39421-013: Quality and Safety Enhancement of Agriculture ... · Agricultural Products and Biogas Development Project This document is being disclosed to the public in accordance with

Completion Report

Project Number: 39421-013 Loan Number: 2513 July 2018

Viet Nam: Quality and Safety Enhancement of

Agricultural Products and Biogas Development

Project This document is being disclosed to the public in accordance with ADB’s Public Communications Policy 2011.

CURRENCY EQUIVALENTS

Currency unit – dong (D)

At Appraisal At Project Completion (19 September 2008) (30 June 2016)

D1.00 = $0.0000572 $0.0000448 $1.00 = D17,478 D22,345

ABBREVIATIONS

ADB – Asian Development Bank BPMU – biogas project management unit CPMU – central project management unit DARD – Department of Agriculture and Rural Development DCP – Department of Crop Production DMF – design and monitoring framework FSI – food safety index GAP – good agricultural practice GDP – gross domestic product ha – hectare IRR – internal rate of return IPMU – institutional project management unit MARD – Ministry of Agriculture and Rural Development MTR – midterm review NAFIQAD – National Agro-Forestry-Fisheries Quality Assurance

Department O&M – operation and maintenance PCR – project completion review PFI – participating financial institution PIC – project implementation consultant PPC – Provincial People’s Committee PPMS – project performance monitoring system PPMU – provincial project management unit RRP – report and recommendation of the President SAZ – safe agricultural zone SDR – special drawing right TA – technical assistance VietGAP – Vietnamese Good Agricultural Practices

NOTES

(i) The fiscal year (FY) of the Government of the Viet Nam and its agencies ends on

31 December. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2018 ends on 31 December 2018.

(ii) In this report, “$” refers to United States dollars.

Vice-President Stephen Groff, Operations 2 Director General Ramesh Subramaniam, Southeast Asia Department (SERD) Directors Eric Sidgwick, Viet Nam Resident Mission, SERD

Jiangfeng Zhang, Environment, Natural Resources, and Agriculture Division, SERD

Team leader Leonard Leung, Natural Resources and Agriculture Economist, SERD Team members Eileen Quisumbing-Battung, Project Analyst, SERD

Roma Gianina Panopio, Senior Operations Assistant, SERD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page

BASIC DATA i

I. PROJECT DESCRIPTION 1

II. DESIGN AND IMPLEMENTATION 1

A. Project Design and Formulation 1

B. Project Outputs 2

C. Project Costs and Financing 7

D. Disbursements 7

E. Project Schedule 8

F. Implementation Arrangements 8

G. Technical Assistance 8

H. Consultant Recruitment and Procurement 8

I. Gender Equity 9

J. Safeguards 9

K. Monitoring and Reporting 10

III. EVALUATION OF PERFORMANCE 10

A. Relevance 10

B. Effectiveness 11

C. Efficiency 11

D. Sustainability 11

E. Development Impact 12

F. Performance of the Borrower and the Executing Agency 13

G. Performance of the Asian Development Bank 13

H. Overall Assessment 13

IV. ISSUES, LESSONS, AND RECOMMENDATIONS 14

A. Issues and Lessons 14

B. Recommendations 15

APPENDIXES

1. Design and Monitoring Framework 16

2. Project Cost at Appraisal and Actual 23

3. Project Cost by Financier 24

4. Disbursement of ADB Loan Proceeds 26

5. Contract Awards of ADB Loan Proceeds 28

6. Status of Compliance with Loan Covenants 29

7. Food Quality and Safety Standards and Regulatory Framework 39

8. Safe Agricultural Zones Infrastructure Investments 44

9. Research Contracts Awarded 45

10. Analysis of Biogas Credit Program 52

11. Reallocation of Loan Proceeds by Expenditure Category Agreed at Midterm Review 56

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12. Technical Assistance Completion Report 57

13. Consulting Inputs: Proposed and Actual 59

14. Summary of Gender Action Plan and Achievements 60

15. Economic Analysis 74

BASIC DATA

A. Loan Identification

1. Country 2. Loan number and financing source 3. Project title 4. Borrower 5. Executing agency 6. Amount of loan 7. Project completion report

number 8. Financing modality

Socialist Republic of Viet Nam 2513, Concessional ordinary capital resources Quality and Safety Enhancement of Agricultural Products and Biogas Development Project Government of Viet Nam Ministry of Agriculture and Rural Development SDR62,405,000 ($95,000,000) 1680 Project loan

B. Loan Data

1. Appraisal – Date started – Date completed 2. Loan negotiations – Date started – Date completed 3. Date of Board approval 4. Date of loan agreement 5. Date of loan effectiveness – In loan agreement – Actual – Number of extensions 6. Project completion date

– Appraisal – Actual

7. Loan closing date – In loan agreement – Actual – Number of extensions 8. Financial closing date

– Actual

9. Terms of loan – Interest rate – Maturity (number of years) – Grace period (number of years) 10. Terms of relending – Interest rate – Maturity (number of years)

8 September 2008 19 September 2008 18 December 2008 19 December 2008 18 March 2009 30 June 2009 28 September 2009 26 August 2009 0 30 June 2015 30 June 2016 31 December 2015 30 June 2016 1 29 November 2017 1.0% per annum during the grace period and 1.5% per annum thereafter 32 8 (55.5% of the prevailing government investment credit interest rate) 20

ii

– Grace period (number of years) – Second-Step borrower

6 Central People’s Credit Fund (now Cooperative Bank) and Vietnam Bank for Agriculture and Rural Development

11. Disbursements

a. Dates Initial Disbursement 17 November 2009

Final Disbursement 13 January 2017

Time Interval 85.94 months

Effective Date 26 August 2009

Actual Closing Date 30 June 2016

Time Interval 82.19 months

b. Amount (SDR)

Category Original Allocation Last Revised Allocationa Amount Disbursed

Works - Quality and safety enhancement

17,595,000 24,376,836 24,376,836

Works - Biogas development 2,932,000 1,021,440 1,021,440 Works - Credit line for biogas

digester construction 7,982,000 7,703,795 7,703,795

Works - Financial assistance to households for biogas digester construction

854,000 1,154,085 1,154,085

Equipment 10,627,000 7,721,752 7,721,752 Vehicles 36,000 31,745 31,745 Furniture 74,000 44,230 44,230 Materials 7,220,000 7,176,535 7,176,535 Training and workshops 4,567,000 3,836,208 3,836,208 Overseas study tours 372,000 226,833 226,833 Consulting services -

International 749,000 815,549 815,549

Consulting Services - National 493,000 221,490 221,490 research and development -

Quality and safety enhancement

1,330,000 1,107,124 1,107,124

Research and development - Biogas development

797,000 0 0

Baseline survey 1,232,000 831,719 831,719 Design and supervision 1,076,000 1,438,963 1,438,963 Certification 1,356,000 1,100,499 1,100,499 Monitoring and evaluation 519,000 212,605 212,605 Project auditing 307,000 129,322 129,322 Recurrent costs 1,186,000 1,064,473 1,064,473 Interest charge 1,101,000 1,101,000 1,101,000 Total 62,405,000 61,316,203 61,316,203

SDR = special drawing right. a The only cancellation, amounting to SDR1,088,797, was made on 29 November 2017 during the closing of the loan

account. The last allocation revision was made during the closing of the loan account.

c. Amount ($) Category Original Allocationa Last Revised Allocation Amount Disbursed

Works - Quality and safety enhancement

26,785,113 36,224,597 36,224,597

Works - Biogas development 4,463,424 1,559,838 1,559,838 Works - Credit line for biogas

digester construction 12,151,110 11,864,273 11,864,273

Works - Financial assistance to households for biogas digester construction

1,300,056 1,788,571 1,788,571

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Category Original Allocationa Last Revised Allocation Amount Disbursed Equipment 16,177,630 11,395,880 11,395,880 Vehicles 54,803 50,771 50,771 Furniture 112,651 70,577 70,577 Materials 10,991,106 10,933,450 10,933,450 Training and workshops 6,952,408 5,836,993 5,836,993 Overseas study tours 556,301 357,202 357,202 Consulting services -

International 1,140,213 1,244,489 1,244,489

Consulting services - National 750,501 338,585 338,585 Research and development -

Quality and safety Enhancement

2,024,678 1,583,671 1,583,671

Research and development - Biogas development

1,213,284 0 0

Baseline survey 1,875,491 1,311,809 1,311,809 Design and supervision 1,638,010 2,155,819 2,155,819 Certification 2,064,258 1,622,913 1,622,913 Monitoring and evaluation 790,081 317,920 317,920 Project auditing 467,350 195,100 195,100 Recurrent costs 1,805,464 1,606,195 1,606,195 Interest charge 1,676,068 1,643,352 1,643,352 Total 95,000,000 92,102,005 92,102,005

SDR = special drawing right. Note: Numbers may not sum precisely because of rounding. a The exchange rate at approval was SDR1 = $1.52231.

C. Project Data

1. Project cost ($’000) Cost Appraisal Estimate Actual

Foreign exchange cost 95,000.0 92,102.0 Local currency cost 15,394.0 17,844.0 Total 110,394.0 109,946.0

2. Financing plan ($’000) Cost Appraisal Estimate Actual

Implementation cost Borrower financed 6,225.0 3,050.0 ADB financed 93,324.0 90,459.0 Other external financinga 9,169.0 14,794.0

Total implementation cost 108,718.0 108,303.0

Interest during construction costs Borrower financed 0.0 0.0 ADB financed 1,676.0 1,643.0 Other external financing 0.0 0.0

Total interest during construction cost 110,394.0 109,946.0

ADB = Asian Development Bank. a Other external financing comprises Provincial People’s Committees, participating financial institutions, and

beneficiaries.

3. Cost breakdown by project component ($’000) Component Appraisal Estimate Actual

Institutional and regulatory development 5,232.0 1,498.0 Development of production and consumption of safe and

quality agro-products 76,027.0

81,404.0

Biogas development 22,969.0 18,854.0 Project management 6,166.0 8,190.0

Total 110,394.0 109,946.0

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4. Project schedule Item Appraisal Estimate Actual

Component 1 Date of contract with consultants

Baseline surveys on provincial food safety index Design and supervision of provincial food safety index

Q4 2010 Q4 2010

1 August 2011 30 September 2013

Component 2 Date of contract with consultants

Research and development for quality and safety enhancement - First contract (five) - Last contract

Q4 2010 Q4 2010

23 October 2014 23 October 2014

Civil works contracts - Safe agricultural zones - First contract - Completion of work

Q1 2010 Q2 2015

17 May 2013 15 June 2016

Equipment contracts (safe agricultural zone for provinces) - First procurement - Last procurement

Q4 2010

17 November 2015 Component 3 Signing of subsidiary loan agreements with financial institutions

Q4 2009

31 December 2009

Component 4 Date of contract with consultant

Institutional and regulatory development and project management

Q4 2010

31 May 2011

Equipment contracts First procurement Last procurement

Q1 2010 Q2 2010

14 May 2010 16 June 2016

Q = quarter.

5. Project performance report ratings Implementation Period

Ratings

Development Objectives Implementation Progress

From 26 August 2009 to 31 December 2010 Satisfactory Satisfactory Single Project Rating From 1 January 2011 to 30 September 2011 On Track From 1 October 2011 to 30 September 2012 Potential Problem From 1 October 2012 to 31 March 2015 On Track From 1 April 2015 to 30 September 2015 Potential Problem From 1 October 2015 to 30 June 2016 On Track

D. Data on Asian Development Bank Missions

Name of Mission

Date

No. of Persons

No. of Person-Days

Specialization of Membersa

Loan inception 12–19 October 2009 3 20 a, b, c Special loan administration 1 8–10 December 2009 2 6 a, c Special loan administration 2 21–25 January 2010 3 15 a, d, e Loan review 1 15–19 March 2010 2 10 c, e Loan review 2 27 October–4 November 2010 2 18 c, e Special loan administration 3 24–26 January 2011 1 3 f Loan review 3 8–17 March 2011 2 20 f, g Special loan administration 4 8–11 August 2011 2 10 f, g Loan review 4 4–13 October 2011 2 20 f, g Loan review 5 28 February–8 March 2012 2 20 f, g Loan review 6 1–5 April 2013 2 10 g, h Midterm review 4–15 November 2013 4 39 h, i, j, k Loan review 7 19–27 August 2014 2 18 h, k Loan review 8 9–17 March 2015 3 21 h, k, l Loan review 9 10–17 August 2015 3 19 k, l, m

v

Name of Mission

Date

No. of Persons

No. of Person-Days

Specialization of Membersa

Loan review 10 28 March–11 April 2016 3 45 k, n, o Project completion review 15–19 January 2018 3 15 k, o, p

a a = senior natural resources economist, b = climate change specialist, c = assistant project analyst, d = project administration unit head, e = financial due diligence specialist, f = finance specialist, g = associate project analyst, h = senor environment specialist, i = lead social development specialist, j = senior procurement specialist, k = project analyst, l = senior natural resources and agriculture specialist, m = associate safeguards officer, n = principal natural resources and agriculture economist, o = staff consultant, p = natural resources and agriculture economist.

I. PROJECT DESCRIPTION

1. Viet Nam had achieved average annual growth in gross domestic product (GDP) of 7.7% over 2003–2008, equivalent to an annual increase in GDP per capita of about 13% (from $490 to $1,053).1 The economy underwent restructuring over the same period, with industry, construction, and services displaying rapid growth. As a result, agriculture’s share of the GDP declined from 22.5% in 2003 to 20.4% in 2008. Viet Nam had achieved greater competitiveness of agricultural products and expanded their exports significantly. The role of the private sector had also increased, accelerating reforms toward a market-based economy. Continued and sustained economic growth had helped reduce the country’s poverty rate from 58.0% in the early 1990s to 14.5% in 2008, though the incidence of poverty among ethnic minorities remained high. Economic growth also resulted in greater demand for food products with assured quality and safety. This required the government to develop a strong institutional and regulatory framework for agricultural product quality and safety to protect consumers in the domestic market and to enhance the country’s competitiveness in the world market. It also provided potential for the development of a profitable food industry that supplies safe food to domestic and international markets.2

2. The Quality and Safety Enhancement of Agricultural Products and Biogas Development Project was designed to (i) create effective regulatory institutions for state management of agro-product safety and quality systems; (ii) accelerate the development of agro-production, processing, and marketing to ensure the safety and quality of vegetable, fruit, and tea products; and (iii) support biogas development to supply clean energy to households and reduce safety and health hazards from livestock waste in 16 provinces.3 The project impact was sustainable and equitable growth of the agriculture sector through increased livelihood opportunities and improved human health. The project outcome was quality and safety improvements in Viet Nam’s agricultural outputs that meet domestic and international requirements.

II. DESIGN AND IMPLEMENTATION

A. Project Design and Formulation

3. At project design, the government’s Strategy for Socio-Economic Development, 2001–2010 sought to enhance the contribution of the agriculture sector to sustainable and equitable growth.4 This included more effective food security, the promotion of agricultural diversification, and improvement in the quality of high-value agriculture and agro-based products for domestic and international markets. Food security and food safety grew in importance following Viet Nam’s accession to the World Trade Organization in 2006, which led the government to streamline over 200 food safety regulations. It also required the establishment of a comprehensive regulatory framework under the action plan for food safety, 2008–2012, which included (i) the establishment of a lead agency for food safety; (ii) planning of safe agricultural zones (SAZs);5 (iii) strengthening of certification, inspection, and monitoring; and (iv) improving food quality and safety testing and 1 Asian Development Bank. 2009. Key Indicators for Asia and the Pacific. Manila. 2 Safe food here refers to agricultural produce that are cultivated, handled, processed and stored in ways that

minimizes food-borne illness and potential health hazards. 3 ADB. 2009. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the Socialist

Republic of Viet Nam for the Quality and Safety Enhancement of Agricultural Products and Biogas Development Project. Manila.

4 Government of Viet Nam. 9th National Congress. 2001. Strategy for Socio-Economic Development, 2001-2010. Hanoi.

5 SAZs comprise an area of agricultural land free from excessive microbiological, chemical, heavy metal pollution and contamination, and is defined as meeting Viet Nam’s standard for irrigation water and soil. Supplementary Appendix D of the report and recommendation of the President provides a detailed description of SAZs.

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certification services. Given this government focus, the project design is considered relevant. The project was also consistent with the country strategy and program, 2007–2010 of the Asian Development Bank (ADB), which targeted (i) development and strengthening of institutional capacity, (ii) promotion of socially equitable and balanced development, and (iii) sustainable environmental management.6 The project promoted improvement in farm income and in the value of agricultural production by supporting tea and fruit development. The project’s comprehensive agriculture sector development program pursued policy and institutional reforms that were conducive to market-based agriculture and agro-industry development.

4. The project was formulated under project preparatory technical assistance (TA) approved on 30 April 2007 with a closing date of 31 March 2008, which was extended to 30 June 2009.7 While the overall scope of the project was consistent with government and ADB objectives for agriculture and improving agricultural product quality and safety standards, the project design was ambitious in its inclusion of 16 geographically dispersed provinces. It also comprised many activities without a clear mechanism for their integration. A more focused and coherent effort in fewer provinces would have been preferable. As such, the design posed a risk to effective project implementation and achievement of project objectives.

5. The impact indicators identified in the project design and monitoring framework (DMF) were not appropriate to assess sustainable and equitable growth of the agriculture sector, as they only covered increases in sector-wide value added and exports without any distributional criteria. Growth of the agriculture sector results in increased livelihood opportunities and improved health, but the DMF did not include indicators for increased livelihoods, and the improved health indicators at the output level were not measurable. Several indicators at the output level were unclear, difficult to measure, or overambitious. Issues relating to indicators and targets were raised by the government at an early stage of implementation.

6. During the midterm review (MTR) mission, it was agreed that several targets and fund allocation would be revised. However, the revised DMF indicators and loan reallocation were not formally entered into the ADB system.8 This notwithstanding, the project completion review (PCR) is based on performance against the revised targets, since it was implemented based on agreed revised targets following the MTR.

B. Project Outputs

1. Regulatory Framework

7. At project design, the project implementation consultants (PICs) were intended to support the government in assessing existing policies, decisions, and regulations on (i) food quality and safety for vegetable, fruit, and tea production; (ii) post-harvest handling; and (iii) certification and inspection. The DMF specified that this should be completed by 2010 and included a target of 10 new decisions and/or regulations to be implemented by 2013. Tasked with reviewing existing policies and regulations, the PICs determined that the target of 10 decisions and/or regulations was arbitrary. The government was already preparing several statutory documents relating to food quality and safety. In the area of vegetables, fruit, and tea, two decrees, one directive, two

6 ADB. 2008. Country Strategy and Program: Viet Nam, 2007–2010. Manila. 7 ADB. 2007. Technical Assistance to the Socialist Republic of Viet Nam for Preparing the Quality and Safety

Improvement of Agricultural Products Project. Manila. 8 Although the memorandum of understanding mentions that the revisions were to be made, no approval for minor

change was sought for the revised DMF indicators. On the other hand, the request for loan reallocation was approved on 13 August 2014, but a “Loan Milestones and Events Dates" was not submitted to reflect changes in the ADB system.

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decisions, and 18 circulars were issued during the project period. The PICs also supported the government in preparing legal instruments (Appendix 7). The institutional project management unit (IPMU) undertook consultations during the updating of the regulatory framework through 44 workshops covering 2,412 participants, including 735 (31%) women from government agencies, research institutes, academia, and the private sector. The IPMU disseminated information on the updated framework and associated documents through 21 seminars, comprising 1,850 participants, of whom 28% were women.

8. Before the project was formulated, food safety had been a major concern for central and local governments and the Vietnamese people. The Ministry of Agriculture and Rural Development (MARD) established the Vietnamese Good Agricultural Practices (VietGAP) standards in January 2008 (Appendix 7) to prevent and minimize the risk of hazards that may occur during production, harvesting, and primary post-harvest handling of agricultural products.9 The government decreed in July 2008 that all vegetables, fruit, and tea produced should be VietGAP certified by 2015. This was rescinded in January 2015 since many small farmers had trouble with compliance, and alternative standards were required for specific markets. The project design proposed the introduction of 20 good agricultural practice (GAP) standards to strengthen VietGAP. Early in project implementation, it became clear that this requirement was both inappropriate (since the government had already begun the development of VietGAP) and arbitrary with respect to the number of standards. The project design did not specify which agricultural products would be covered by the 20 standards. By MTR, three standards had been issued and a further two were under preparation. It was agreed that these five standards were adequate for the harmonization of the individual standards for vegetables, fruit, and tea. It was proposed to revise the target from 20 to five. However, after MTR the proposal was not processed internally, resulting in a lack of official documentation that reflect the changes in the target. The national standards on food safety introduced by project closing are listed in Appendix 7. In addition to preparing new national standards, the PICs recommended the strengthening of VietGAP. The outcome was VietGAP 2, which is more harmonized with international GAP standards. The Ministry of Science and Technology endorsed VietGAP 2 as a national standard in June 2017.

9. The project outputs specified in the DMF regarding the institutional development of food quality and safety were:

(i) A standing committee on food safety chaired by the vice-minister was to be established by 2010. The committee was not established, however, mainly because the Vietnamese Food Administration under the Ministry of Health already had a food safety mandate as dictated by the Food Safety Law, 2010. MARD established a VietGAP steering committee in March 2011 and in April 2015 the National Agro-Forestry-Fisheries Quality Assurance Department (NAFIQAD) was established as the food safety focal point in MARD.

(ii) Specialized food safety units were to be incorporated into NAFIQAD, the Department of Crop Production (DCP), and the Department of Agriculture and Rural Development (DARD) in the 16 project provinces. A total of 152 staff, including 54 women (35.5%), have been engaged by or seconded to these units. At project closing, the units continued to operate with increased capacity supported by the government budget.

(iii) A food safety monitoring system was to be established under NAFIQAD and a food safety index (FSI) launched in the 16 project provinces in 2011. Before the project, NAFIQAD, DCP, and the Department of Plant Protection each had their own food safety monitoring systems. In 2013, the IPMU commissioned national consultants

9 Decree No. 379/QD-BNN-KHCN dated 28 January 2008.

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to develop the FSI at provincial level. The outcome was a three-tier system, which at its lowest level comprised 185 indicators. However, it is difficult to implement because of its complexity. The government is reviewing the FSI and, according to the IPMU, expects to introduce a mandatory system nationwide within 2–3 years.

(iv) Training was to be provided for 130 MARD and 140 DARD staff in certification management. By project closing, the project delivered 30 courses covering 993 participants from MARD and DARDs, the National Agriculture and Fisheries Extension Center, certification bodies, laboratories, academic institutes, and private enterprise, of which 353 were female participants (35.3%). The total number of staff trained from MARD, DARD, and the National Agriculture and Fisheries Extension Center was 691, comprising 69% of the total number of staff trained. Of the total 691 trainees, 264 were women.

(v) At least 20 certification bodies were to be accredited for VietGAP certification for vegetables, fruit, and tea; and were to be operating in project provinces. By 2013, 17 regional (covering more than one province) certification bodies had been accredited by the DCP and 10 provincial certification bodies by provincial DARDs. However, in September 2012 a MARD directive specified that within 1 year all certification bodies would be accredited nationally and that provincial accreditation would cease. At project closing, 23 certification bodies were operating, covering all Viet Nam provinces.

2. Infrastructure and Facilities

10. The project operationalized the concept of SAZs to facilitate the production and distribution of safe, high-quality agricultural products. The intention was to establish three demonstration sites (one each for production, primary processing, and trading) in each province SAZ.10 It became clear early during implementation that separate demonstration sites for processing and trading were not appropriate since such activities are frequently integrated. The necessity for a one-of-each type demonstration unit in each SAZ was also not apparent, as this would depend on the specific production and marketing characteristics of and existing facilities in or close to the SAZ.

11. It was planned that at least 35% of the agricultural land in each project province identified as safe production areas would be assessed for potential for the SAZ interventions. Despite delays in contracting consultants to undertake the required assessment, the number of SAZ models developed exceeded the target.11

By the end of the project, 182,187 hectares (ha) in the 16 provinces had been assessed and approved for SAZ planning, representing 80.4% of the total area for vegetables, fruit, and tea cultivation.

12. The project targeted supporting 25% of the SAZ areas assessed as safe to develop SAZ models where the project would provide financing for improved infrastructure (e.g., market access roads, electricity, water supply, and waste disposal). This equated to 45,627 hectares (ha) of the 182,510 ha assessed as suitable for the safe production of vegetables, fruit, and tea. By MTR, SAZ models covering only 2,255 ha had been developed with infrastructure. Loan funds allocated for SAZ development were significantly short of the requirement to reach the 25% target. The geographic spread of the project over 16 provinces added to implementation difficulties. It was proposed at MTR, though not officially approved, to revise the target to an area basis and to

10 The Report and Recommendation of the President to the Board of Directors did not clearly define “trading” and what

it covered (e.g., markets and transport facilities) and how it would be demonstrated. 11 It was originally intended to contract the National Institute of Agricultural Planning and Projections to undertake SAZ

planning but, as an agency under MARD, the Institute was ineligible according to ADB procedures. It was then necessary to contract consultants to undertake the work.

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reduce the SAZ models’ coverage to 2,500 ha. This was expected to equate to 65 SAZ models. By project closing, as a result of funds reallocation and improved SAZ planning and implementation, 95 SAZ models covering 3,100 ha had been provided with new or improved infrastructure. This equates to 6.8% of the original target area of 45,627 ha.

13. The project was to ensure that at least 500 production, processing, and marketing enterprises would be certified by 2012. It was not clear what a production enterprise meant, and was interpreted as a farm household, which would be certified by VietGAP during project implementation. It was also not clear why the target number specified in the DMF was low, given the project investment of $75 million under the agro-products quality and safety component. By project closing, 27,477 households had been certified according to VietGAP standards, of which 6,196 were women-headed households, 930 were poor households, and 1,575 were ethnic minority households. The total area covered by certified growers was 10,323 ha, comprising 1,717 ha of vegetables, 3,497 ha of fruit, and 5,109 ha of tea.

14. To support improved food safety management, 100 staff were to be trained in each project province. Over the project period, 41,416 participants from provincial and district administrations and processing enterprises were trained in 1,207 courses, of which 36.1% were females.12 Training was delivered to 301,676 farmer participants at 7,110 courses in GAP, certification, and management of the food safety system, of which 38.5% were females.

15. The project was to conduct research to produce 20 pest- and disease-tolerant fruit and tea varieties to replace less tolerant varieties on 35% of the total area assessed as suitable for safe production. This equates to 72,355 ha, which was significantly more than the area envisaged during project design. By MTR, variety replacement had been undertaken on only about 10,400 ha. Based on the expected level of replacements for the remainder of the project, it was proposed to reduce the target area to 14,000 ha. By project closing, variety replacements on 16,009 ha (21.0% of the target area) had been completed, covering 112,981 households, of which 12.4% were poor households and 28.3% were ethnic minority households.

16. The development of replacement varieties was financed under the project’s research and development budget for quality and safety enhancement. Although agricultural research is largely the domain of government institutions, ADB procurement guidelines preclude them from bidding for contracts. This resulted in delays in the implementation of the research program. Five research contracts were awarded in October 2014, 5 years after loan effectiveness. On project completion, four contracts had been completed and accepted by MARD’s Scientific Council. The fifth contract was cancelled because unfavorable weather conditions delayed the start of the research program, which could not be completed before project closing. Two completed research contracts for variety development resulted in 16 new varieties (Appendix 9).

17. To support the certification system, the project targeted upgrading three regional laboratories (north, south, and eastern region). By project completion, 12 laboratories had been upgraded in the Department of Plant Protection, DCP, and NAFIQAD. Over the project period, private sector laboratories emerged to provide testing and certification services. At project completion, more than 200 private sector laboratories were in operation to meet requirements related to VietGAP and other certification systems, i.e., sanitary and phytosanitary certification.

12 Participants are defined as people attending a training course, rather than individuals. An individual may attend more

than one course.

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3. Biogas Development

18. The number of biogas digesters to be constructed with project support was not clearly defined in the report and recommendation of the President (RRP). An amount of $4.5 million had been earmarked for biogas civil works, but it was not clear what this was intended to achieve since household biogas digester construction, biogas research, and biogas demonstration units were to be financed from other expenditure categories. The DMF specified a target of 40,000 biogas digesters. By project closing, 30,078 biogas digesters had been constructed and technically accepted. Training in biogas digester construction, maintenance, and safe operation was provided to 59,808 people (32.6% women), comprising 54,993 potential biogas households and 4,744 biogas contractors and technicians and project management staff. In addition, 68,020 women (50%) out of 136,875 people from 30,078 households benefited from biogas construction. Attendance at project-financed training was a condition of households’ participation in the biogas program.

19. Issues arose during implementation over the financing of the biogas program. Project support for biogas development comprised direct financial assistance (of at least D1.0 million per household) and a credit line through participating financial institutions (PFIs) for households constructing biogas digesters. The project was to provide financial assistance to 20,000 households, but the DMF set a target of 40,000, which included 20,000 biogas digesters to be funded by the Government of the Netherlands under a different project. It was agreed at MTR to correct the DMF target to 20,000, but this was not updated in ADB’s system. At project closing, 30,078 households received financial assistance retrospectively on technical approval of the construction of biogas digesters.13 The MTR reported that 11,200 households had received credit for biogas digester construction, but raised concerns that (i) the demand for biogas was less than the original target; (ii) the cost of biogas digester construction had escalated; and (iii) repayment on existing loans was poor (estimated at a weighted average across the two PFIs of 28%). This constrained the expansion of the credit program. In addition to direct financial assistance, the PFIs were to lend to 20,000 households under the biogas credit program. It was agreed at MTR to reduce the credit program target to 12,000 households, though this was not reflected in ADB’s system. By project closing, 14,256 households (71.3% of the target of 20,000) had borrowed to install biogas digesters. Details of the biogas credit program are in Appendix 10.

20. At project design, three additional targets were incorporated into the biogas component First, livestock husbandry would be incorporated into SAZs. Second, the biogas program included an applied research and development component to assist DARDs in the implementation of large- and medium-scale biogas demonstration. Third, linked to the research activity was the development of 10 medium- or large-scale biogas digesters as demonstration units. It became clear early in implementation that livestock activities were not necessarily undertaken in proximity to SAZs. It was agreed at MTR to drop livestock activity. In addition, as the ADB-financed Low Carbon Agriculture Support Project included 40 medium- and 10 large-scale biogas digesters, it was agreed at MTR to drop demonstration units. 14

4. Project Management

21. Support for project management was provided through a central project management unit (CPMU), an IPMU responsible for the regulatory framework component, a biogas project

13 An additional $505,000 was allocated from biogas research and development in August 2014 to increase the

provision of financial assistance to households for biogas digesters. 14 ADB. 2012. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the Socialist

Republic of Viet Nam for the Low Carbon Agricultural Support Project. Manila.

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management unit (BPMU) for the biogas component, and 16 provincial project management units (PPMUs). The CPMU was established on 16 December 2008 in the Agricultural Projects Management Board of MARD, the executing agency. The IPMU was established in the DCP on 31 March 2009 and the BPMU in the Department of Livestock Production on 24 March 2009. The 16 PPMUs operated within provincial DARDs and were established from March to May 2009. Provincial People’s Committees (PPCs) acted as executing agencies for subprojects at the provincial level. Two PFIs were responsible for implementing the project’s biogas credit line: (i) the Vietnam Bank for Agriculture and Rural Development; and (ii) the Central Credit Fund, renamed Cooperative Bank during project implementation.

C. Project Costs and Financing

22. The project cost was estimated at $110.39 million at appraisal while actual project costs were $109.95 million (Appendix 2). Actual costs of institutional and regulatory development (component 1) amounted to 28.6% of the estimated amount because the level of support required in this area was lower than estimated. Actual costs of the development of production and consumption of safe and quality agro-products (component 2) exceeded the appraisal estimate by 7.1% because of the higher costs of establishing SAZs. Biogas development costs were 17.9% lower than estimated, consequent to a decision to reallocate funds to SAZ civil works during MTR. Project management costs were 32.8% higher than estimated. The MTR identified several issues related to implementation progress, and a reallocation of financing was agreed on 14 August 2014. However, the agreed changes were not reflected in the ADB system and the allocation at project completion remained the same as at loan approval (footnote 8). The key change proposed at MTR was an increase in civil works for the development of SAZs of $12.09 million, financed largely by a reduction in civil works for biogas development in equipment financing and the termination of biogas research activities.15 Details of the reallocation are in Appendix 11.

23. At appraisal it was estimated that ADB would finance $95.00 million, the government $6.22 million, PPCs $6.47 million, PFIs $1.35 million (in relation to the biogas development credit line), and beneficiaries $1.35 million (as equity contributions to biogas digester investment). ADB actually financed $92.10 million, the government $3.05 million, PPCs $8.88 million, PFIs $2.95 million, and beneficiaries $2.95 million. Details of project costs are in Appendix 3.

D. Disbursements

24. Total disbursements amounted to SDR61,316,203 ($92.10 million), compared with the loan amount of SDR62,405,000 ($95.00 million). At loan closing, the undisbursed SDR1,088,797 ($1.536 million) was cancelled. The first disbursement took place on 17 November 2009 and the final disbursement on 13 January 2017. A breakdown of projected and actual annual and cumulative loan disbursements is in Appendix 4. The disbursement projection at appraisal was much more rapid than what actually occurred. Cumulative disbursement was projected to be 26% by the end of the second year (2010) and 42% by the end of the third year (2011). However, actual cumulative disbursements had reached less than 20% by the end of the third year owing largely to slow disbursement under the quality and safety enhancement and biogas development expenditure categories, which did not commence until 2013. Disbursements did, however, pick up rapidly thereafter. Given that food quality and safety was relatively new in Viet Nam, the wide geographic coverage of the project, and the complex nature of project management and implementation arrangements, the disbursement schedule estimated at appraisal was unrealistic.

15 Biogas research and development would be taken up under ADB’s Low Carbon Agricultural Support Project.

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E. Project Schedule

25. The SAZs were established behind schedule because of delays in contracting consultants to undertake the required SAZ planning and assessment. Consequently, the loan closing date was extended from 31 December 2015 to 30 June 2016 to allow (i) completion of a small number of SAZ models; (ii) support for improving SAZ–market links; and (iii) completion of all quality and safety research contracts and dissemination of results. Implementation was initially slow, with limited activity in the first year (2010). Key issues that delayed implementation were contracting issues relating to the assessment of safe agricultural production areas and research contracts, and the delayed engagement of the PICs. Financial closing was delayed due to clarifications and substantiation during liquidation.

F. Implementation Arrangements

26. The project’s complex management structure (para. 21) gave rise to implementation issues, particularly relating to the coordination of project activities that were assigned to multiple government agencies. The lack of a dedicated project steering committee exacerbated coordination problems. While the CPMU was adequately staffed, the capacity of PPMUs was variable. In some PPMUs, a lack of staff and limited staff experience led to delayed implementation and absorbed a significant amount of the CPMU’s time. The project’s geographical coverage left little alternative to the proposed implementation structure with 16 PPMUs. The IPMU (regulatory framework) and BPMU (biogas development) implemented their programs largely independently. Likewise, the two PFIs that lend to households for biogas digestor construction were autonomous, relying in some provinces on local communes rather than PPMUs for the identification of potential borrowers. Notwithstanding these challenges, the implementation arrangement is in general adequate for a project with such a broad range of objectives. Most of the output and outcome targets were achieved; those that were partly achieved or not assessed were primarily attributable to over-ambiguous or non-verifiable targets.

G. Technical Assistance

27. The project-related TA on Strengthening Project Management and Developing Strategies and Options for Biogas Development Program Expansion was designed to support the CPMU during project start-up (part 1) and provide a design for an investment to expand biogas development (part 2). The TA had a budget of $1.8 million, including $1.5 million financed by ADB and $0.3 million by the government. The TA (part 1) prepared a project implementation manual, provided training on procurement, and conducted SAZ planning. The TA was extended from 30 June 2010 to 31 December 2012 to allow completion of part 2 of the TA. The TA account was closed on 25 November 2013. Total disbursement was $1,488,187, equivalent to 99% of the allocated amount. The TA is rated partly successful and the completion report is in Appendix 12.

H. Consultant Recruitment and Procurement

28. The project was envisaged to provide a team of consultants for institutional and regulatory development and project management, comprising 60 person-months of international and 148 person-months of national inputs. The CPMU undertook consultant selection in accordance with ADB guidelines using the quality- and cost-based selection procedure based on a 90:10 quality–cost ratio and a full technical proposal. The consulting services contract was signed on 31 May 2011 following a delay caused by refinements of the terms of reference. After six contract variations, the final allocation of consultant inputs was 46.2 person-months of international and 145.0 person-months of national. The closing date was extended to 8 November 2015 for consultants to support the CPMU in completing certain project activities. By contract completion,

9

35.7 person-months of international and 131.1 person-months of national consultant inputs were used. Some difficulty arose in implementing the consulting services because of the delay in contracting and the lack of a clear delineation of responsibilities across project components between consultants and the PMUs. The IPMU wanted to manage the inputs of consultants working on the regulatory framework but received limited support as all consultants were assigned to the CPMU. The terms of reference of the consulting services also lacked support to the BPMU and should have included expertise on carbon financing for biogas. A breakdown of proposed and actual consulting inputs is in Appendix 13.

29. The government was generally satisfied with the performance of the consultants, particularly in the (i) strengthening and harmonization of about 200 regulations on food safety to 18 circulars; (ii) organization of training courses on VietGAP, national technical regulations, marketing, and GAP; (iii) creation of criteria on safe agricultural production areas; and (iv) preparation of plans for certifying agricultural products and strengthening monitoring and evaluation capacity. Progress reports were submitted in a timely manner although there were occasions of delay because of consolidation of information from 19 implementing agencies and two PFIs.

30. The main procurement issues are as follows: (i) several PPMUs had limited capacity in procurement according to ADB procedures and, despite training provided through the TA, PPMUs relied heavily on CPMU staff; (ii) delays in the quality and safety enhancement component resulted from the ineligibility of the National Institute of Agricultural Planning and Projection to undertake assessment of safe agricultural production areas (footnote 11); and (iii) all procurement contracts except for vehicles and furniture required prior review by ADB, which resulted in slow implementation. At MTR, it was agreed to expedite the procurement process by consolidating all civil works within a province into a single provincial contract.

I. Gender Equity

31. The project gender classification is effective gender mainstreaming. The gender action plan developed at project design included key gender objectives and targets: (i) female government staff’s access to training (target 30%); (ii) women’s representation (or staffing) in food safety management-related institutions (target 30%); (iii) women benefiting from SAZ model development and implementation (target 50%); and (iv) 50% of credit accessed for household biogas construction to be in women’s names.

J. Safeguards

32. The project was classified category B for environment and indigenous peoples, and was expected to have no resettlement impact. Environmental protection is integrated into training materials and practices, VietGAP certification, and new varieties replacement. Full environmental impact assessments were required for SAZs of more than 50 ha. For all civil works, PPMUs prepared initial environmental examination, environmental protection commitment, and environmental impact assessment reports with the assistance of the safeguards consultant.

33. The RRP stated that project interventions, such as the establishment of SAZs and the training of farmers in GAP and other farm food safety standard-based practices, would positively impact ethnic minorities in the project area. However, no indigenous peoples’ action plan was prepared at appraisal.16 On completion, the project supported 1,506 ethnic minority households

16 The Summary Poverty Reduction and Social Strategy of the RRP indicates limited beneficial impact for indigenous

peoples. It proposed “Other Action” in terms of measures to address any issues but these were not specified.

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to obtain VietGAP certification, representing 5.7% of the total number of households that obtained VietGAP certification. Variety replacement was a significant benefit for the 25,660 ethnic minority households, which was 25.5% of the number of households supported for variety replacement.

34. The CPMU and PPMUs built into their subproject processing systems adequate assessment of involuntary resettlement and social safeguards. Some voluntary land donations occurred to facilitate SAZ model development. ADB requested the CPMU in August 2015 to engage an independent monitoring agency to verify such land donations and to support this process by providing a list of SAZs where land donations had taken place. However, there was insufficient time before project closing to recruit consultants to undertake the assessment.

K. Monitoring and Reporting

35. No problems were encountered in meeting the conditions of loan effectiveness, which was achieved before the date specified in the financing agreement. Out of 35 covenants, 33 were fully complied with and two were partially complied with. One covenant was amended to allow all eligible households to borrow under the project credit line, including those that had received a grant for biogas digester construction and were thus precluded from borrowing under the original covenant. A summary of compliance with loan covenants is in Appendix 6. Although the project design required that a project performance monitoring system (PPMS) be established in 2010, the contract was not awarded until December 2013. The firm contracted to develop the PPMS undertook the baseline survey, prepared quarterly reports, and completed the government PCR in December 2015 before project closing. Therefore, it did not include project activities undertaken after 2015. The PPMS was not considered effective for monitoring project performance because of the above constraints. As a corrective measure, a separate monitoring and evaluation system focusing on output monitoring was established under the related policy and advisory TA.

36. The audited project reports were submitted on time, except for the first year because of a delay in engaging the external auditor. Of the 17 audited project financial statements submitted, five qualified opinions were given from 2012 to 2014. The qualified opinions were regarding (i) the use of loan proceeds for biogas digester construction; and (ii) discrepancy between the recorded expenditure and payments to contractors. However, the unqualified audit opinions for 2015 and 2016 indicated that the issues were rectified.

III. EVALUATION OF PERFORMANCE

A. Relevance

37. At appraisal, the project was highly relevant to the government and ADB goals and strategies in the agriculture sector. The government had already begun to address food security and food safety issues, especially after accession to the World Trade Organization. At PCR, food quality and safety remain highly relevant to Viet Nam’s transition to a middle-income country in which increasing urbanization and rising incomes will stimulate demand for high-quality safe agricultural products. It is also critical to facilitate Viet Nam’s increased participation in international food markets. The SAZ models and FSI are innovative concepts upon which the government had already embarked, with positive impact on project-supported households and communities. A positive demonstration effect on non-project households is also likely.

38. The project design was generally appropriate. That said, it would have been beneficial if the project covered less provinces, but intensified support to the participating provinces. Secondly, the consultants could have conducted advance SAZs planning for a few provinces to

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expedite implementation. Lastly, more attentiveness could have been given to DMF in both indicator identification and target setting. At completion, the project is rated relevant.

B. Effectiveness

39. The DMF sets four outcome targets. The project’s achievements exceeded the first target. From 2009 to 2015, the production of vegetables, fruit, and tea certified as safe increased by 633%, and the processing of vegetables, fruit, and tea certified as safe increased by 351%. The second target was partly achieved, as only 5% of the total production of vegetable, fruit, and tea were certified safe in 2015. By commodity, the certification percentage is 11% for vegetable, 5% for fruit, and 3 % for tea. Vegetable was highest because supermarkets require certification. Fruits is lower because they were typically sold in local traditional markets which did not require certification, tea was the lowest because testing was typically not required for fresh tea leaves. The achievement was less than the target of 20% for multiple reasons: (i) over-ambitious target which is a project design issue; (ii) distance between testing laboratories and production areas; and consequently (iii) high testing costs. The 5% certification rate was still a significant advancement, since it represented 212,000 tons of certified produce in 2015, as compared to 47,000 tons in 2009.

40. As for the last two targets, they are difficult to assess because limited data are available. No cases of food poisoning associated with vegetables, fruit, and tea were recorded from 2009 to 2015 in the project provinces, so there are no estimates of the medical treatment cost.17 Of the 23 output level targets, 19 were achieved, 2 were partly achieved, and 1 were not achieved, and 1 was not applicable and thus not assessed.

41. Evidence from surveys and field observations during ADB review missions shows that the project has resulted in improved agricultural practices and improved agricultural product safety and quality.18 VietGAP-certified households have generally attained improved net farm incomes. Improved processing facilities in SAZ models have also resulted in greater penetration in more discerning food markets. Although the area under the project covered by VietGAP and project SAZ models is small, the project has demonstrated what could be achieved on a larger scale. Strong government commitment to increasing VietGAP coverage and the growing presence of international certification should ensure the spread and continuity of improved food quality and safety. Overall, the project is rated effective in achieving project outcomes and outputs.

C. Efficiency

42. Given the project’s sector financing modality, no overall project economic analysis was undertaken at appraisal. Three crop production subprojects were, however, analyzed and economic internal rates of return from 24.8% (lychee) to 28.9% (tea) were estimated. For the PCR, an economic analysis of the project has been undertaken based on project survey data. The economic internal rate of return (IRR) of the project is estimated to be 13.1%, and details of the analysis are in Appendix 15. The project is rated efficient.

D. Sustainability

43. Concerns exist over the sustainability of certain aspects of the project. The project supported some 25,000 households in becoming VietGAP certified, including financing for their initial certification. While both vegetable and fruit farmers have reported that incremental incomes

17 The only recorded cases of food poisoning were related to meat and fish (24 cases in 2009 and three in 2014). 18 Surveys undertaken for the CPMU by national consultants, as reported in the MARD project completion report.

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exceeded the cost of certification, the transition to VietGAP 2 entails higher compliance costs and adds uncertainty to farmers’ willingness to maintain certified. The sustainability of the rural public infrastructures in SAZ models depends on adequate operation and maintenance (O&M) by the local government. However, there are insufficient evidence that sufficient O&M planning or budget allocation are provided.

44. On a more positive note, for income-earning facilities in SAZs, O&M can be financed from increased earnings. The economic analysis indicates that the SAZ models yield high economic IRRs, ranging between 11% to 87%, with a median of 25.5%. While no separate financial analysis was conducted, the financial IRRs must be in a similar range as the economic IRRs, given they do not differ significantly, especially for livelihood projects. Several gender results are also likely to be sustained, such as the food safety management capacity of the female staff in government agencies, who were trained under the project. The project has also supported sustainable agricultural practices in food safety standards of female farmers who benefited from the VietGAP certification program. Overall, the project is rated less than likely sustainable because of concerns over sustainability of VietGAP certification and adequacy of O&M for the public infrastructures.

E. Development Impact

45. At the impact level, the DMF sets targets of (i) annual increases in agriculture value added of 3.0%–3.2%, and (ii) an increase in agriculture exports of 12.3%–14.3% over 2016–2020. According to the government PCR, annual average growth in agriculture value added was 3.1% from 2011 to 2015. Fruit, vegetable, and tea products supported by the project demonstrated high rates of growth, with a combined annual growth in value added of 27.8%.19 Agriculture exports grew at an average annual rate of 11.3%; and exports of fruit, vegetables, and tea grew at an average annual rate of 21.4%. If these trends continue, it is likely that the impact targets will materialize.

46. The project had a positive impact on the livelihoods of VietGAP-certified farmers and communities benefiting from the SAZ models. There are also benefits from the adoption of improved agricultural practices by farmers not directly participating in the project. Households investing in biogas digesters have benefited from reduced energy costs, time savings, and improved animal waste management, with a positive environmental impact. Positive health impacts and broader environmental benefits also resulted from the reduced and/or more effective use of fertilizers and agrochemicals introduced through VietGAP. The project’s development impact on women is significant while less certain for the poor and ethnic minorities. No effective mechanism was in place for targeting poor and ethnic minority households in the VietGAP certification program. Similarly, under the biogas development program, no clear eligibility criteria were applied for project support. PFIs reported some targeting of poor households in the delivery of biogas credit, but no evidence is available on the effectiveness of this action.

47. The reallocation of funds from the biogas and equipment expenditure category to the productive SAZ development expense category likely resulted in a positive impact. Aggregate farm household incomes are likely to have increased, given higher revenue from certified agricultural products. Both economic benefits and aggregate household income increases will, however, be tempered by a potential failure of farmers to renew VietGAP certification and by the low benefit results from the reduced scale of the biogas program.

48. Impact on gender equality. The implementation of the gender action plan is rated

19 Government of Viet Nam. Ministry of Agriculture and Rural Development. 2015. Project Completion Report for Quality

and Safety Enhancement of Agricultural Products and Biogas Development Project. Hanoi.

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successful, with 80% of 10 actions completed (including seven actions achieved and one action partially achieved) and 100% of the 10 targets achieved. Key achievements include (i) 1,173,235 women benefiting from infrastructure and equipment upgrades of SAZ models, safe agro-products certification, and the new varieties (52.2% of 2,234,295 beneficiaries); (ii) 68,020 women from 30,078 households benefiting from biogas systems installation and subsidy (50% of 136,875 beneficiaries); (iii) 7,272 women obtaining access to bank loans for the construction of biogas units (51% of 14,256 households); and (iv) women’s representation on the VietGAP standing committee and in the food safety management system units (54 female staff [35.5%] out of 152 staff) contributed to improving women’s voice in high-level policy decision making. Women’s participation in consultations contributed to policy development and created a sense of empowerment for women involved. Detailed results and impacts are in Appendix 14.

F. Performance of the Borrower and the Executing Agency

49. The government as the borrower was responsible for implementing changes in the legal and regulatory framework for food quality and safety. The CPMU, as executing agency, performed well in implementing activities for which it was responsible and developed a good working relationship with ADB to handle the significant administrative burden. The capacity of PPMUs to implement the project was variable. Financial management and procurement capacity was not adequately assessed for all provinces at appraisal. ADB review missions reported delays and shortfalls in the transfer of funds to PPMUs from provincial treasuries. The PFIs implementing the biogas credit line were largely unsupervised by the CPMU and PPMUs. No household eligibility and selection criteria were established in advance for participation in the biogas program, which reduced the poverty or indigenous peoples targeting potential.20 Although project implementation started slowly, the CPMU was able to achieve the revised output targets. The performance of the borrower and executing agency is rated satisfactory.

G. Performance of the Asian Development Bank

50. ADB supervised the project extensively, with an inception mission in October 2009, four special loan administration missions from December 2009 to August 2011, and 10 review missions from March 2010 to April 2016. The MTR took place in November 2013 and the PCR mission in January 2018. ADB changed the project officer several times between appraisal and completion, resulting in a lack of continuity in project direction. The administration of the project was, however, facilitated by assigning the project to a permanent project analyst who successfully managed project administration and developed a good working relationship with the CPMU. ADB’s review mission of August 2015 noted that the project would have benefited from ADB’s guidance on social safeguards at an earlier stage of implementation. The shortcomings in the preparation of DMF targets suggest that greater diligence could have been applied in finalizing the project design. While this deficiency was addressed at MTR and revisions on DMF targets and fund reallocations were agreed upon, the failure to reflect the revisions in the ADB system is a lapse (para. 6). This undermines the apparent performance of the project if assessed against the original targets. Overall, ADB’s performance is rated satisfactory.

H. Overall Assessment

51. Based on the assessment of the project as relevant, effective, efficient, and less than likely sustainable, the project is rated successful. The project design was complex. It involved diverse

20 Nonetheless, before biogas digester construction, all applications for project support were reviewed by district level

People’s Committees. PPMUs also reviewed a random sample of 10% and the BPMU reviewed a random sample of 5% of applications.

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activities for which multiple government institutions were responsible. Implementation problems were almost inevitable given the inclusion of 16 provinces. The definition and setting of DMF targets could have benefited from refinement: (i) the impact targets could not be measured within the time frame of the project or by the indicators specified; (ii) the four outcome indicators were vague and open to interpretation; and (iii) for some outputs, the indicators defined were inappropriate and/or inconsistent with the RRP. The delayed establishment of the PPMS also hindered assessing the achievement of outputs. Notwithstanding these issues and the initial implementation delays, the project was implemented largely as intended. It yielded achievements that exceeded the outcome targets, and the impact targets are likely to materialize by 2020.

Overall Ratings Criteria Rating Relevance Relevant Effectiveness Effective Efficiency Efficient Sustainability Less than likely sustainable Overall Assessment Successful Development impact Satisfactory Borrower and executing agency Satisfactory Performance of Asian Development Bank Satisfactory Source: Asian Development Bank.

IV. ISSUES, LESSONS, AND RECOMMENDATIONS

A. Issues and Lessons

52. Major lessons from the project are: (i) Where a project aims to operationalize new concepts (such as VietGAP and

SAZs), its technical and geographic coverage should be limited to avoid delays in implementation, ensure more effective outputs, and facilitate learning lessons. The administrative burden placed on project management hinders its ability to focus on project design and how best to achieve project benefits and impact rather than the attainment of narrower output and disbursement targets.

(ii) Farmers who obtain GAP certification can increase household incomes but may require financial assistance to initiate the process to convince them of the benefits.

(iii) The establishment of SAZs and clustering of agribusiness activities in SAZs can facilitate value chain links and greater penetration into food markets, with the associated increased incomes and profitability for SAZ stakeholders. Strong government commitment is needed to disseminate the SAZ concept.

(iv) Where project activities are clearly the responsibility of government institutions or where such institutions have a clear comparative advantage, measures should be put in place before project start-up to ensure that such institutions can be engaged under the project to prevent implementation delays.

(v) Where projects include direct financial assistance for activities being carried out by other development partners or government agencies, greater coordination is necessary to ensure consistency in the level of assistance being provided.

(vi) Inadequate assessment during project preparation of implementing agencies’ financial and human resource capacity, especially when introducing innovative technical concepts and activities, can lead to problems in project implementation.

(vii) Inappropriate design of consulting services and insufficient inputs in key areas can render consulting services ineffective in critical project activities. The incorporation of related consulting services into a single contract rather than across several contracts can improve coordination and effectiveness.

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(viii) The failure to establish an effective PPMS risks undermining the success of a project by failing to report project outputs and outcomes properly. Even where a less robust monitoring and evaluation system is set up, it should be used to guide project implementation and identify potential risks to the attainment of project objectives rather than simply record the attainment of numerical output targets.

(ix) High turnover of ADB project officers risks undermining project implementation. The project officer responsible for project design should provide guidance during project start-up to prevent misinterpretation of project design and indicators.

(x) Links to regional programs can inform and improve project implementation. B. Recommendations

53. Further action or follow-up. The legal and regulatory framework for food quality and safety is becoming more complex. The government should ensure effective oversight and implementation of the framework, and encourage coordination and cooperation between the multiple agencies responsible for food quality and safety. The government should promote awareness of food product certification among consumers, thereby generating increased demand to facilitate the spread and sustainability of safe food production. Although the project is closed, ADB should maintain participation in the working group on food safety.

54. While concerns over debt sustainability may limit the prospect for a loan project, scope for TA exists in several areas: (i) strengthening of market links between farmers in SAZs and downstream purchasers of safe produce; (ii) supporting the design and implementation of provincial FSIs; (iii) supporting agricultural research of replacement varieties and their propagation; and (iv) developing quality and safety assurance systems with multiple levels of compliance that facilitate participation by poor households.

55. The general recommendations are as follows:

(i) Where project activities are innovative, greater care should be given during project preparation to (a) the extent of geographical coverage, (b) confirmation of counterpart funding, and (c) the capacity of implementing agencies.

(ii) Agriculture and natural resources sector projects face implementation delays in their first year. The phasing of project activities and costs should reflect this reality.

(iii) DMF outputs should closely reflect the outputs defined in the RRP, and output indicators should be clearly defined to avoid misinterpretation and be quantified so that indicators can be easily monitored, and achievements assessed.

(iv) ADB should engage with the government to discuss how to avoid implementation issues such as (a) a large and complex project management system with weak capacity, (b) late release of counterpart funds, and (c) limited institutionalization of successful implementation arrangements into national systems.

(v) Where government agencies can carry out key project activities most effectively, ADB should consider relaxing procurement rules to enable such agencies to undertake those activities.

(vi) On gender action plan implementation, it is recommended that (a) ADB start to monitor plan implementation as early as possible to guide project management to use inputs from gender consultants effectively and (b) project management should assign gender focal points to take charge of gender action plan implementation to increase government ownership and capacity building.

16 Appendix 1

DESIGN AND MONITORING FRAMEWORK

Design Summary

Targets Specified at Appraisal

Targets Agreed at Midterm

Project Achievementsa

Impact Sustainable and equitable growth of the agriculture sector.

Contribution to annual increases during 2016-2020 in Viet Nam’s aggregate agriculture sector value added of about 3.0%-3.2%, and agricultural exports of about 12.3%-14.3%, in line with the government’s 5-Year Socio- Economic Development Plan.

2016-2020 period was not evaluated. Average annual growth in agriculture value added over the period 2011-2015 was equal to 3.1%. Total agricultural exports declined in 2015 but fruit and vegetables increased by 20.5%.

Outcome Improved quality and safety of agricultural products of Viet Nam.

Production, post-harvest handling, and trading of safe vegetables, fruits, and tea doubles by 2015 from the levels in 2009. About 20% of the total vegetable, fruit, and tea production processed by accredited laboratories is certified safe by 2015.

Achieved. Production of vegetables, fruits, and tea certified as safe increased from 97,334 tons in 2009 to 713,000 tons in 2015, an increase of 633%. By value, production increased from D1.6 billion in 2009 to D9.8 billion in 2015, an increase of 530%. Processing of vegetables, fruits, and tea certified as safe increased from 47,000 tons in 2009 to 212,000 tons in 2015, an increase of 351%. Partly achieved. The quantity of vegetables, fruits, and tea certified as safe increased by 493% over the 2009-2015 period. Trade in vegetables, fruits, and tea certified as safe increased by 716% from 2009 to 2015. Of total production of vegetable, fruit, and tea, 5% certified as

Appendix 1 17

Design Summary




Incidence of food poisoning related to unsafe vegetables, fruits, and tea (including gastro-enteritis diseases due to unmanaged livestock waste) decreases by 30% by 2015 from the level in 2009. Medical treatment cost due to foodborne diseases reduced by about $30 million/year by 2013.

safe by accredited laboratories in 2015. Certification by commodity: vegetable 11%; fruit 5%; and tea 3%. Vegetable is highest because supermarkets require certification. Fruits is lower because they are typically sold in local traditional markets which do not require certification, tea is the lowest since testing is typically not required for fresh tea leaves. Achievement is less than target for multiple reasons: (i) over-ambitious target; (ii) long distance between testing laboratories and production areas; (iii) high testing costs. Not assessed. No cases of food poisoning associated with vegetables, fruits, and tea were recorded between 2009 and 2015 in any province. Not assessed. Since no food poisoning has been recorded, there are no estimates on the medical treatment cost.

Outputs 1. Improved regulatory framework and fully operational quality and safety system for agro-products.

All policies and regulations on quality and safety of agricultural products assessed by 2010. 10 new decisions and/or regulations on

Partly achieved. Assessment was delayed by the late contracting of PIC in 2011. Completed by 2012. Achieved. 14 legal or regulatory documents

18 Appendix 1

Design Summary




state management of food safety from central to local level are implemented by 2013. A standing committee on food safety chaired by a vice minister is established at MARD by 2010. Specialized units on food safety are established in NAFIQAD, DCP and DARDs by 2010. A food safety monitoring system is enhanced under NAFIQAD and a provincial food safety index is introduced in 16 provinces by 2011. 130 staff in MARD and 140 in DARDs’ relevant departments are trained in food safety and quality certification systems management during 2010– 2015.

A food safety monitoring system is established under NAFIQAD and a provincial food safety index is to be used to investigate food safety in the project provinces in 2011. 130 staff in relevant agencies under MARD and DARDs departments are trained in food safety and quality certification system during 2010–2015.

were completed by 2015. Not assessed. The standing committee was not established as responsibility for food safety oversight lies with the Viet Nam Food Authority under the Ministry of Health. Achieved. Food safety units established in NAFIQAD, DCP, DPP, and DARD offices in each project province by end 2013 with 152 staff engaged, of which 54 (35.5%) female. Achieved. A crop food safety management system was established in NAFIQAD, DCP and DPP and a provincial food safety index system was established by end 2013. In four provinces, the system is no longer operational due to the system’s complexity. Achieved. 30 training sessions on food safety and quality certification with a total of 993 participants including 353 (35.5%) female participants. MARD and NAFEC with 421 staff including 144 women; DARD with 270 staff including 120 women; certified organizations with 250 staff including 73 women; laboratories with seven staff including one woman;

Appendix 1 19

Design Summary




At least 20 certification bodies for safe vegetables, fruits, and tea are accredited and servicing the project provinces during 2010–2015. 20 new GAPs standards for vegetables, fruits, and tea are tested with certified users and reviewed annually by the GAP standards committee during 2010–2015.

Five new GAP standards for vegetables, fruits, and tea are tested with certified users and reviewed annually by the GAP standards committee during 2010–2015.

and enterprises and research institutions or universities with 45 staff including 15 women. Achieved. 23 certification bodies were established. Achieved. Two national standards and one technical regulation adopted. At project closing, two draft national standards and one draft VietGAP benchmarking document submitted for review. One national standard subsequently dropped.

2. Infrastructure and facilities for quality and safety of agro-products.

Three demonstration sites (one each for safe production, primary processing or packing and trading) are established in each project province SAZ during 2010–2015. At least 35% of safe production areas covered by the project are assessed for safety and included in SAZ planning schemes by 2015. At least 25% of SAZs have market access roads, electricity, safe water, waste disposal, and safe packing, primary processing, and marketing infrastructure by 2015.

At least 2,500 ha of SAZs have market access roads, electricity, safe water, waste disposal, and safe packing, primary processing, and marketing infrastructure by 2015.

Not achieved. Specific demonstration sites not established. Safe production, processing and marketing activities undertaken in certified production areas and SAZ models. Achieved. 182,510 ha (equal to 87% of safe production areas in project provinces) included in SAZs by 2015. Achieved. 3,100 ha established as SAZ models and provided with specified facilities by 2015.

20 Appendix 1

Design Summary




At least 500 production, processing, and marketing enterprises are certified by 2012. 100 staff in each province trained on GAP, food safety system management and certification during 2010–2015. 20 pest and disease-tolerant fruit and tea varieties produced to replace susceptible varieties, and at least 35% of the total area targeted for safe variety replacement is achieved by 2015. A total of three laboratories upgraded to serve south, central and northern regions during 2010–2015.

12 pest and disease-tolerant fruit and tea varieties produced to replace susceptible varieties, and 14,000 ha of targeted crop will be replaced with pest- and disease-tolerant fruit and tea varieties by 2015.

Achieved. 27,477 households issued with certificates by 2012 of which 113,881 people benefited from certification, including 60,471 women (53.1%). Achieved. 41,416 participantsb (36.1% female) from provincial and districts governments, communes and private sector entities trained in specified subjects by 2015. Achieved. 11 new pest and disease tolerant varieties introduced. 15,230 ha replaced with disease tolerant varieties; fruit 1,757 ha tea 13,473 ha covering 112,981 households. Achieved. 12 laboratories were upgraded.

3. Biogas development for clean energy, improved agro-product safety and reduced health hazards from livestock wastes.

40,000 new household biogas units are operating in 16 provinces by 2015. Financial assistance and training provided to 40,000 farm households to ensure safe and effective biogas unit construction, operation, and safe use of biogas and slurry and waste by 2015.

Financial assistance and training provided to 20,000 farm households to ensure safe and effective biogas unit construction, operation, and safe use of biogas and slurry and waste by 2015.

Partly achieved. 30,078 units constructed across all 16 project provinces. Achieved. 30,078 households received financial assistance. 59,808 participants (32.6% female) of which 54,993 were user-household participants (30% female) trained in construction and operation of biogas units and in use of bio-waste.

Appendix 1 21

Design Summary




16 provinces have incorporated livestock into SAZ registered planning schemes by 2010. Applied research and development contracts to advise and assist all DARDs to implement demonstrations are completed, and designs for medium and large-scale biogas systems have been established and evaluated by 2011. Five medium- or large-scale biogas demonstration units have been established and evaluated by 2011 and another five units by 2012. 40,000 farm households have access to bank loans for establishment of biogas units and are able to repay.

Indicator removed. Indicator removed. Indicator removed. 12,000 farm households have access to bank loans for establishment of biogas digesters and are able to repay them.

Achieved. 14,256 households, including 7,272 (51%) female-headed households, accessed bank loans for biogas development through: Cooperative Bank 8,637; VBARD 5,619 PFI loans were used to finance 46.8% of the total of 30,078 biogas digesters constructed.

4. Effective project management support established at central and provincial levels.

CPMU established and operational with staff and facilities in MARD by Q3 2009. PMU for institutional and regulatory development established at the DCP and operational with qualified staff by Q3 2009. BPMU for biogas development established at the DLP

Achieved. CPMU established on 16 December 2008. Achieved. IPMU established on 31 March 2009. Achieved. BPMU established on 24 March 2009.

22 Appendix 1

Design Summary




and operational with qualified staff by Q3 2009. PPMU for quality and safety established and operational with qualified staff in 16 provinces by Q3 2009. Project performance and monitoring system operating effectively by 2010.

Achieved. PPMUs established between March and May 2009. Achieved. Monitoring and evaluation system established under the technical assistance on Strengthening Project Management and Developing Strategies and Options for Biogas Development Program Expansion in 2010.

BPMU = biogas project management unit, CPMU = central project management unit, DARD = Department of Agriculture and Rural Development, DCP = Department of Crop Production, DLP = Department of Livestock Production, DPP = Department of Plant Protection, GAP = good agricultural practices, ha = hectare, IPMU = institutional project management unit, MARD = Ministry of Agriculture and Rural Development, NAFEC = National Agricultural and Fisheries Extension Center, NAFIQAD = National Agro-Forestry-Fisheries Quality Assurance Department, PFI = participating financial institution, PIC = project implementation consultants, PMU = project management unit, PPMU = provincial project management unit, SAZ = safe agricultural zone, VBARD = Vietnam Bank for Agriculture and Rural Development, VietGAP = Vietnamese Good Agricultural Practices. a As of project closing, unless otherwise stated. Where appropriate, achievements are assessed against original

targets not those agreed at MTR. Data are derived from the database and progress reports of the CPMU and from MARD.

b Participants are defined as people who may have attended more than one training event rather than separate individuals.

Appendix 2 23

PROJECT COST AT APPRAISAL AND ACTUAL

($’000)

Appraisal Estimatea Actualb

Item Foreign

Exchange Local

Currency Total Cost

Foreign Exchange

Local Currency

Total Cost

A. Institutional and regulatory development

1,703.76 3,528.67 5,232.43 1,498.32

B. Development of production and consumption of safe and quality agro-products

22,784.01 53,243.16 76,027.18 81,404.33

C. Biogas development 1,177.86 21,790.71 22,968.56 18,853.95 D. Project management 838.55 5,327.10 6,165.65 8,189.09

Total (A+B+C+D) 26,504.20 83,889.60 110,393.80 109,945.69 a Includes contingencies estimated at $3.922 million and financing charges during implementation of $1.676 million. b Records of actual costs incurred do not separate out contingences. Totals for each component include financing charges during implementation of $1.643 million

distributed between components according to the share of each component in total costs less financing charges during implementation. Actual costs are not differentiated by foreign and local currency costs. Includes estimated audit fees of $216,780 for the audit of the annual project financial statements for 2009–2016 financed from ADB loan resources ($195,100) and government resources ($21,680).

Source: Asian Development Bank estimates.

24 Appendix 3

PROJECT COST BY FINANCIER

Table A3.1: Project Cost at Appraisal by Financier ADB Government PPCs Financial Institutions Beneficiaries Total

Amount % of Cost Category

Amount % of Cost

Category Amount

% of Cost Category

Amount % of Cost

Category Amount

% of Cost

Category

A. Investment Costs

1. Materials 10,991,563 90.00 0 0.00 1,221,285 10.00 0 0.00 0 0.00 12,212,847 2. Works 44,699,350 87.87 0 0.00 3,472,150 6.83 1,350,000 2.65 1,350,000 2.65 50,871,500 3. Research and development 3,238,078 90.00 359,786 10.00 0 0.00 0 0.00 0 0.00 3,597,864 4. Training, workshops, and overseas study tours

7,518,188 90.00 835,354 10.00 0 0.00 0 0.00 0 0.00 8,353,543

5. Equipment, vehicles and furniture

16,345,212 90.00 1,816,135 10.00 0 0.00 0 0.00 0 0.00 18,161,346

6. Consulting services for implementation

1,890,793 90.00 210,088 10.00 0 0.00 0 0.00 0 0.00 2,100,881

7. Design and supervision, M&E, and certification

6,367,856 90.00 707,540 10.00 0 0.00 0 0.00 0 0.00 7,075,396

8. Project auditing 467,244 90.00 51,916 10.00 0 0.00 0 0.00 0 0.00 519,160 9. Duties and taxes 86,743

Subtotal (A) 91,518,283 88.95 3,980,819 3.87 4,693,435 4.56 1,350,000 1.31 1,350,000 1.31 102,892,537

B. Recurrent Costs

1. Incremental staff remuneration for institutional and regulatory development

263,960 31.00 587,525 69.00 0 0.00 0 0.00 0 0.00 851,485

2. Incremental staff remuneration for project management

723,447 31.00 670,213 28.72 940,039 40.28 0 0.00 0 0.00 2,333,700

3. Operations and maintenance 818,463 31.00 986,150 37.35 835,591 31.65 0 0.00 0 0.00 2,640,203

Subtotal (B) 1,805,870 31.00 2,243,888 38.52 1,775,630 30.48 0 0.00 0 0.00 5,825,388

Total Base Costs (A+B) 93,324,154 85.84 6,224,706 5.73 6,469,065 5.95 1,350,000 1.24 1,350,000 1.24 108,717,925

C. Contingencies 0

D. Financial Charges during Implementation

1,675,888 100.00 0.00 0.00 0.00 0.00 1,675,888

Total Project Costs (A+B+C+D) 95,000,042 86.06 6,224,706 5.64 6,469,065 5.86 1,350,000 1.22 1,350,000 1.22 110,393,813

% Total Project Cost 86% 6% 6% 1% 1% 100%

ADB = Asian Development Bank, M&E = monitoring and evaluation, PPC = Provincial Peoples’ Committee. Source: Asian Development Bank.

Appendix 3 25

Table A3.2: Project Cost at Completion by Financier

ADB Government PPCs Financial Institutions Beneficiaries Total

Amount

% of Cost Category





A. Investment Costs

1. Materials 10,933,450 90.00 0 0.00 1,215,010 10.00 0 0.00 0 0.00 12,148,460 2. Works 51,437,278 83.58 61,281 0.10 4,131,663 6.71 2,954,854 4.80 2,954,854 4.80 61,539,929

3. Research and development

1,583,671 90.00 175,963 10.00 0 0.00 0 0.00 0 0.00 1,759,634

4. Training, workshops, and overseas study tours

6,194,195 89.92 179,049 2.60 515,402 7.48 0 0.00 0 0.00 6,888,645

5. Equipment, vehicles and furniture

11,517,228 90.00 1,060,414 8.29 219,278 1.71 0 0.00 0 0.00 12,796,920

6. Consulting services for implementation

1,583,075 90.00 175,897 10.00 0 0.00 0 0.00 0 0.00 1,758,972

7. Design and supervision, M&E, and certification

5,408,461 90.00 88,024 1.46 512,914 8.54 0 0.00 0 0.00 6,009,399

8. Project auditing 195,100 90.00 21,678 10.00 0 0.00 0 0.00 0 0.00 216,778 9. Duties and taxes

Subtotal (A) 88,852,458 86.17 1,762,306 1.71 6,594,266 6.39 2,954,854 2.87 2,954,854 2.87 103,118,737

B. Recurrent Costs

Subtotal (B) 1,606,195 30.99 1,288,060 24.85 2,289,350 44.17 0 0.00 0 0.00 5,183,604

Total Base Costs (A+B)

90,458,653 83.52 3,050,365 2.82 8,883,616 8.20 2,954,854 2.73 2,954,854 2.73 108,302,341

C. Contingencies

D. Financial Charges during Implementation

1,643,352 100.00 0 0.00 0 0.00 0 0.00 0 0.00 1,643,352

Total Project Costs (A+B+C+D)

92,102,005 83.77 3,050,365 2.77 8,883,616 8.08 2,954,854 2.69 2,954,854 2.69 109,945,694

% Total Project Cost 84% 3% 8% 3% 3% 100%

ADB = Asian Development Bank, M&E = monitoring and evaluation, PPC = Provincial Peoples’ Committee. Source: Asian Development Bank.

26 Appendix 4

DISBURSEMENT OF ADB LOAN PROCEEDS

Table A4.1: Annual and Cumulative Disbursement of ADB Loan Proceedsa ($ million)

Yeara Annual Disbursement Cumulative Disbursement

Amount ($ million)

% of Total

Amount ($ million)

% of Total

2009 5.40 5.9 5.40 5.9 2010 0.43 0.5 5.83 6.3 2011 7.49 8.1 13.32 14.5 2012 25.77 28.0 39.09 42.4 2013 19.15 20.8 58.23 63.2 2014 18.21 19.8 76.44 83.0 2015 5.52 6.0 81.96 89.0 2016 11.55 12.5 93.51 101.5 2017 (1.41) (1.5) 92.10 100.0 Total 92.10 100.0 ADB = Asian Development Bank. a Includes disbursements to advance accounts. Source: Asian Development Bank.

Table A4.2: Projected Annual and Cumulative Disbursement of ADB Loan Proceeds

($ million)

Year Annual Disbursement Cumulative Disbursement

Amount ($ million)

% of Total Amount

($ million) % of Total

2009 10.63 11.2 10.63 11.2 2010 14.45 15.2 25.08 26.4 2011 14.73 15.5 39.81 41.9 2012 28.57 30.1 68.38 72.0 2013 26.62 28.0 95.00 100.0 2014 0.00 0.0 95.00 100.0 2015 0.00 0.0 95.00 100.0 2016 0.00 0.0 95.00 100.0 2017 0.00 0.0 95.00 100.0 Total 95.00 100.0 ADB = Asian Development Bank. Source: Asian Development Bank.

Appendix 4 27

Figure A4.1: Projection and Cumulative Disbursement of ADB Loan Proceeds

($ million)

Source: Asian Development Bank.

0.00

20.00

40.00

60.00

80.00

100.00

2009 2010 2011 2012 2013 2014 2015 2016 2017

$ m

illio

n Projected Annual Disbursement

Actual Annual Disbursement

Projected Cumulative Disbursement

Actual Cumulative Disbursement

28 Appendix 5

CONTRACT AWARDS OF ADB LOAN PROCEEDS

Table A5.1: Annual and Cumulative Contract Awards of ADB Loan Proceeds ($ million)

Year Annual Contract Awards Cumulative Contract Awards

Amount ($ million)

% of Total Amount

($ million) % of Total

2009 0.00 0.0 0.00 0.0 2010 0.77 0.8 0.77 0.8 2011 5.58 6.2 6.34 7.0 2012 14.76 16.3 21.10 23.3 2013 33.71 37.3 54.80 60.6 2014 14.97 16.5 69.77 77.1 2015 14.54 16.1 84.31 93.2 2016 4.65 5.1 88.96 98.3 2017 1.50 1.7 90.46 100.0 Total 90.46 100.0

ADB = Asian Development Bank. Source: Asian Development Bank.

Figure A5.1: Projection and Cumulative Contract Awards of ADB Loan Proceeds ($ million)

Source: Asian Development Bank.

0.00

20.00

40.00

60.00

80.00

100.00

120.00

2009 2010 2011 2012 2013 2014 2015 2016 2017

$ m

illio

n

Projected Annual Contract Awards

Actual Annual Contract Awards

Projected Cumulative ContractAwards

Actual Cumulative Contract Awards

Appendix 6 29

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Covenant

Reference in Loan

Agreement

Status of Compliance

The Borrower shall: (i) maintain, or cause to be maintained, separate accounts for the Project; (ii) have such accounts and related financial statements audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; (iii) furnish to ADB, as soon as available but in any event not later than six (6) months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors' opinion on the use of the Loan proceeds and compliance with the financial covenants of this Loan Agreement as well as on the use of the procedures for imprest account/statement of expenditures), all in the English language; and (iv) furnish to ADB such other information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request.

Section 4.02

Complied with. Final audited accounts and financial statements and report of auditors were submitted on 30 December 2016.

The Borrower shall enable ADB's representatives to inspect the Project, the Goods and Works financed out of the proceeds of the Loan, and any relevant records and documents.

Section 4.03 Complied with.

Except as ADB may otherwise agree, the Borrower immediately after the Effective Date shall: (i) establish two or more FGIAs, as may be needed, one to be managed by CPMU and others by the FIs (for the credit facility under Part 3(ii) of the Project), at commercial banks acceptable to ADB; and (ii) cause each IA to establish and manage an SGIA in each Project Province or Ha Noi, as may be applicable in the case of BPMU and IPMU, at commercial banks acceptable to ADB. The maximum amount to be deposited into the CPMU’s FGIA account shall not exceed the lower of (i) the estimated six (6) months’ expenditure, or (ii) the equivalent $8,285,000, and the maximum amount to be deposited into the FIs’ FGIA accounts shall not exceed the lower of (i) the estimated six (6) months’ expenditure, or (ii) the equivalent of $1,215,000. The maximum amount to be deposited into each SGIA for project implementation purposes shall not exceed the lower of (i) the estimated six (6) months’ expenditure, or (ii) equivalent of $300,000.

Schedule 3 para. 6(a)

Complied with.

Each disbursement under the Project shall be made, and each imprest account for the project shall be established, managed, replenished and liquidated in accordance with the Loan Disbursement Handbook

Schedule 3 para. 6(b)

Complied with.

30 Appendix 6

Covenant

Reference in Loan

Agreement


and the relevant financial regulations of the Borrower. ADB’s statement of expenditures procedures shall be used for reimbursement of eligible expenses for, and liquidation of advances provided in to, each of the imprest accounts (including SGIAs) established under the project, in accordance with ADB’s Loan Disbursement Handbook and detailed arrangements agreed upon between the Borrower and ADB. Any individual payment to be reimbursed or liquidated under ADB’s statement of expenditures procedure shall not exceed $100,000 equivalent. Notwithstanding any other provision of this Loan Agreement, no withdrawal shall be made from the Loan Account for Part 3(ii) of the Project (credit facility for biogas investments) until: (a) the Borrower shall have caused the FIs to enter into a Project Agreement with ADB in terms and conditions proposed by ADB; and (b) the Borrower shall have entered into a Subsidiary Loan Agreement with the FIs concerned with terms and conditions satisfactory to ADB.

Schedule 3 para. 7

Complied with.

Except as ADB may otherwise agree, Goods and Works shall only be procured on the basis of the methods of procurement set forth below: National Competitive Bidding Shopping Direct Purchase The methods of procurement are subject to, among other things, the detailed arrangements and threshold values set forth in the Procurement Plan. The Borrower may only modify the methods of procurement or threshold values with the prior agreement of ADB, and modifications must be set out in updates to the Procurement Plan.

Schedule 4 para. 3

Complied with.

Except as ADB may otherwise agree, and except as set forth in the paragraph below, the Borrower shall apply quality- and cost-based selection for selecting and engaging consulting services.

Schedule 4 para. 5

Complied with.

The Borrower shall apply the following methods for selecting and engaging the specified consulting services, in accordance with, among other things, the procedures set forth in the Procurement Plan: Least-Cost Selection for Project auditing

Schedule 4 para. 6

Complied with.

The Borrower shall ensure that all Goods and Works procured (including without limitation all computer hardware, software and systems, whether separately procured or incorporated within other Goods and services procured) do not violate or infringe any industrial property or intellectual property right or claim of any third party.


Complied with.

The Borrower shall ensure that all contracts for the Schedule 4 Complied with

Appendix 6 31

Covenant

Reference in Loan

Agreement


procurement of Goods and Works contain appropriate representations, warranties and, if appropriate, indemnities from the contractor or supplier with respect to the matters referred to in subparagraph (a) of this paragraph.

para. 7(b)

The Borrower shall ensure that all ADB-financed contracts with consultants contain appropriate representations, warranties and, if appropriate, indemnities from the consultants to ensure that the consulting services provided do not violate or infringe any industrial property or intellectual property right or claim of any third party.

Schedule 4 para. 8

Complied with

As the Project Executing Agency, MARD shall have the overall responsibility for the implementation of the Project.

Schedule 5 para. 1

Complied with.

The CPMU established in APMB shall be responsible for overall Project coordination and management activities under the Project.

Schedule 5 para. 2

Complied with.

The IPMU established in DCP shall be responsible for the implementation of activities related to institutional and regulatory development under Part 1 of the Project. The BPMU established in DLP shall be responsible for the management of all activities related to biogas development under Part 3 of the Project, except for Part 3 (ii) which will be carried out by the FIs concerned. The PPMUs established in DARD of each Project Province shall be responsible, at the provincial level, for (i) management of quality and safety enhancement activities under Part 2 of the Project, and (ii) implementation of all biogas development related activities under Part 3 of the Project. Each of BPMU, IPMU and PPMUs shall act in an IA capacity under the Project. The Borrower shall ensure that sufficient and adequate staff at the central, provincial, district, and commune level are provided in a timely manner in each Project Province to facilitate the implementation of food safety regulations and policies.

Schedule 5 para. 3

Complied with.

In each Project Province where investments in safe agriculture infrastructure are to be undertaken under the Project, the Borrower shall ensure that the PPC concerned has completed the identification, designation, and registration of SAZs prior to commencement of any physical construction activities.


Complied with

The Borrower shall also ensure that (i) units for food safety monitoring, information, and communication are piloted at the National Agro-Forestry and Fisheries Quality Assurance Department; (ii) food safety units are piloted at DCP; and (iii) subunits for food safety are piloted at DARDs of the Project Provinces in accordance with the Borrower's

Schedule 5 para. 4(b)

Complied with.

32 Appendix 6

Covenant

Reference in Loan

Agreement


National Action Plan for Food Safety and related implementation regulations. The Borrower shall also ensure that counterpart staff are provided at the central, provincial and district level in the Project Provinces in a timely manner to facilitate the implementation of food safety regulations and policies by either reassigning existing staff, adding responsibilities to existing staff, or identifying new staff to carry out the tasks of food safety specialists and food safety facilitators.

Schedule 5 para. 5

Complied with.

The Borrower shall ensure that each Subsidiary Loan, unless otherwise agreed by ADB, (i) is denominated in Dong; (ii) has a maturity, grace period, and interest rate to be determined by the Borrower in accordance with the Borrower's lending practices applicable to the onlending of funds externally borrowed by the Borrower; and (iii) is made under such other terms and conditions acceptable to ADB. The Borrower shall also ensure that each FI utilizes the proceeds of the relevant Subsidiary Loan for the sole purpose of onlending Subloans to eligible household beneficiaries for construction of biogas digesters under the Project.

Schedule 5 para. 6

Complied with.

For each biogas digester construction project to be financed by a Subloan under the Project, the Borrower shall cause the relevant FI to ensure that: (i) such Subloan is made in strict accordance with the eligibility criteria, including technical and environmental criteria, established by and agreed between the Borrower and ADB; (ii) financing is provided at these ratios: 81.8% of the total project cost to be financed by the proceeds of the relevant Subsidiary Loan, 9.1% by FI's own funds, and 9.1% by the relevant household through the provision of local materials and/or labor of equivalent value; (iii) the related biogas digester is constructed and proposed, and is certified in accordance with the relevant standards, including technical and environmental standards, established by and agreed between the Borrower and ADB under the Project; and (iv) technical and environmental criteria related to biogas are added to respective FI's standard loan eligibility criteria to ensure the targeted clientele under the Project is reached. The Borrower shall ensure that: (i) each Subloan has an interest rate as agreed by MOF and the FI concerned in the relevant Subsidiary Loan; (ii) such interest rate is determined based on the rate of the relevant Subsidiary Loan plus a margin agreed between MOF and the FI concerned; and (iii) each Subloan has such other terms and conditions as the relevant FI may have in extending loans to

Schedule 5 para. 7

Overall: partially complied with. Clause (i): partially complied with. No household eligibility and selection criteria were established ex ante for participation in the biogas program. However, prior to biogas digester construction, all applications for project support were reviewed at the district level. In addition, PPMUs undertook a review of a random sample of 10%, and BPMU undertook a review of a random sample of 5% of applications. Non-eligible households/applications were precluded from receiving project financial assistance and/or project-financed loans. Clause (ii): complied with. Withdrawal applications (for replenishment) included reports on number of sub-loans (with a breakdown of contributions of ADB, FIs, and beneficiaries). In some cases, ADB’s contribution is less than 81.8%. The fact that FI and beneficiary’s contributed

Appendix 6 33

Covenant

Reference in Loan

Agreement


customers from time to time in the ordinary course of its business. In determining the applicable interest rate for a Subloan, the Borrower shall take into consideration, and hence ensure, that eligible households have access to affordable financial sources for construction of biogas digesters.

more than the stipulated share should not weigh against the compliance status. Subsidiary Loan Agreements between the MOF and each PFI specifying terms and conditions under (i) to (iii) were completed on 31 December 2009.

The Borrower shall ensure that household beneficiaries in the Project Provinces, except for those who have received financial assistance under the Biogas Program are eligible for Subloans under the Project.

Schedule 5 para. 8

Complied with. Covenant amended on 6 July 2010 to read: “The Borrower shall ensure that all eligible households in the project provinces, including those subject to receive financial assistance through ADB and other funding agencies, will be allowed to apply for subloans under the project”. Following this, all households, including those in receipt of financial assistance, were eligible for borrowing

The Borrower shall ensure that the implementation of the Biogas Program is further expanded to include the Project Provinces of Ben Tre, Ho Chi Minh, Binh Thuan, Ninh Thuan, Da Nang, and Lam Dong.

Schedule 5 para. 9

Complied with.

Without any prejudice to the provisions of Section 4.02 of the Loan Agreement, the Borrower shall ensure that: (i) all parties involved in Project implementation, including MOF and the FIs, maintain records and accounts for the project, which shall clearly identify the Goods, Works, and consulting services financed by the Loan proceeds, financing resources received, expenditures incurred, and the use of local funds; and (ii) these records and accounts are established and maintained in accordance with sound accounting principles and internationally accepted accounting standards. The Borrower shall cause CPMU to review and consolidate these accounts and have them audited annually in accordance with sound accounting practices by auditors acceptable to ADB. The Borrower shall also ensure that the audit report produced for each financial year under the project includes: (i) a statement verifying whether or not the funds disbursed by ADB have been used for the purpose for which such funds were disbursed; and

Schedule 5 para. 10

Complied with.

34 Appendix 6

Covenant

Reference in Loan

Agreement


(ii) the auditor's opinion on the use of imprest accounts and statement of expenditures procedure under the Project. The Borrower shall cause copies of the relevant audited accounts and auditor's report to be submitted to ADB within six (6) months after the end of each financial year under the project. The Borrower shall also cause CPMU to prepare consolidated quarterly reports, elaborating progress made, problems encountered during the relevant period, steps taken or proposed to remedy the problems, proposed program of activities, and progress expected for the next quarter. Within three (3) months of physical completion of the Project, the Borrower shall cause CPMU to submit to ADB a completion report, which shall describe, among other things as may be required by ADB, the achievements in relation to the project's expected impact, outcome and outputs, and shall be in the form acceptable to ADB. The Borrower shall ensure that the portfolio of the Subloans shall be accounted for and reported separately by the FIs concerned in such form and at such frequency as may be required by ADB.

Schedule 5 para. 11

Complied with. Although no separate reports from FIs were submitted, withdrawal applications (for replenishment) included reports on number of sub-loans, with a breakdown of contributions of ADB, FIs, and beneficiaries.

To monitor the progress of the Project implementation, the Borrower shall cause CPMU to establish and maintain a PPMS, which shall be designed to permit adequate flexibility to adopt remedial action regarding Project design, schedules, activities, and development impacts. The Borrower shall cause CPMU to ensure that the PPMS for the Project adopts gender disaggregated indicators and includes the following: (i) physical progress of the implementation of Project activities; (ii) number of areas of SAZs with soil and water monitoring data; (iii) number of models for safe agricultural production, the areas established, and number of farmers involved; (iv) production amount and value of certified safe agro-products; (v) volume of certified safe agro-products traded in wholesale markets and supermarkets; (vi) number and type of laboratory tests completed on agro-product quality and safety; 9vii) number of constructed biogas plants and planned livestock production areas; (viii) increases in farm incomes; (ix) reduction in poverty incidence; and (x) social development.

Schedule 5 para. 12

Partially complied with. The defined PPMS was not fully established. A monitoring and evaluation system was established under Part A of the technical assistance on Strengthening Project Management and Developing Strategies and Options for Biogas Development Program Expansion in 2010. A consulting package to assist CPMU in establishing the PPMS was awarded in December 2013.

Within six (6) months from the Effective Date, the Borrower shall cause CPMU to refine the PPMS framework, confirm achievable targets as well as

Schedule 5 para. 13

Complied with late. PPMS consulting contract not

Appendix 6 35

Covenant

Reference in Loan

Agreement


monitoring and recording arrangements, and establish relevant systems and procedures. The Borrower shall also cause each IA to report to the CPMU, at a required frequency, the baseline and progress data, including annual reporting on the environmental management plan of the Project. The Borrower shall further cause the CPMU to analyze and consolidate the reported data through its management information system and then report the outcome to ADB through quarterly progress reports.

awarded until December 2013.

The performance of the Project shall be reviewed at least twice a year jointly by the Borrower and ADB. Each such review shall: (i) assess implementation performance, achievement of progress towards project outcomes and outputs, and financial progress; (ii) identify issues and constraints affecting implementation; and (iii) work out a time-bound action plan for the resolution of issues and constrains so identified. The Borrower, jointly with ADB, shall undertake a mid-term review to assess implementation status and take appropriate measures, including modification of scope and implementation arrangements, and reallocation of the Loan proceeds, as appropriate, in order to achieve the Project’s objectives.

Schedule 5 para. 14

Complied with.

The Borrower shall ensure that in all Project Provinces information dissemination, education and mass communication activities are carried out in a timely manner to promote the replication of safe agriculture production models and biogas technology application and utilization.

Schedule 5 para. 15

Complied with.

The Borrower shall ensure that (i) the Environmental Assessment and Review Framework, prepared for the Project and agreed by the Borrower and ADB, guides the environmental assessment and institutional responsibilities for the biogas subprojects to be identified and financed through the Sub-loans; (ii) Project activities do not cause significant environmental impact or concerns; (iii) any potential adverse impact on the environment is managed through screening of final investment plans, adopting appropriate mitigation measures and environmental monitoring during Project implementation; and (iv) in implementing the Project, the Borrower's relevant environment-related laws and regulations as well as ADB's Environment Policy (2002) are followed. If there is any discrepancy between the Borrower's laws and regulations, and the requirements of ADB's Environment Policy, ADB's policy shall apply. The Borrower shall also ensure that MARD, following relevant internal processes of the Borrower, carries out relevant environmental assessment prior to commencement

Schedule 5 para. 16

Complied with.

36 Appendix 6

Covenant

Reference in Loan

Agreement


of any civil works under the Project. The Borrower shall further cause MARD to ensure that MARD's assessment (i) meets the requirements of the Environmental Assessment and Review Framework, (ii) includes details of relevant local consultation carried out, and (iii) is available, in the local language, to the public and other interested parties upon request at the PPMU office of each Project Province before the relevant Project activities start. The Borrower shall ensure, and cause MARD and each IA to ensure, that: (i) all activities to be financed out of the Loan proceeds have no resettlement impact; (ii) construction of new facilities under the Project is carried out on existing sites on public land, free from all encumbrances, habitation, dispute, or controversy; and (iii) proposals for the Works include confirmation that no land acquisition or resettlement shall be required under the Project. In the event of any unforeseen land acquisition or involuntary resettlement, the Borrower shall immediately inform ADB and prepare the necessary planning documents in compliance with ADB's Involuntary Resettlement Policy (1995). If there is any discrepancy between the Borrower’s laws and regulations, and the requirements of ADB's Involuntary Resettlement Policy, ADB's Policy shall apply.

Schedule 5 para. 17

Complied with.

The Borrower shall ensure, and cause MARD, each IA, and each FI to ensure that all activities to be financed out of the Loan proceeds: (i) shall not adversely affect indigenous peoples, female-headed households, disabled, elderly, or other similarly vulnerable groups; and (ii) shall give special consideration to the participation and practices of ethnic minority population in compliance with ADB's Policy on Indigenous Peoples (1998). In the event that indigenous people are beneficiaries of, or otherwise affected by, any biogas subproject financed out of the Loan proceeds, the Borrower shall also ensure, and cause MARD, each IA, and each FI to ensure that: (i) all ethnic minority groups in and around proposed subproject locations are consulted on their willingness to participate, suitability of the sites, and relevant subproject activities; (ii) such ethnic minority groups are given equal opportunities to participate in relevant subproject activities including training; and (iii) the outcome of relevant consultation carried out is summarized in the relevant subproject investment plans or subproject feasibility study.

Schedule 5 para. 18

Complied with.

The Borrower shall cause MARD to ensure that: (i) the contracts for relevant Works contain provisions prohibiting use of child labor and differentiation in

Schedule 5 para. 19

Complied with.

Appendix 6 37

Covenant

Reference in Loan

Agreement


wages between male and female workers for work of equal value, in accordance with the relevant laws and regulations of the Borrower; (ii) such contracts also include mandatory provisions on health, sanitation, and appropriate working conditions; and (iii) contractors and their workers observe local protocols concerning acceptable behavior toward the local population. The Borrower shall ensure that: (i) the gender action plan, prepared for the Project in agreement with the Borrower, is fully implemented in a timely manner; and (ii) that adequate resources are allocated for this purpose. In particular, the Borrower shall ensure that the timeframe for each of the measures specified in the gender action plan is determined at the inception stage of Project implementation and submitted for ADB’s approval.

Schedule 5 para. 20

Complied with.

The Borrower shall comply with, and shall cause MARD, each IA, and each FI to comply with ADB's Anticorruption Policy (1998, as amended to date) and ADB's policy relating to Enhancing the Asian Development Bank's Role in Combating Money Laundering and the Financing of Terrorism (2003). The Borrower (i) acknowledges ADB's right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project; (ii) agrees to cooperate fully with, and to cause MARD, each IA, and each FI to cooperate fully with any such investigation and to extend all necessary assistance, including providing access to all relevant books and records, as may be necessary for the satisfactory completion of any such investigation; and (iii) agrees to refrain, and cause MARD, each IA, and each FI to refrain, from engaging in money laundering activities or financing of terrorism and shall allow, and cause MARD, each IA, and each FI to allow, ADB to investigate any violation or potential violation of these undertakings.

Schedule 5 para. 21

Complied with.

Without limiting the generality of Sched. 5, para. 21, the Borrower shall (i) ensure that MARD and each IA conduct periodic inspections on the contractors’ activities related to fund withdrawals and settlements, and (ii) ensure and cause MARD and each IA to ensure that all contracts financed by ADB in connection with the Project include provisions specifying the right of ADB to audit and examine the records and accounts of all contractors, suppliers, consultants, and other service providers as they relate to the Project.

Schedule 5 para. 22

Complied with.

To deter corruption and increase transparency, the Borrower shall maintain the website to disclose information about public procurements, including

Schedule 5 para. 23

Complied with.

38 Appendix 6

Covenant

Reference in Loan

Agreement


those related to the Project. For each contract, the website shall include information on, among others, the list of participating bidders, name of the winning bidder, basic details on bidding procedures adopted, amount of contract awarded, and the list of goods/services, including consulting services, procured. In addition to the web-based disclosure, stakeholders, which include civil society and non-governmental organizations, shall be provided by the Borrower with detailed information on procurement on public notice boards in their respective areas.

ADB = Asian Development Bank, APMB = Agricultural Project Management Board, BPMU = biogas project management unit, CPMU = central project management unit, DARD = Department of Agriculture and Rural Development, DCP = Department of Crop Production, DLP = Department of Livestock Production, FGIA = first generation imprest account, PFI = participating financial institution, IA = implementing agency, IPMU = institutional project management unit, MARD = Ministry of Agriculture and Rural Development, MOF = Ministry of Finance, PPC = Provincial People’s Committee, PPMS = project performance monitoring system, PPMU = provincial project management unit, SAZ = safe agricultural zone, SGIA = second generation imprest account.

Appendix 7 39

FOOD QUALITY AND SAFETY STANDARDS AND REGULATORY FRAMEWORK

A. The Development of Vietnamese Good Agricultural Practices

1. Vietnamese Good Agricultural Practices (VietGAP) is the application of production methods to produce clean, safe agricultural products, especially fresh fruit and vegetables.1 Before VietGAP was established, there had been a number of agricultural production safety programs2 for fruit and vegetables that were adopted by farmers but with regional variations in the way the associated regulations were implemented. Also, because the government had not established a unit to be responsible for testing and certification nor any incentive mechanism to encourage producers, the production of clean, safe agricultural produce was not effectively developed. In some areas, it appeared for a while then faded and was forgotten. In 2004, the Vietnam Fruit Association participated in the "Strengthening Competitiveness" project of the Vietnam Chamber of Commerce and Industry and organized a visit to Thailand to review the American-Thailand affiliate programs as well as good agricultural practices (GAP) links in western Thailand. At that time, Thailand was implementing the European system of good agricultural practices (EUREPGAP). Also in 2004, the Vietnam Fruit Association together with the Gardening Association and the Vietnam Chamber of Commerce and Industry introduced EUREPGAP at a workshop in Ho Chi Minh City. A year later, GAP programs were setup in six provinces in agricultural areas located by the Tien River. These programs were well run and yielded encouraging results in all six provinces. In November 2007, the Gardening Association (sponsored by Syngenta Vietnam) undertook a review of GAP implementation in Malaysia. Following the visit, the delegation submitted a report to the Ministry of Agriculture and Rural Development (MARD) recommending the immediate establishment of GAP in Viet Nam.

2. On 28 January 2008,3 MARD established the National Agro-Forestry-Fisheries Quality Assurance Department (NAFIQAD). NAFIQAD was given wide responsibility for formulation and implementation of regulations to be guided by the newly developed food safety and agricultural health action plan. Having been established later than EUREGAP, GlobalGAP and the GAP programs of other Asian countries, VietGAP had the advantage of learning from their experiences and was applied more rapidly and effectively. VietGAP principally covers the production of fruit, vegetables, tea, coffee, and rice. The key aspects of production covered by VietGAP4 are (i) site assessment and selection; (ii) planting material; (iii) land management; (iv) fertilizers and additives; (v) irrigation water; (vi) crop protection and use of chemicals; (vii) harvest and post-harvest handling; (viii) waste management and remediation; (ix) labor health and safety; (x) records, record-keeping, traceability, and product recall; (xi) internal audit; and (xii) complaints and complaint resolution. In July 2008,5 the government required that all agricultural produce should meet VietGAP standards by 2015. However, in the light of difficulties in reaching this goal, it was cancelled in January 2015.6

1 Vietnam Certification Center. VietGAP standard; and D. B. Khoa et al. 2015. Development of Good Agricultural

Practices (GAPs) Models for Tea, Rice and Vegetables in Vietnam. Food and Fertilizer Technology Center for the Asian and Pacific Region. 8 December.

2 Prime Minister’s Decision on the approval of a national action plan on the assurance of food safety to 2010 No. 43/2006/QD-TTg, dated 20 February 2006; and Prime Minister’s Directive on the implementation of urgent methods to assure food hygiene and safety No 06/2007/CT-TTg, dated 28 March 2007.

3 Decree of the Minister of Agriculture and Rural Development No. 379/QD-BNN-KHCN dated 28 January 2008. 4 Decision of the Minister of Agriculture and Rural Development No. 99 / 2008/QD-BNN dated 15 October 2008. 5 Decision of the Minister of Agriculture and Rural Development No. 107/2008/QD-TTG) dated 30 July 2008. 6 Decision of the Minister of Agriculture and Rural Development No.01/2015/QD-TTG 9 January 2015.

40 Appendix 7

B. GAP Standards Issued or Drafted during Project Implementation

3. The following standards were issued during project implementation:7

(i) BasicGAP: MARD Decision No. 2998/QD-BNN-TT BasicGAP Guidance for Vegetable Production in Vietnam. BasicGAP was prepared with the support of the Japanese International Cooperation Agency and adopted in 2014. BasicGAP covers only farm production conditions (soil and water) and husbandry techniques but does not cover environment and human health as VietGAP does.

(ii) National Technical Regulation (TR) QCVN 01-132:2013/BNNPTNT Fresh Vegetable, Fruit, and Tea; Conditions for Ensuring Food Safety in Production and Primary Processing.

(iii) National Standard 9016:2011 on the Collection and Sampling of Fresh Vegetables On-farm

(iv) National Standard 9017:2011 on the Collection of Sampling on Fresh Fruit On-Farm.

4. The following standards were in draft form at project closing:

(i) VietGAP 2 for International Benchmarking against Global Food Safety Initiative (GFSI).

(ii) National Standard for Organic Production. This was submitted to the Ministry of Science and Technology (MST) in 2015, following which MST prepared a draft document. At the time of the PCR, the status was unknown.

(iii) National Standard on the Collection and Sampling of Fresh Tea Buds Off-farm. This was submitted to MST but MST decided that a broader standard covering several crops was required. At the time of the PCR, this is under preparation.

5. In 2011, the project implementation consultants (PIC) made a recommendation to the institutional project management unit (IPMU) for a two-tier GAP system which targeted specific levels of food safety within a three-tier food market. The document also provided the Department of Crop Production (DCP) with information on food safety management systems in Australia, Thailand, and United Kingdom. Based on the comparison, the VietGAP standard was revised to make it equivalent to other international GAP standards. The existing VietGAP standard had only 65 control criteria, but for international harmonization it needed to be widened to include criteria relating to worker health and safety (welfare) and greater environmental concerns with improved transparency and traceability practices. The revised and improved VietGAP was termed VietGAP Version 2 (VietGAP 2) and had 141 control criteria for fruit and vegetables of which 51 are considered critical and compliance is compulsory, and 138 control criteria for tea, if the crop is irrigated, of which 43 are considered critical and, therefore, compulsory. The PIC assisted IPMU to draft a Technical Regulation which was based on the existing VietGAP standard but focusing only on food safety and traceability which made it easier for small farmers to comply. The National Technical Regulation QCKTQG 07/2013/TT-BNNPTNT 01-132:2013/MARD "National Technical Regulation on vegetables, fruits, and tea buds related to food safety in primary production and processing” was issued by MARD on 22 January 2013.

6. The IPMU requested the PIC to look at the possibility of benchmarking VietGAP 2 to other international GAP standards. The team undertook the review and identified a number of issues that needed to be addressed to achieve mutual recognition (such as standards ownership,

7 Central Project Management Unit. 2016. Progress Report IV 2016, Part 2. Paras. 3-6.

Appendix 7 41

transparency, internationally recognized ISO accreditation, translations, evidence of audits, a minimum of one year in operation, etc.). Although the VietGAP 2 standard as documented would pass a benchmarking exercise, according to the PIC the actual system of certification, which includes the accreditation and recognition of the certification bodies and that of governance, would fail to meet international requirements. This is being addressed by MST. The government approved VietGAP 2 as a National Standard in June 2017.

C. Legal Instruments Prepared

7. The PIC supported the government in preparing the following legal instruments:

(i) The Decree on the Management of Fertilizer Production and Trading. (i) Two documents related to sampling fresh vegetables and fruits in the field in

compliance with Viet Nam standards. (ii) Two technical regulations on conditions to comply with food safety requirements

for producers and primary processors of fresh vegetables and fruits. (iii) A draft decision to be issued by the Prime Minister related to a number of support

policies for the application of GAP standards in crop, livestock, and fisheries production.

D. Regulatory Framework Documents Issued or Drafted

No Content Status

A. Directives, Decisions and Circulars

1 Directive on 15/12/2009 4136/CT-BNN-TT on the launch of the VietGAP standard for the production of vegetables, fruits, and tea

MARD issued Directive 4136/CT-BNN-TT on 15/12/2009

2 Circular 75/2011/TT-BNNPTNT dated 31/10/2011 regulations on the registration and certification of food advertisements and its contents that are under the management of the Ministry of Agriculture and Rural Development

MARD issued Circular 75/2011/TT-BNNPTNT on 31/10/2011

3 Circular dated 3/11/2011 76/2011/TT-BNNPTNT; the list of permitted levels of food irradiation relating to the maximum dose allowed for food under the management of the Ministry of Agriculture and Rural Development


4 Prime Minister’s Decision 01/2012/QD-TTg issued 12/01/2012 on policy for support in VietGAP implementation in production of crop, animal husbandry, and fisheries

Government issued Decision 01/2012/QD-TTg on 12/01/2012

5 Circular on Regulations on the certification of fishery products, farming, livestock production and processing in accordance with VietGAP

DCP Circular 48, issued on 26 September 2012

6 MARD Circular listing products for support in VietGAP implementation under Prime Minister’s Decision 01/2012/QD-TTg

MARD issued as 53/2012/TT BNNPTNT on 26/10/212

7 Circular amending Circular No. 14/2011/TT-BNNPTNT dated 29/3/2011 reference monitoring, evaluation of agri-material trading and products of agriculture, forestry, and fishery origin

MARD issued No. 01/2013/TT-BNNPTNT on 04/01/2013

8 Circular amending Circular No. 13/2001/TT-BNNPTNT dated 16/3/2011 reference Guide to food safety inspection of imports of plan origin

MARD issued No. 05/2013/TT-BNNPTNT on 21/01/2013

9 Draft Decree of the Government on administrative sanctions for violations in the field of protection and quarantine

Issued Decree of the Government No.114/2013/NĐ-CP on 03/10/2013

10 Joint Circular (MARD-MPI-MOF) Guidelines on the implementation of Decision 01TTg relating to VietGAP Applications in agriculture, forestry, and fisheries

MARD issued Circular 42/2013/TTLT-BNNPTNT-BTC-BKHĐT on 16/10/2013

42 Appendix 7

No Content Status

11 MARD Circular on Criteria for Determining the Production Areas Fisheries and Horticulture focus (land use planning)

MARD issued Circular No 49/2013/TT-BNNPTNT on 19/11/2013

12 MARD decision on Guidelines for implementing BasicGAP MARD issued Decision No. 2998/QĐ-BNN-TT on 02/7/2014

13 MARD Circular on the recognition of GAP and organic certification as applied to agricultural production, forestry and fisheries


14 A draft Circular that provides for conditions to ensure food safety in the agricultural product wholesale and auction markets


15 NAFIQAD: Circular on the conditions for ensuring safety in food production, food retailing and management practices in small scale primary production


16 New Proposed Regulation/Circular replaces circular No 14/2011/TT-BNNPTNT and circular No 01/2013/TT-BNNPTNT on Proposed Regulation/Circular to inspect and monitor inputs relating to supply, quality and food safety in agriculture, forestry, and fishery production under the jurisdiction of the MARD

MARD issued Circular No 45/2014/BNNPTNT on 3/12/2014

17 New proposed Circular replaces circular No 13/2011/TT-BNNPTNT and circular No 05/2013/TT-BNNPTNT on the sequential guidelines for testing procedures and food safety inspection in imported food of plant origin

MARD issued Circular No 12/2015/TT-BNNPTNT on 16/3/2015.

18 Circular amending and superseding Circular No. 28/6/2010 dated 38/2010/TT-BNNPTNT from the Ministry of Agriculture and Rural Development Regulations on the management of plant protection products

The final draft is completed and submitted to the Minister for issue (January 2015) Status unknown in January 2018

19 Circular on food safety and conditions for plant quarantine of plant products to the EU market (renamed procedures for food safety certification for food exported of plant origin)

DPP submitted the final draft to the Minister for signing approval in December 2014. Waiting for any instruction or final approval from Minister Status unknown in January 2018

20 Circular amending Circular No. 48/2012/TT-BNNPTNT dated 26/9/2012 Regulations on the certification of fishery products, farming, livestock production and processing in accordance with VietGAP

DCP completed and submitted to the Minister for issue (January 2015) Status unknown in January 2018

21 A joint circular with the Ministry of Natural Resources and Environment on the collection of packaging materials after pesticide use

MARD is collaborating with MONRE to finalize the Joint Circular Status unknown at January 2018

22 Government Decree on the management and control of fertilizer quality

DCP prepared a draft Government Decree and MARD submitted to government on 18/1/2013. Prime Minister requested MIT to finalize and submit to government for circulation Status unknown at January 2018

23 Circular on regulations relating to inspection, certification conditions and procedures of packaging materials, food contact materials and containers and equipment to ensure food safety in production and processing under the jurisdiction of the Ministry of Agriculture and Rural Development

This Circular was cancelled as the contents were largely covered by the existing joint Circular No. 13/2014/TTLT-BYT-BNNPTNT-BCT.

24 NAFIQAD: Circular on the list of restricted goods and agriculture, forestry, fisheries, salt, agricultural materials relating to food safety for customs clearance and specific guidelines for inspection and certification of export and import quality of goods

This circular was cancelled.

Appendix 7 43

No Content Status

B. Regulations and Standards

1 National Technical Regulation QCVN 01-132:2013/BNNPTNT “NTQ on vegetables, fruits and tea buds related to food safety in primary production and processing”


2 National Standards 9016:2011 on Collection of Sampling of fresh vegetables on-farm

MARD issued in 2012

3 National Standards 9017:2011 on Collection of Sampling on fresh fruit on-farm

MARD issued in 2012

4 Development of the National Standard (TCVN) for Organic Production

The final draft was submitted to MST for final review and to be issued as a National Standard in January 2015 Status unknown in January 2018

5 National Standards (TCVN) on Collection of Sampling of fresh tea buds on-farm

Drafted in 2013. In 2014 the standard preparation was postponed as it was not in the MST work plan. Included in the 2015 work plan Status unknown in January 2018

DCP = Department of Crop Production, DPP = Department of Plant Protection, EU = European Union, GAP = good agricultural practices, MARD = Ministry of Agriculture and Rural Development, MIT = Ministry of Investment and Trade, MOF =Ministry of Finance, MNRE = Ministry of Natural Resources and Environment, MOF = Ministry of Finance, MONRE = Ministry of Natural Resources and Environment, MPI = Ministry of Planning and Investment, MST = Ministry of Science and Technology, NAFIQAD = National Agro-Forestry-Fisheries Quality Assurance Department, VietGAP = Vietnamese Good Agricultural Practice. Source: ADB. 2015. Quality and Safety Enhancement of Agricultural Products Project. Consultant’s report. Manila (Loan 2513-VIE). Updated during the project completion review on January 2018.

44 Appendix 8

SAFE AGRICULTURAL ZONES INFRASTRUCTURE INVESTMENTS

Within the safe agricultural zone model area of 3,100 hectares, project supported infrastructure comprises:1

Access roads - 237.6 kilometers

New or upgraded irrigation canals - 2,787.2 kilometers

Electricity power lines - 64.6 kilometers

Refuse collection points (for example, for used agrochemical packaging) - 1,522 locations

1 Figures are derived from the government project completion report prepared by national monitoring and evaluation

consultants. The Central Project Management Unit did not provide further details of infrastructure types and scale or location by province as requested by the project completion review mission.

Appendix 9 45

RESEARCH CONTRACTS AWARDED

1. Five research and development contract packages, with a total procurement value of $2.128 million, were implemented during the project. The research and development work began in October 2014, with contracts signed in the third week of October, which was 14 months before project completion. The packages are summarized in the following table, and details provided below.

Package No. Research and Development Topic Contractor

18 Research and selection of new tea varieties suitable for the northern provinces of Viet Nam.

Vietnamese Tea Science - Technology Association

19 Research for improvement of the quality of some fruit varieties in the northern provinces of Viet Nam.

Center for Crop Variety and Agricultural Technology

20a Research for improvement of the quality of some fruit varieties in the southern provinces of Viet Nam.

Viet Rural Enterprise Development Center

21 Study for finalizing technology, primary processing equipment and storage methods suitable for some fruit and vegetables.

DAHUN Viet Nam Company Limited

22 Research for application of methods on postharvest treatments and storage fruit utilizing safe chemicals.

Institute for Asian – Pacific Science and Technology Research Cooperation

a Package was cancelled due to lack of time to undertake research prior to project closing.

A. Package 18: Research and selection of new tea varieties suitable for northern provinces of Viet Nam

2. Subproject 1: Research and selection of new Shan tea varieties suitable for Son La and Yen Bai provinces. The rationale for the research program is that Vietnamese tea products are considered to be variable in quality and have low competitiveness. As a result, the average price of Vietnamese tea is often lower, equal to 50% to 75% of the world price. The problems arise from the fact that old and unpopular tea varieties still account for 50% of the tea plantation area and suffer from low yield, poor quality and a failure to meet customers’ requirements.

3. In the case of Shan tea, plantations are also old and account for around 20% of the total national tea production area. The initial stands were grown from seed resulting in a lack of uniformity and variable characteristics. The Northern Mountainous Agriculture and Forestry Science Institute (NOMAFSI) is in the process of upgrading upland Shan tea varieties which includes developing new Shan tea varieties, aiming to increase the yields by 15% to 20%. The new varieties are expected to be suitable for the upland areas in Yen Bai and Son La provinces. Specific objectives include (i) development of three or four new varieties of high quality and aroma that are resistant to common tea diseases; (ii) formulation of technical procedures for propagation and cultivation; and (iii) establishment of demonstration sites of 1 to 2 hectares (ha) in Yen Bai and Son La for intensive cultivation of the selected varieties that are certified by a competent agency for pilot production or accepted by a competent authority (at ministerial, city, and provincial level) for production. As a result, four new varieties were developed and accepted.

4. Subproject 2: Research and selection of new Trung Du tea varieties suitable for Thai Nguyen and Phu Tho provinces. The Trung Du tea varieties are a variant of the Chinese large leaf tea species. Trung Du tea plantations currently account for over 30% of the national tea production area. Existing plantations are not uniform and have poor average yields of low quality.

46 Appendix 9

A number of tea breeding studies have been conducted by the Northern Mountainous Agriculture and Forestry Science Institute on Trung Du tea and there are numerous new varieties for cultivation on an experimental basis in Phu Ho (Phu Tho Province) and in Thai Nguyen, to select the most promising new varieties for full production. The outputs of the Trung Du research program are the same as those of the Shan tea program (Subproject 1). As a result, two new varieties were developed and accepted.

B. Package 19: Research for improved quality of several fruit varieties in northern provinces of Viet Nam

5. Subproject 1: Research and selection of red-flesh dragon fruit varieties and intensive cultivation techniques for Ha Noi and Vinh Phuc. Existing dragon fruit cultivation is predominantly of white-flesh varieties. The Southern Fruit Research Institute has produced red-flesh dragon fruit varieties LD1 and LD5, with the latter being superior in respect of transportation tolerance and shelf life. Research has shown that the red-flesh dragon fruit has potential for development in northern Viet Nam. The overall objective is to select and develop one or two red-flesh dragon fruit varieties, which are suitable for production in Ha Noi and Vinh Phuc Province with expected yield of between 20 and 25 tons per ha. As a result, two new varieties were developed and accepted.

6. Subproject 2: Research and selection of avocado varieties and intensive cultivation techniques suitable for Son La Province. The French introduced avocados in Viet Nam. They are mainly grown in southern provinces, though not widely. They are largely limited to household orchards in Son La. The objective of the program is to select avocado varieties suitable both for household orchards and for intensive and commercial production in Son La Province. The varietal characteristics sought are fruit weight ranging from 350 to 400 grams, percentage of flesh is 78% of fruit weight, and the pit easily removed from flesh. As a result, five new varieties were developed and accepted.

7. Subproject 3: Research and selection of persimmon varieties of high yield and good quality for Bac Giang Province. Persimmon varieties currently grown in Viet Nam are astringent varieties, mainly Nhan Hau and Thach. There is a need for improved varieties and improved post-harvest techniques. Litchi growers are looking for another fruit crop to extend the harvest window and therefore increase income. The non-astringent varieties proposed are Fuyu (Fuyugaki) and Jiro. The program output is the development of persimmon varieties which are non-astringent, of high quality and commercial value to improve effectiveness of land use and incomes for farmers in Bac Giang Province. This subproject was canceled due to problems in field conditions.

8. Subproject 4: Research and selection of litchi varieties of high commercial value and improved cultivation techniques for Bac Giang and Hai Duong. In 2010 the national area under litchi was 79,100 ha, yielding 256,700 tons. Areas under litchi cultivation in Bac Giang and Hai Duong are 35,800 ha and 13,000 ha respectively. The main litchi cultivar is Thieu Thanh Ha, which is harvested within a short window (June). This creates problems of labor availability for harvesting, transport, preservation and processing of the fruit, and lower value and incomes for litchi growers. Efforts are ongoing to replace the Thieu litchi with early ripening varieties, increasing the harvesting window by 15-20 days. But there are only a few early ripening varieties of good quality and high yield. The research objective is to develop such early ripening varieties. As a result, one new variety was developed and accepted.

9. Subproject 5: Research, selection, and development of grapefruit varieties suitable for Ha Noi. Ha Noi production is able to meet only 20% of demand, with the remainder being

Appendix 9 47 supplied by fruit from other provinces and imports from the People’s Republic of China, Thailand, and the United States. Ha Noi is also engaged in the breeding of specialty grapefruit (such as the Dien cultivar) cultivated in the Day River region and in Hoai Duc District, for which there is a niche market. There is a need to increase the productivity and improve the quality of local grapefruit. The objective of this research program is to select and develop local grapefruit varieties which are of high productivity and quality. This includes 1 or 2 local grapefruit varieties, and 5 to 10 elite grapefruit trees and cultivars, which have such characteristics as vigorous growth, good quality, average weight between 700 and 800 grams per fruit, productivity between 200 and 250 kilograms (kg) per tree, brix degree between 11% and 14%, and are suitable for Ha Noi areas. As a result, one new variety was developed and accepted.

10. Subproject 6: Research and selection of high quality custard jackfruit varieties for Ha Noi. Jackfruit trees are easy to grow and have been planted in the North and South of Viet Nam. There are many varieties of jackfruit, including sweet jackfruit, custard jackfruit, saffron jackfruit, and To Nu jackfruit. Of the three types of jackfruit mainly grown in the north, custard jackfruit predominates. Many custard jackfruit trees are over 50 years old. Jackfruit are harvested twice a year; flowering in November with harvesting in February-March, and flowering in March with harvesting in June-July. Proper cultivation techniques are not generally applied, leading to deterioration in quality and variable productivity. There is a need for true-to-type varieties. The objective of the research program is to develop custard jackfruit varieties which are of high productivity and quality, and suitable for Ha Noi, including 1 or 2 local custard jackfruit varieties, and 5–10 elite custard jackfruit trees and cultivars that have vigorous growth, productivity 10%-15% higher than other trees, average weight between 5 and 7 kg per fruit, brix degree between 20% and 25%, and are suitable for Ha Noi areas. As a result, one new variety was developed and accepted.

C. Package 20: Research for improved quality of several fruit varieties in southern provinces of Viet Nam

11. Subproject 1: Research and selection of Cavendish banana varieties and intensive production techniques for Tien Giang, Ben Tre, and Lam Dong. The main banana varieties grown in Viet Nam are Cavendish and Cau. Post-harvest diseases are a key factor affecting the quality of bananas with losses between 10%-15%. Cavendish has export potential but there is little varietal uniformity because of years of on-farm propagation. Tissue culture is required and in the advanced tissue culture laboratories the Temporary Immersion System is practiced instead of the conventional agar system. The overall objective of the research program is to develop Cavendish banana varieties which are high yielding, producing hands of 2–3 kg and bunches of 25–35 kg in weight, resistant to major diseases and suitable for cultivation in Tien Giang, Ben Tre, and Lam Dong provinces. The plants will be virus and disease free producing 15,000–20,000 plants by tissue culture. The production of the plantlets is short term if tissue culture facilities are available.

12. Subproject 2: Research and selection of rootstock varieties of citrus fruits which are tolerant to unfavorable natural conditions in the Mekong River delta region. In the Mekong Delta the citrus (orange, lemon, tangerine, and grapefruit) area of production is estimated to be 74,229 ha (in 2011). The crop has suffered a number of problems including pests and diseases and the adverse effects of climate change, causing crop failure and variety degradation. The major effects of climate change in the Mekong delta region are salt water intrusion, drought, acidification, and flooding. Currently, the problem of seawater intrusion is about 0.5–1.0 km annually and lasts around 1-3 months each year. Soil-borne diseases, such as Fusarium and Phytophthora root and collar rot, are also problematic. The objective of the program is to develop

48 Appendix 9

rootstocks that can tolerate extremes of climate and have disease tolerance. The output would be 4-5 new rootstock varieties of citrus fruits, which are highly tolerant and resistant to unfavorable conditions, namely tolerance and resistance to 8% salinity, flooding and drought for 30 days, heavy alkaline soil (pH 3.5) and root rot diseases.

13. Subproject 3: Research and selection of apple varieties of high yield and quality for Ninh Thuan Province. The hawthorn tree (Common jujube) is an easy to grow crop in drier regions, such as Ninh Thuan which has over 998 ha of the crop with average yields of 19 tons per ha annually. The cultivars grown are sour apple, sweet Thien Phien, Gia Loc, newly imported cultivars from Thailand and some local cultivars. At present, there has been no study on integrated cultivation techniques, and productivity depends heavily on fertilizers and pesticides, which is not sustainable. The research program objective is to select new apple varieties which are of high productivity and quality, and suitable for Ninh Thuan and other provinces with similar conditions. The aim is to develop 1 or 2 apple varieties which are of high yield (15-20% higher than existing varieties), with vigorous growth, fruit weight ranging from 50-100 grams, brix degree of 20%-25%, good fruit quality and suitable for cultivation in Ninh Thuan. It is also proposed to develop crop production methods within a good agricultural practice (GAP) regime.

14. Subproject 4: Research and selection of yellow-flesh papaya varieties for Tien Giang Province. The productivity of papaya is relatively low due to drought, flooding, and papaya ring spot virus which has caused a reduction in productivity of up to 50%. Fresh and processed fruit exporting companies in Tien Giang and Ho Chi Minh City demand for good quality fruit. The Southern Fruit Research Institute has resulted in papaya varieties adapted to both intercropping or for intensive production. The overall objective of the program is to develop new varieties of yellow-flesh papaya that are highly productive, of good quality and high commercial value, and suitable for the province of Tien Giang. The aim is to identify 1 or 2 varieties which yield 30-50 kg per tree, 10%-15% brix degree (compared with the current 10%-12%), firm pulp, and resistant to major diseases. Intensive cultivation techniques will be researched for the selected varieties to ensure optimum production, quality and food safety.

D. Package 21: Research and development of suitable technology and equipment for primary processing and preserving of several types of vegetables and fruit

15. Subproject 1: Research and development of suitable technology and equipment for primary processing and preserving of several types of leafy vegetables in northern provinces in Viet Nam. There are currently a number of issues with respect to the post-harvest handling of fruit and vegetables: (i) some producers and traders apply chemicals to improve produce shelf-life, which can be detrimental to consumers; (ii) leafy vegetables readily wilt; (iii) there is relatively rapid deterioration resulting in nutrient loss, and (iv) there is a build-up of microbiological pathogens. Due to the widespread lack of suitable post-harvest technologies, relatively few vegetables are currently being distributed to supermarkets, leading to a considerable loss of potential income for farmers and opportunities for consumers to purchase fresh and safe vegetables. The output of the research program is to develop technologies and equipment for primary processing, packing, and preserving of several types of leafy vegetables, including water morning glory, buk choy, pak choy, gai choy, collard greens, in some northern provinces to ensure products conform to quality and food safety standards. The aim is to improve shelf life to between 7 and 10 days and wastage to less than 8%.

16. Subproject 2: Research and development of technology and equipment for primary processing and preserving of fruit and root vegetables in southern provinces in Viet Nam. Some of the largest vegetable production areas are in southern Viet Nam, including Lam Dong

Appendix 9 49 (43,200 ha and 1,243,900 tons), Ho Chi Minh City (9,100 ha and 203,900 tons), and Tien Giang (34,000 ha and 555,200 tons). However, there remain numerous problems in vegetable production which include the vegetable varieties available, production methods and post-harvest technologies. Some vegetable processors lack quality raw materials for processing and export. The use of advanced production techniques is not well supported and is largely on small-scale and household based production units, which tend not to apply modern post-harvest practices in production and trading. During peak harvest periods, products are available in great quantity but are of low quality and are not suitable for export to highly selective but potentially lucrative markets such as in Canada, European Union, Japan, and the United States. In addition, post-harvest losses are high. Several studies on post-harvest technology for handling of vegetables are being conducted yet most of them relate to small-scale production and are less appropriate for large-scale production.

17. The overall objective of the research is to develop suitable technologies and equipment for primary processing and preserving of several types of fruit and vegetables (potatoes, carrots, sweet peppers, cucumbers, tomatoes, chayote, and bitter gourds) in some southern provinces, in order to comply with quality and food safety standards. The aim is to develop primary processing and storage equipment with a maximum throughput of 5 tons of raw materials per day that meets requirements on technical and industrial design and hygiene and food safety criteria, and costs less than imported equipment. The equipment will be demonstrated in several locations.

18. Subproject 3: Research and development of technology for primary processing and preserving of oranges and grapefruits by coating in Tien Giang and Ben Tre. Among the citrus fruits grown in the Mekong River delta region, large (giant) oranges are predominant. In Tien Giang citrus fruits are a specialty. The province has 11,873 ha under orange, tangerine and grapefruit cultivation. The provincial authorities are planning to increase the area under giant oranges to over 5,000 ha in the districts that are subject to flooding, and to establish procedures for intensive production of oranges in compliance with VietGAP. In Ben Tre, green skin grapefruit are widely planted in areas of fresh and brackish water with a total area of 3,284 ha, of which 32.3% produce yields of between 9 and 14 tons per ha. Ben Tre green skin grapefruit have been recognized by MARD as the national variety, for which there is high demand. At the same time the government has invested in GAP compliance programs for 4,000 ha of grapefruit.

19. Primary processing and storage of orange and grapefruit in Tien Giang and Ben Tre is low technology, leading to shorter shelf-life, product weight loss and high spoilage rates. Numerous studies have been conducted on edible coating to preserve citrus fruits, using Chitosan, a derivative with anti-microbial and respiration inhibiting qualities. This has proven to extend the fruit’s shelf-live by up to 8 weeks. All studies have been small-scale and mainly involved the use of Chitosan coating along with perforated containers or cold preservation. The Viet Nam Institute of Agricultural Engineering and Post-harvest Technology has recently conducted research on the preservation of citrus fruits using coatings. As such, it is important to build on that work with the aim of producing membrane–forming materials that can be effectively applied in the storing of oranges and grapefruit. The overall objective of the research is to develop dipping and coating materials to increase the shelf-life by one and a half to two times. Three demonstration sites are proposed.

20. Subproject 4: Research and development of technology for primary processing and preserving of litchi fruits by coating in Bac Giang and Hai Duong. Hai Duong and Bac Giang are the two largest producers of litchi. In 2009, Bac Giang cultivated 35,000 ha with a production of 128,000 tons and Hai Duong 14,770 ha and 50,000 tons. Post-harvest technology for litchi is complex but necessary to increase the time litchi is available on the market, in what is a very short

50 Appendix 9

harvest window. At present, a number of studies have been conducted to preserve litchi by heat treatment or cold storage with or without the use of post-harvest chemical applications. All the work is small scale and not replicated commercially.

21. The output of this research is to improve the quality and effectiveness of preserved litchi to lengthen the marketing window and to provide export market opportunities by reducing the cost of export through using sea freight rather than air freight. Two demonstration sites will be established with a daily product throughput of 3 tons to store litchi for a minimum duration of 30 days, to ensure a fruit of high quality and a spoiling rate of less than 10%, and to increase economic efficiency by at least 15%.

E. Package 22: Applied research for methods of handling and ripening of fruit by safe chemicals

22. Subproject 1: Applied research for advanced methods of handling and preserving grapes and apples to assure their quality and safety. Table grapes (Vitis vinifera) are of commercial importance for farmers in Ninh Thuan. Vietnamese apple growing was introduced into the province 20 years ago with a production area estimated to be more than 400 ha producing 12,000 tons per year. Post-harvest losses for grape and apple are relatively high. The overall objective of the research program is to determine ways to improve post-harvest handling of grapes and apples to increase shelf-life and to maintain quality.

23. Subproject 2: Applied research into technology for ripening of fruit (bananas, mangos, sapodilla, durian, jackfruit, and papaya) by safe chemicals. Studies on the post-harvest handling of tropical fruit have identified a number of issues, including limited advice for farmers, traditional techniques, high losses, and low quality. Work is needed in response to competition from imports such as durian and mangos from Taiwan and Thailand, grapes and apples from Australia, New Zealand, and the United States, apples, grapes, oranges and tangerines from the Peoples’ Republic of China, and bananas from the Philippines. The research will contribute to improving fruit ripening techniques, reducing post-harvest losses, and improving quality by (i) determining the optimum harvest time for bananas, mangos, sapodilla, durian, jackfruit, and papaya; (ii) developing and releasing 1 or 2 products for ripening fruit; (iii) enhancing ripening techniques; and (iv) establishing demonstrations at both household and commercial levels.

24. Subproject 3: Research into and development of pre- and post-harvest technology for preservation of longan fruit in Ha Noi and Son La. Late season or ripened longan varieties have a production area of over 2,100 ha around Ha Noi. They are considered a priority crop for rural development. The average productivity of longan trees has been on the increase from 6.2 tons per ha in 2004 to 7.1 tons per ha in 2008. Yields in the south are higher, at 6–8 tons per ha. There are plans to expand longan cultivation to over 40,000 ha, largely with late ripening varieties. Son La has an area of 12,200 ha under longan cultivation, in which Song Ma district alone has an area of 5,000 ha, where it is a specialty with large fruit with thick flesh, small stone and sweet taste. Good plant husbandry practices have not been adopted widely and many of the trees are propagated by seed leading to variability. Longan fruit production is problematic, with a short harvest window and shelf life. The fruit is sold mainly for the fresh market and only a small volume is processed (juiced or dried). The overall objective of the research is to improve and develop agronomic and post–harvest practices, and the use of growth regulators to manipulate production of fruit. Specific output is increasing shelf life by one and a half times. One or two demonstration sites will be used to test the technologies recommended.

Appendix 9 51 F. Comments

25. The five packages amount to 19 research subprojects with varying degrees of complexity. The English versions of the research proposals lack information particularly with references to previous work undertaken, specific varieties or germplasm to be trialed, types of equipment to use and inputs to be tested. Some subprojects refer to primary processing machinery with the only specification being throughput measured in tons of raw material to be processed. For some fruit crops that have a limited harvest “window” such as litchi, grapes, longan, and persimmon more emphasis could have been placed at looking at secondary processing research, dehydration, juices, extracts, jams, etc.

26. Around 90% of the proposals are using and building on previous research, experiments and trials and most are long-term research and development projects which would span from 4- to 5-year period for perennial crop variety trials. As such, there was unlikely to be any meaningful results during the lifetime of the project given their proposed start dates and the need to establish perennial crop demonstration sites since, with the exception of banana and dragon fruit, fruiting maturity will be only achieved after 4-6 years.

27. Research bidders and/or contractors were required to submit an inception report within 15 days of signing contracts detailing an action plan for implementing the research subproject, which was unrealistic. Additional detail was necessary with respect to demonstration plots, the type of machinery to be procured (where necessary), and reference to previous research work undertaken by the bidding contractor.

28. Much of the data used in research proposals are old, some dating to 2008. More up-to-date data should have been provided in each proposal.

52 Appendix 10

ANALYSIS OF BIOGAS CREDIT PROGRAM

1. The source of data on the biogas credit program is the project completion review (PCR) report prepared by the national monitoring and evaluation consultants.1 The government PCR report does not provide any data for activities beyond 2015. The central project management unit (CPMU) did not provide any additional data on the biogas credit program during ADB’s PCR mission. There are a number of discrepancies in the various sources of data on the biogas credit program within the government PCR. These are noted during the following discussion however, it was not possible to reconcile these discrepancies during the ADB PCR mission.

2. Two sources of finance were available for biogas digester construction under the project. The first was direct financial assistance (grants) to households meeting eligibility criteria. This assistance was to be at least D1.0 million per household. Over the course of the project 30,078 households benefitted from biogas grants. The second source of project finance for household biogas development was the biogas credit program. Credit was accessible to eligible households including those that had also benefitted from a biogas grant. Credit was used in the construction of 14,256 biogas digesters over the life of the project.

3. The credit program was implemented through two financial institutions: the Vietnam Bank for Agriculture and Rural Development (VBARD) and the Central Credit Fund (CCF), which was renamed Cooperative Bank during implementation of the project. The first disbursements by both VBARD and CCF were in 2011. Between 2011 and 2015, VBARD provided finance in 13 provinces for the construction of 5,619 digesters, with a total disbursement of D128.89 billion (Table A10.1). CCF provided credit in five provinces for the construction of 8,637 digesters and a total disbursement of D273.25 billion (Table A10.2). In the 13 provinces where VBARD operated, average loan sizes ranged from D10.00 million to D44.45 million, with an overall average of D22.94 million. In the five provinces covered by CCF, average loans ranged from D21.26 million to D42.91 million, with an overall average of D31.64 million. The average loan size across the entire credit program was D28.21 million, equivalent to around $1,380 (based on the average year-end rate of exchange during the project period).

4. At appraisal, the cost of the credit program was estimated at a total of $14.85 million, of this ADB was to finance $12.150 million (81.8%), and participating financial institutions (VBARD and CCF) from their own resources and beneficiary households would each finance $1.350 million (9.1%). The data in Tables A10.1 and A10.2 are not clear on the source of financing within each province. In some cases, the combined financing indicated for ADB and beneficiaries exceeds the total amount of financing, while in others it is exactly equal to the total amount of financing. It is not clear what the contribution of VBARD and CCF to biogas financing was in these provinces. Where the combined financing of ADB and beneficiary households is shown to be less than the total financing, the balance may be expected to be derived from VBARD or CCF financing. However, in no case does this balance equate to the figure shown for beneficiary household contributions. In this context, the contribution of ADB financing to total financing varies significantly. In provinces financed by VBARD, the ADB contribution ranged from 85.0% to 95.7%, with an overall average of 90.2%. For provinces financed by CCF, ADB’s contribution to financing was lower, with a range of 59.2% to 85.3% and an overall average of 77.2%. It was not possible to reconcile these discrepancies during the ADB PCR mission. `

1 Government of Viet Nam. Ministry of Agriculture and Rural Development. 2015. Project Completion Report for the

Quality and Safety Enhancement of Agricultural Products and Biogas Development Project. Hanoi.

Appendix 10 53

Table A10.1: Biogas Credit Program Disbursements by Vietnam Bank for Agriculture and Rural Development

Province Loan Disbursement (D million) Digester

Average Loan

Female Borrowers

Financed By ADB

2011 2012 2013 2014 2015 Total (No.) (D million) (%) ADB Beneficiaries %

Ben Tre 2,900 2,728 1,533 2,305 771 10,237 606 16.89 36 9,088 2,464 88.8

Hai Phong 850 - 1,728 0 0 2,578 58 44.45 46 2,233 621 86.6

Bac Giang 9,136 12,704 12,855 11,005 7,731 53,431 2,296 23.27 39 48,510 13,305 90.8

Thai Nguyen 2,797 6,664 15,970 3,209 28,640 1,202 23.83 15 25,669 2,971 89.6

Da Nang 57 - 48 150 0 255 10 25.50 50 231 25 90.6

Ninh Thuan 76 - 64 0 0 140 11 12.73 25 134 6 95.7

Vinh Phuc - 20 0 0 20 2 10.00 0 17 3 85.0

Phu Tho 0 9,130 934 10,064 650 15.48 9 9,595 449 95.3

Ha Tay 0 5,448 2,265 7,713 218 35.38 45 6,659 1,196 86.3

Lam Dong 0 376 0 376 30 12.53 0 341 94 90.7

Yen Bai 0 2,576 0 2,576 137 18.80 39 2,262 837 87.8

Tien Giang 0 1,327 394 1,721 100 17.21 20 1,487 702 86.4

Soc Son 0 4,873 6,261 11,134 299 37.24 40 10,090 2,037 90.6

Total 15,816 22,116 55,928 26,523 8,502 128,885 5,619 22.94 30 116,316 24,710 90.2

ADB = Asian Development Bank. Source: Government Project Completion Review Report, Annex 11.

Table A10.2: Biogas Credit Program Disbursements by the Central Credit Fund

Province Loan Disbursement (D million) Digester

Average Loan

Female Borrowers

Financed By ADB

2011 2012 2013 2014 2015 Total (No.) (D million) (%) ADB Beneficiaries %

Ha Noi 13,975 15,341 1,351 231 - 30,898 1,460 21.16 70 24,770 4,314 80.2

Bac Giang 5,882 35,723 24,578 10,014 213 76,410 2,470 30.94 61 57,690 27,196 75.5

Phu Tho 6,250 25,035 8,867 794 - 40,946 1,451 28.22 68 34,600 4,467 84.5

Vinh Phuc 4,119 16,013 27,208 20,416 8,797 76,553 2,127 35.99 65 65,323 12,340 85.3

Hai Duong 3,846 34,060 8,436 2,100 - 48,442 1,129 42.91 67 28,698 17,209 59.2

Total 34,072 126,172 70,440 33,555 9,010 273,249 8,637 31.64 65 211,081 65,526 77.2

ADB = Asian Development Bank. Source: Government Project Completion Review Report, Annex 12.

54 Appendix 10

5. The government PCR provides another source of data on the biogas credit program from annual disbursement data for the project. These data (presented in Annex 13 of the government PCR) are presented in Table A10.3. The figures for annual and total disbursement over the life of the project for both VBARD and CCF differ from those in Tables A10.1 and A10.2.

Table A10.3: Biogas Credit Program Annual Disbursements by Financier

Financier Loan Disbursement (D million)

2011 2012 2013 2014 2015 Total

CCF 55,408 76,061 74,207 10,459 9,010 225,145

of which:

ADB resources 49,867 68,455 66,786 9,414 194,522

CCF's own resources 5,541 7,606 7,421 1,046 21,614

VBARD 25,055 24,420 27,315 13,959 8,502 99,251

of which: 0

ADB resources 22,550 21,978 24,583 12,563 81,674

VBARD's own resources 2,506 2,442 2,731 1,396 9,075

Summary

CCF 55,408 76,061 74,207 10,459 9,010 225,145

VBARD 25,055 24,420 27,315 13,959 8,502 99,251

Total 80,463 100,481 101,522 24,418 17,512 324,396

of which ADB

Value 72,417 90,433 91,369 21,977 276,196

Percentage 90.0 90.0 90.0 90.0

VBARD and CCF own resources 8,047 10,048 10,152 2,442 30,689

Beneficiaries 8,046 10,048 10,152 2,442 30,688

Total 88,509 110,529 111,674 26,860 17,512 355,084

Percentage Financing (%)

VBARD and CCF 9.1 9.1 9.1 9.1

ADB 81.8 81.8 81.8 81.8

Beneficiaries 9.1 9.1 9.1 9.1

Total 100.0 100.0 100.0 100.0

ADB = Asian Development Bank, CCF = Central Credit Fund, VBARD = Vietnam Bank for Agriculture and Rural Development. Source: Government Project Completion Review Report, Annex 13.

6. There is no breakdown of lending in 2015 by source (either ADB resources or the participating financial institutions’ own resources) for either VBARD or CCF. As a result, the financing percentages for the project cannot be determined accurately. From 2011 to 2014, the relative financing shares of ADB (81.8%), VBARD and CCF (9.1%), and beneficiary households were exactly as designed at project appraisal. In this case, ADB’s contribution to financing differs significantly from the data indicated in Tables A10.1 and A10.2. On the assumption that disbursements relate to the same number of digesters financed by VBARD (5,619) and CCF (8,637) as indicated in Table A10.3, the average loan sizes are lower than those indicated in Tables A10.1 and A10.2. For VBARD the average loan size indicated in Table A10.3 is D17.66 million compared with D22.94 in Table A10.1. For CCF the average loan size is D26.07 million compared with D31.64 million in Table A10.2. The overall loan size from Table A10.3 is equal to D22.76 million compared with D28.21 million from Tables A10.1 and A10.2. It was possible to reconcile these differences during the ADB PCR mission.

Appendix 10 55

7. More in-depth financial analysis of the biogas credit program in terms of disbursement, recovery of principal and interest payments, non-performing loans, etc. was precluded by the failure of VBARD and CCF to provide the required data to CPMU. During MTR, it was reported that repayment of existing loans was poor, averaging only 28%. At the time of the ADB PCR mission, multiple requests to PFIs through the CPMU for detailed portfolio data were unsuccessful. PFIs only returned verbal confirmation that loans had been fully repaid. The claim cannot be verified without access to portfolio data. In addition, no information was available on whether VBARD and CCF had recycled the funds recovered from initial biogas loans to finance additional households.

56 Appendix 11

REALLOCATION OF LOAN PROCEEDS BY EXPENDITURE CATEGORY AGREED AT MIDTERM REVIEW

($ ‘000)

Cat No Category Name Allocation Increase

(Decrease)

Revised

Allocation

1 Works

1A Quality and Safety Enhancement 26,929 12,093 39,022

1B Biogas Development 4,519 (2,739) 1,780

1C Credit Line for Biogas Digester Construction 12,281 12,281

1D Financial Assistance to Households Biogas

Digester Construction 1,333 505 1,838

1E Household Contribution to Credit Line

2 Equipment, Vehicles, and Furniture

2A Equipment 16,358 (7,571) 8,787

2B Vehicles 57 (7) 51

2C Furniture 116 (46) 7

3 Materials 11,125 (714) 10,411

4 Training, Workshop, and Overseas Study

Tours

4A Training and Workshop 7,055 (339) 6,716

4B Overseas Study Tours 581 (83) 498

5 Consulting Services

International 1,161 754 1,915

National 758 (408) 350

6 Research and Development

6A Quality and Safety Enhancement 2,042 (56) 1,986

6B Biogas Development 1,224 (1,085) 139

7 Design and Supervision, Monitoring and

Evaluation, and Certification

7A Baseline Survey 1,926 (440) 1,487

7B Design and Supervision 1,650 776 2,426

7C Certification 2,078 (1) 2,077

7D Monitoring and Evaluation 796 (532) 264

8 Project Auditing 474 (221) 253

9 Recurrent Costs 1,835 (375) 1,690

10 Interest Charge 1,690 0 1,690

Total 95,988 (487) 95,501

Source: ADB estimates submitted to the project director dated 8 August 2014.

Appendix 12 57

TECHNICAL ASSISTANCE COMPLETION REPORT

Technical Assistance (TA) Number, Country, and Name:

Amount Approved: $1,500,000

TA 7251-VIE: Strengthening Project Management and Developing Strategies and Options for Biogas Development Program Expansion

Revised Amount: Not applicable

Executing Agency: Ministry of Agriculture and Rural Development

Source of Funding: TASF-IV

Amount Undisbursed: $11,813.25

Amount Utilized: $1,488,186.75

TA Approval Date: 18 March 2009

TA Signing Date: 15 October 2009

Fielding of First Consultant: 11 November 2009

TA Completion Date Original: 30 June 2010

Actual: 31 December 2012

Account Closing Date Original: 30 June 2010

Actual: 25 November 2013

Description The TA was associated with the Quality and Safety Enhancement of Agricultural Products and Biogas Development Project1 and had two parts. Part 1 provided start-up support for the loan project, including oversight and capacity building. The oversight function provided advisory support to the government on how to effectively implement and monitor project activities on the quality and safety of agricultural products and biogas development. Part 2 was used to prepare an investment to expand biogas development. It originally intended to: (i) develop technical designs of biogas plants of varying sizes for farm households and medium- to large-scale commercial livestock farms, based on field testing, demonstration, and applied research activities; (ii) determine credit financing options for different socioeconomic groups; (iii) establish a geographical expansion plan and strategy; (iv) design a practical institutional and management structure for expansion of the biogas program; and (v) develop clean development mechanism projects. This technical assistance completion report assesses only part 1 of the TA, since part 2 is a transaction TA which resulted in a project.2 Expected Impact, Outcome, and Outputs The expected impact of the project with which the TA was associated was sustainable and equitable growth of the agriculture sector through increased livelihood opportunities and improved human health. The expected outcome was integration of livestock waste management with clean energy production and increased agro-product safety and reduced health hazards. The outputs were (i) improved regulatory framework and fully operational quality and safety system for agro-products, (ii) accelerated development of infrastructure and facilities to ensure quality and safety of agro-products, and (iii) supported biogas development for clean energy and reduced agro-product safety and health hazards from livestock wastes in 16 provinces. Delivery of Inputs and Conduct of Activities ADB financing of part 1 of the TA was estimated at $250,000, and part 2 at $1,250,000. The executing agency for the TA was the Ministry of Agriculture and Rural Development (MARD). The extension of the completion date was largely a result of delays in finalizing the design of part 2.

1 Asian Development Bank. 2009. Report and Recommendation of the President to the Board of Directors: Proposed

Loan to the Socialist Republic of Viet Nam for the Quality and Safety Enhancement of Agricultural Products and Biogas Development Project. Manila (Loan 2513).

2 Asian Development Bank. 2012. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the Socialist Republic of Viet Nam for the Low Carbon Agricultural Support Project. Manila (Loan 2968).

58 Appendix 12

The TA was designed to provide 26 person-months of project implementation specialist inputs comprising 6 international and 20 national person-months. The consultants’ terms of reference (TORs) were to support MARD in (i) project start-up, including oversight and capacity building; (ii) preparation of implementation and procurement plans; (iii) drafting of consultant TORs; and (iv) preparation of requests for proposals. The first consultant, a national project implementation manual development expert engaged for 3 person-months to prepare a project implementation manual, was mobilized on 18 November 2009. A national procurement expert, engaged for 14 person-months, was mobilized on March 2010. On completion, 35 person-months of national consultant inputs had been contracted. No international consultants were contracted. All consultants were recruited as individual consultants by ADB in accordance with ADB guidelines. The TA was completed on September 2011. The TORs of the TA were broad and did not provide clear guidance on the support to be given to MARD, particularly tasks (iii) and (iv), were assumed to be related to part 2 of the TA. No reference is made in the original TORs to the provision of support to safe agricultural zone (SAZ) planning and implementation. There is also no reference to any change in the scope and breakdown of consultant inputs (for instance, to include SAZ expertise and to utilize only national consultants) in aide memoires of ADB loan review missions. The latter focused almost exclusively on part 2 of the TA.

Evaluation of Outputs and Achievement of Outcome Consultants prepared the project implementation manual, set up a project monitoring and evaluation system, trained project management staff on procurement, and initiated the process of SAZ planning. The reports generated by the TA were forwarded to the relevant executing and implementing agencies. However, since no copies were retained after project completion, the quality of the report cannot be assessed. The monitoring and evaluation system set up did not constitute the project performance monitoring system (PPMS) that was intended to be established in 2010. In fact, the recruitment of a consulting firm to set up the PPMS did not take place until December 2013, more than 2 years after the TA was completed. These issues notwithstanding, the central project management unit was satisfied with the capacity building and training provided.3 Overall Assessment and Rating The TA is rated less than successful. It supported MARD in project start-up in terms of the preparation of an implementation manual, procurement training and SAZ planning. Support for procurement training and SAZ training strengthened government staff’s capacity to implement future projects. The TA did not, however, establish the required PPMS. Recommendations and Follow-Up Actions Although a relatively small part of the overall TA in terms of funding, part 1 had a critical role in the establishment of project implementation arrangements. However, the TORs were overly broad and it appears to have been given limited attention in ADB loan review missions in comparison with the more significant part 2. It is recommended that greater attention during project review missions and increased funding is given to a TA that supports project start-up to facilitate more effective project implementation, particularly with project performance monitoring.

Prepared by: Leonard Leung Designation and Division: Natural Resources and Agriculture

Economist, SEER

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

3 Since the concept paper for the TA cannot be located, it is not possible to evaluate the outputs and achievements

against the DMF targets.

Appendix 13 59

CONSULTING INPUTS: PROPOSED AND ACTUAL

Original Allocation

Final Allocation

Utilized Unutilized Expertise

International

Agricultural Products Quality and Safety System Management (Team Leader)

24.00 22.97 21.34 1.63

Policy and Institutions 5.00 0.73 0.73 -

Monitoring and Evaluation 8.00 4.00 1.97 2.03

Applied R&D for Agricultural Product Safety and Quality

7.00 5.00 2.30 2.70

Risk Analysis 6.00 2.50 1.20 1.30

Communication and Training 1.00 - -

Social Development 2.00 3.00 1.32 1.68

Environmental Assessment 2.00 4.00 2.90 1.10

Financial Management 1.00 - - -

Rural Infrastructure 4.00 4.00 3.97 0.03

Subtotal International 60.00 46.20 35.73 10.47

National Consultants

Agricultural Products Quality and Safety System Management (Deputy Team Leader)

43.00 34.00 27.95 6.05

Policy and Institutions 17.00 10.00 9.50 0.50

Monitoring and Evaluation 12.00 15.00 15.00 -

Applied R&D for Agricultural Product Safety and Quality

22.00 10.00 8.45 1.55

Risk Analysis 8.00 13.00 13.00 -

Communication and Training 11.00 8.00 7.95 0.05

Social Development 6.00 8.00 5.82 2.18

Environmental Assessment 11.00 14.00 10.46 3.54

Financial Management 8.00 - - -

Rural Infrastructure 10.00 33.00 33.00 -

Subtotal National 148.00 145.00 131.13 13.87

Total 208.00 191.20 166.86 24.34

R&D = research and development. Source: ADB. 2009. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the Socialist Republic of Viet Nam for the: Quality and Safety Enhancement of Agricultural Products and Biogas Development Project. Manila (Original allocation); and ADB. 2015. Quality and Safety Enhancement of Agricultural Products Project. Consultant’s report. Manila (Loan 2513-VIE) (Final allocation, following Contract Variation No. 5).

60 Appendix 14

SUMMARY OF GENDER ACTION PLAN AND ACHIEVEMENTS

I. PROJECT DESCRIPTION

1. The Quality and Safety of Agricultural Products and Biogas Development Project was approved on 30 June 2009 and became effective on 26 August 2009. The project covers 16 provinces1 benefiting 1.6 million people. The project objectives are: (i) increasing income and livelihood opportunities in agriculture sector and (ii) improving people’s health and labor productivity due to food safety improvement in primary production and processing. The impact of the project is sustainable and equitable growth of the agriculture sector through increased livelihood opportunities and improved human health. The project includes four components: (i) improved regulatory framework and fully operational quality and safety system for agro-products; (ii) infrastructure and facilities for quality and safe agro-products; (iii) reduce hazard from livestock waste (biogas development program); and (iv) project management support.

2. The project duration was from 30 June 2009 to 30 June 2016. The project gender classification is effective gender mainstreaming. A gender action plan (GAP) was developed at the project design. At mid-term review (MTR), GAP Target 4 (to clarify and improve wording) and Target 5 (to specify “provincial” as the coverage of action) were revised. The results of the GAP implementation are presented in Table A14.1.

II. GENDER ANALYSIS AND PROJECT DESIGN FEATURES

A. Gender Issues and Gender Action Plan Features

3. The gender issues identified by the project included: (i) women account for more than 50% of farmers; compared with men, women contribute more hours of labor to cultivation, agricultural processing, and marketing of agricultural products. Women are thus burdened by trying to balance being part of the work force and doing domestic and other unpaid work; (ii) women have less access to and less control over agricultural resources, which limits their access to credit from formal sources to expand agricultural production; (iii) many farmers, especially women in the project area, are familiar with integrated pest management techniques, but lack understanding of the entire safe production process; (iv) women have less access to agricultural extension training; and (v) women have little say in decision making on technical-related issues (e.g., selection of crops, varieties, and planting season) as well as in community activities.

4. A GAP has been prepared to ensure gender equality in the distribution of project benefits and to enable active engagement of women in subproject design and implementation. The project GAP includes the following features:

(i) female government staff’s access to various training and the consultative on the

regulatory framework on food quality and safety (30%);

(ii) women’s representation (or staffing) in food safety management-related

institutions (e.g., committees, new institutions, project staffing) (30%);

(iii) women’s representation in consultation meetings for safe agricultural zone (SAZ)

planning (30%);

(iv) female farmers benefiting from model SAZ development and implementation (50% of project beneficiaries will be women);

1 Bac Giang, Ben Tre, Binh Thuan, Da Nang, Hai Duong, Hai Phong, Ha Noi, Ho Chi Minh city, Lam Dong, Ninh Thuan,

Phu Tho, Son La, Thai Nguyen, Tien Giang, Vinh Phuc, and Yen Bai.

Appendix 14 61

(v) female farmers benefiting from safe agro-product certification and crop

replacement (50% of project beneficiaries will be women);

(vi) female farmers’ access to training on product safety (30%);

(vii) women’s access to unskilled labor opportunities in model SAZ infrastructure

development (e.g., farm-to-market roads, storage construction) (30%);

(viii) direct financial assistance provided for the construction of 20,000 household biogas units (50% of beneficiaries to be women);

(ix) more than 50% of credit lines accessed for household biogas to be under women’s names; and

(x) applied research on biogas includes gender analysis.

B. Overall Assessment of Gender-Related Results and Achievements

5. The GAP implementation is rated successful. The project GAP consisted of 10 actions and 10 targets. As of project completion, eight out of 10 actions envisaged in the GAP (80%, including one partially achieved) and ten out of ten (100%) of GAP targets were achieved.

6. The key achievements under the GAP includes: (i) 1,173,235 women beneficiaries, including: 843,259 women benefiting from infrastructure and equipment upgrades of SAZ models (50% of 1,679,547 beneficiaries); 60,471 women (53.2% of 113,881 beneficiaries) from 27,477 households, including 6,196 female-headed households (22.6%), benefiting from safe agro-products certification; and 269,505 women from 112,981 households benefiting from the new varieties (61% of 440,867 beneficiaries); (ii) 68,020 women (50% of 136,875 beneficiaries); from 30,078 households, benefiting from biogas systems installation and subsidy (at D1.2 million per household) and training on biogas maintenance and safe operations at home. The project also conducted training courses on biogas digester construction, maintenance and safe operation for biogas potential households, contractors, and technicians and project management staff with 59,808 participants of which 19,497 are women (32.6%) and 7,272 women from beneficiary households obtaining access to bank loans for construction of biogas units (51% of 14,256 households; target: 50%); (iii) a total of 131,240 women received other trainings under the project, including: 131,096 women trained on farm food safety standards-based practices (38% of 343,092 participants; target 30%); and 144 female staff trained on staff capacity development program (34.2% of 421 staff trained). Women also actively participated in consultations held under the project: 2,578 women in consultations on the proposed SAZ models and location of public infrastructure (35.7% of 7,227 participants; target: 30%); and 735 women participated in consultations to review decrees, policies, and strategies for ensuring agro-product safety and quality in Viet Nam (30.5% of 2,412 participants; target 30%).

7. The project developed sex-disaggregated monitoring and evaluation database of all project activities. The GAP monitoring results were regularly updated and attached to project quarterly progress report.

C. Gender Equality Results

1. Participation, access to project resources and practical benefits

8. Women’s participation in consultations, decision-making, and leadership positions under the project was high, exceeding targets. 3,313 women out of 9,639 (34%; target 30%) have participated in consultations on the review of existing decrees, policies, and strategies for ensuring agro-product safety and quality in the country, and in identifying model sites and locations of related infrastructure. Ten women out of 30 are members of the newly established

62 Appendix 14

specialized committees and units on crop food safety management system (target: 30%), and 44 females out of 122 staff in the provincial food safety specialists and facilitators (36%; target: 30%).

9. More than one million women were able to access resources made available by the project. The practical benefits include trainings and capacity building, credit and other forms of assistance, and use of improved infrastructure and certification system, as follows: (i) trainings and capacity building - 131,449 women (38.2% of 344,085) participants; (ii) credits and loans - 7,272 women beneficiaries (51% of 14,256; target: 50%); (iii) direct financial and other forms of assistance for biogas construction – 68,020 women (50% of 136,875; target: 50%); (iv) cost and time saving - cooking using biogas helped to save time (2-4 hours per day), and reduce cost by up to VND 800,000 per month per household; (v) infrastructure and equipment upgrades and safe agro-products certification – total of 903,730 women beneficiaries (50.4% of 1,793,428; target: 50%); and (vi) new varieties of fruit trees and teas – total of 269,505 women beneficiaries (61% of 440,867; target: 50%).

2. Strategic changes in gender relations

10. The project promoted strategic changes in gender relations and women’s empowerment as follows:

(i) Women’s participation in consultation on setting up food safety regulatory framework to contribute to policy development. This had created a sense of empowerment for those women involved.

(ii) The high proportion of women’s representation in Vietnamese Good Agricultural Practices (VietGAP) standing committee and food safety management system units (54 female staff or 35.5% out of 152 staff) has contributed to improving women’s voice in high-level policy decision-making process.

(iii) The project encouraged female farmers to participate in the trainings and models on farm food safety standards as well as safe agro-products certifications. These activities have enabled female farmers to increase their income because the well-

Box 1: Project Impact on Practical Benefit for Women

Ms. Pham Van Anh, 35-year old tea producer from Nghia Lo town, Van Chan district in Yen Bai Province. Ms. Anh attended training of new disease-resilient tea varieties provided by the project in 2012. She was provided with the new tea variety free of charge from the project and started planting this in the same year on her 0.5 hectares of tea-growing land. With the experience since the training, the tea productivity was higher from 5%-10% and the price was higher 3%-5% compared with the traditional tea varieties, this contributed to the increase of income in her household. She proudly remarked that she had additional income to support her children’s education and she will share her experience to other female farmers who want to apply the new tea varieties. Mrs. Vu Thi Thuy, 40 years old from Long Hoa commune, Go Cong town, Tien Giang Province participated in the models on safe agricultural zones and received the certification of agro-products. According to Mrs. Thuy, “Previously, we mainly grew vegetables. We were not concerned much about our health when using chemical fertilizer or spraying pesticide. Therefore, we were often sick. When participating in the project, I have opportunities to receive training on clean vegetables planting in compliance with the standards. The planted vegetables, therefore, have brands, resulting to higher selling prices. Before participating in the project, my family's monthly income was about D8 million, the current income has increased to D10 million per month. In addition, my family has also been supported to access loan to construct biogas plant at the amount of D1.2 million with low interest rate. Cooking using biogas is cleaner and less time-consuming compared to firewood and charcoal. As a result, I have more time to rest and my health has improved”.

Appendix 14 63

informed consumers are willing to pay extra for food safety and/or farmer groups can sell their safe products directly to the supermarkets which pay higher prices for safe products. Such income-generating activities have not only empowered women but also increased their decision-making powers and enhanced their standing in the community when they gain economic autonomy.

(iv) Women accessing biogas credit made under women’s name has resulted in more women’s economic empowerment and this also helped to improve safety and reduce health hazard from livestock waste. These are assessed as time-saving for women so that they are able to participate in the agricultural production and take care of their families.

Box 2: Project Impact on Women’s Empowerment

Mrs. Nguyen Thi Nga lives in Bao Hung commune, Tran Yen district in Yen Bai Province. At present, her family has 3 hectares of tea and raising 20 pigs and 2 cows. She participated in the project’s training course on tea variety replacement, VietGAP application in safe tea, fruit, and vegetable production, and training on biogas and pesticide. Thanks to these training courses, she has improved techniques in agricultural production and gained experience from other people engaged in livestock raising and producers in the province. She has also received D1.2 million from the financial package of the project for developing biogas plant which gave her more time to rest and relax. Thanks to the project, her living condition has improved with higher income from cultivation and livestock activities. She said that her husband encouraged and enabled her to participate in the training courses and project activities. Participation in project activities has improved Ms. Nga’s self-confidence and strengthen her voice in her family and community.

3. Contribution of gender equality results to overall loan outcomes and effectiveness

11. Although none of the key gender indicators or targets has been integrated into the project’s design and monitoring framework, the GAP has enhanced the inclusivity of project benefits by ensuring women farmers’ access to agriculture inputs, crop varieties, new technology and infrastructure, and knowledge to be integrated into the value chain development of selected safe agro-products (vegetables, fruits, and tea). Trainings to women by the project have resulted in time savings, poverty reduction, and improved hygiene which reduces food poisoning incidence and associated medical costs due to food-borne diseases. The GAP implementation contributed to achieving gender equality goals and outputs of the overall project as follows:

(i) Output 1: Regulatory Framework for Quality and Safety System for Agro-Products. The main activities of this output are improvement of the regulatory framework and coordination for state management of quality and safety; quality and safety-related capacity development of state agencies and certification bodies; establishment of a crop food safety management system for food safety coordination, monitoring, and management at the central and provincial level. The

64 Appendix 14

GAP’s corresponding policy measures completed under this output led to the inclusion of gender mainstreaming in human resource development strategy in the trainings, review and development of regulatory framework for quality and safety system for agro-products, and in the staffing of the newly established specialized committees and units on crop food safety management system). This contributed to strengthen the effectivities and accountability of the state management of agro-product safety and quality systems.

(ii) Output 2: Infrastructure and Facilities for Quality and Safe Agro-products. The main activities under this output are implementation of SAZ plans and development of support infrastructure in SAZs; certification of agro-products; strengthening of provincial capacity for agro-food safety monitoring and assessment; replacement of pest- and disease-prone varieties with tolerant varieties; and provision of laboratory services to project province. The GAP actions under this output increased the effectiveness of infrastructure investment and model implementation in SAZs by ensuring that gender equality in the distribution of project benefits and to enable active engagement by women in subcomponent design and implementation. The achievement of GAP targets under this output on farmers’ training, consultations and farmers benefiting from SAZs model, safe agro-product certification and crop replacement ensured female farmers have equal opportunities to participate in training equality with their male farmers.

(iii) Output 3: Improved Safety and Reduced Health Hazard from Livestock Waste. The main activities of this output are biogas infrastructure investment, a credit facility for biogas and demonstration, and applied biogas research services. GAP measured under this output included an affirmative action that provided a larger amount of credit loans for construction of biogas units to women, which resulted in 51% or 7,272 women gained access to credit loan among 14,256 recipients. Likewise, the GAP requirement to assess the impact of biogas technology on women’s workload and division of labor between men and women and biogas credit lines made under women’s name results. This proved that biogas program contributed to improve health and save time for women to participate in other economic, domestic, social activities, and also increase more women’s empowerment.

III. LESSONS LEARNT AND RECOMMENDATIONS

1. Factors Contributing to the Success of GAP Implementation

12. The central project management unit (CPMU) developed and maintained a fairly comprehensive sex-disaggregated monitoring and evaluation database of all project activities and coordinated stakeholders and 16 provincial project management units (PPMUs). These helped the CPMU to monitor and report on the GAP targets more effectively.

13. During project implementation, there was a considerable interest and awareness of the project implementation units on the importance of the role of women in almost all project activities. Hence, the project management units (PMUs) actively promoted women's participation in all project activities to achieve targets under the GAP.

14. The active participation of local authorities, especially the commune Women's Union, has helped to disseminate information on the project as well as mobilize more active participation of women in project activities.

Appendix 14 65

2. Constraints during GAP Implementation

15. The social development consultants engaged under the project covered a whole range of social issues including social safeguards, ethnic minorities, and gender. During project implementation, the consultants spent most of their time for the indigenous people’s action plan implementation and the social safeguards, leaving limited time for GAP implementation.

16. The project allocated resource for GAP refinement, although it could have been put into better use. Commitment to GAP implementation has not been systematic throughout project implementation. Gender consultants were engaged only for a very limited time and worked mainly during the initial phase of the project implementation. The overall project and GAP implementation would have benefited from (i) appointment of gender focal points at the CPMU and PPMUs; (ii) stronger ADB’s guidance, especially at the very early stage of project implementation; and, (iii) earlier involvement of the ADB gender specialist who was mobilized only at MTR stage.

3. Sustainability

17. A total of 41,416 staff at provincial, district and commune levels, and processing units were trained, including 14,962 female staff participated in the implementation of activities on farm food safety standards-based practices under the project and continue to implement VietGAP and food safety system management in their provinces beyond the project.

18. A total of 993 staff from the Ministry of Agriculture and Rural Development and the Department of Agriculture and Rural Development, and other stakeholders were trained including 353 women participated in policy formulation, monitoring, accreditation and certification, inspection under project, and continue to lead food safety system management beyond the project.

19. Female farmers have learned to research and to apply agricultural technologies for food safety standards and certification for safe agro-products. This helped to improve their capacity to continue applying these technologies in their agricultural production beyond the project

20. The female staff of the newly established specialized committees and units on crop food safety management system (including standing committee on VietGAP, units within the National Agro-Forestry and Fisheries Quality Assurance Department, Department of Crop Production, and Department of Plant Protection) and the provincial food safety system units who benefited from the training by the project, have gained substantial capacity and increased confidence in decision making in food safety management system.

4. Recommendations

21. Separate gender consultants should be hired to support GAP implementation, monitoring and adequate reporting. The gender related tasks to be performed during project implementation should be separated from the social safeguards and indigenous people tasks so that consultants with adequate expertise and time can dedicate their efforts and focus on their respective tasks while working closely together.

22. During the project inception stage, special attention needs to be paid to gender for ensuring some minimum requirements are fulfilled for successful GAP implementation, including (i) translation of the GAP into the local language; (ii) engagement of the project gender consultant(s); (iii) assigning gender focal points at relevant levels of project implementation; (iv)

66 Appendix 14

proper communication of GAP targets, activities and monitoring and reporting requirements to IA/EA, PIU/PMO; (v) integration of gender indicators in the project management and monitoring system; (vi) capacity building of the PMU and key project partners for effective GAP implementation, regular monitoring and adequate reporting; and, (vii) incorporation of the GAP activities and targets in the overall project work plans and budget.

23. The ADB gender specialist should be mobilized from the inception stage to guide the gender consultants and PMUs at the early phase of the project on GAP implementation and participate in regular loan review missions to provide regular and further guidance and support. This helps for having the PMUs monitor and report adequately on the GAP implementation status and highlighting in a timely manner where greater effort is needed for effective GAP implementation. The ADB gender specialists’ involvement from the beginning of and throughout project implementation will help keep the momentum going.

24. At project design stage, the Project Administration Manual should clearly provide details about responsibilities on GAP implementation, monitoring and reporting, as well as budget and resource allocation. The project needs to provide sufficient resources to implement the GAP. The provision of adequate resources is critical to both successful design and effective implementation of the GAP. 25. Finally, to ensure sustainability of the government’s capacity in gender mainstreaming and GAP implementation, the existing gender focal points network and/or mechanism in government ministries should be tapped on and the gender focal points could be actively involved and better utilized for the project GAP implementation and monitoring.

Appendix 14 67

Table A14.1: GAP Monitoring Table

(As 30 June 2016) Output Targets and Actions Results Issues/challenges

Output 1: Regulatory Framework for Quality and Safety System for Agro-Products

1.1 Enhancing the regulatory framework on food quality and safety.

1. Target 1: Women comprise 30% of those represented during the consultative process adopted for the review of existing decrees, policies, and strategies for ensuring agro-product safety and quality in Viet Nam.

Achieved 735 (30.5%) female staff from total of 2,412 MARD and provincial and district staff participated in 44 workshops to review existing decrees, policies, and strategies for ensuring agro-product safety and quality in Viet Nam

1.2 Strengthening the institutional capacity of state agencies responsible for policy formulation, monitoring, accreditation and certification, inspection, laboratory analysis, review, and development of standards and communication.

2. Target 2: Female and male staff of MARD, NAFEC (134), DARD (144, 16 provinces), certification organizations (100), and laboratories (20) will be given equal opportunity to participate in training.

Achieved 30 training courses on food safety and quality certification were conducted with 353 (35.5%) women out of 993 participants from relevant agencies, including MARD (415), NAFEC (6), DARD (270), certification organizations (250), laboratories (7), enterprises and research institutions and universities (45). [As a point of reference, the rate of female staff in the departments under MARD accounts for 34% (534 female staff among 1,584 total staff)]. Achieved 353 (35.5%) women out of 993 staff participated in 30 training courses for strengthening the institutional capacity at central, provincial levels and stakeholders on quality and safety system for agro-products.

Total Female participants

% female participants

MARD 415 143 34

NAFEC 6 1 17

DARD 270 120 44

Laboratory 7 1 14

Certification organizations

250 73 29

Enterprises 4 1 25

Research Institutes

41 14 34

Total 993 353 35.5

3. Target 3: Target of 30% representation by women in central, provincial, district, and commune training programs.

1.3 Establishment of a (pilot) crop food safety management system (MARD).

4. Target 4: 30% representation by

women in the staffing of the newly

established specialized committees

and units on crop food safety

Achieved

There were 10 female staff (33%) out of 30 staff

appointed to the newly established specialized

committees and units on crop food safety

68 Appendix 14

Output Targets and Actions Results Issues/challenges

management system (including

standing committee on VietGAP, units

within NAFIQAD, DCP, DPP).

management system (including standing committee

on VietGAP, and units within NAFIQAD, DCP, DPP).

5. Target 5: 30% staffing of women in

positions created for provincial food

safety specialists and facilitators.

Achieved

36% staff (44 out of 122) were women in positions

created for provincial food safety specialists and

facilitators in 13-16 provinces (except Hanoi, Hai

Phong and Ho Chi Minh city where the systems were

formed before and is still active in promoting food

safety management plant).

Output 2: Infrastructure and facilities for quality and safe agro-products

2.1 Planning of SAZs. 6. Target 6: Local communities will be

consulted on the (proposed)

establishment of three SAZ model sites

and on the location of related basic

public infrastructure (30%

representation by women during

consultations, with segregated focus

groups).

Achieved

2,578 women (35.7%) out of 7,227 participants in the

consultation meetings on the proposed SAZ models

and construction location of public infrastructures in

16 provinces. No segregated focus groups, because

women were able to articulate their needs in the

mixed group meetings. The women raised concerns

on upgrading rural roads and vegetable, tea, and fruit

models. According to them, good quality roads

facilitate transportation of fresh tea or vegetables,

which is important in preserving their quality resulting

to increase selling price.

2.2 Development of support

infrastructure in SAZs.

7. Target 7: Women’s representation in

model sites will be encouraged (50% of

project beneficiaries will be women).

Achieved

843,259 women (50.2%) out of 1,679,547 people

benefited from the infrastructure and equipment

upgrades of 95 SAZ models.

60,471 women out of 113,881 people (about 53.2%)

in 27,477 households, including 6,196 female-

headed households (22.6%) benefited from safe

agro-products certification.

269,505 women (61%) out of 440,867 people in

112,981 households benefited from the new varieties

(tea and fruit trees).

2.3 Certification of agro-

products and strengthening

of provincial capacity for

monitoring and assessment.

2.4 Replacement of pest-

and disease-susceptible

varieties with tolerant

varieties to improve quality

and safety of agro-products.

Appendix 14 69


2.5 Provision of training on

farm food safety standards-

based practices to farmers,

primary processors, and

traders.

8. Target 8: Women’s participation in

project-financed training activities

(30% representation).

Achieved:

8,317 training courses on farm food safety

standards-based practices have been organized with

343,092 participants, including 131,096 female

participants (38.2%).

Training

courses

No. of

courses

Total Women % of

women

11 7,110 301,676 116,134 38.5

22 1,207 41,416 14,962 36.2

Total 8,317 343,092 131,096 38.2

9. Action 1: Gender-sensitive training

materials in local languages will be

prepared in close consultation with

beneficiaries.

Achieved

Sessions on basic gender-sensitivity were integrated

in the training courses on farm food safety standards.

The gender training materials used were not

prepared in local languages, because ethnic

minorities people take only 5.7% among the farmers

who were given the project training courses. All of

them can communicate using the national common

languages in normal life.

2.6 Provision of support

services to project

provinces.

10. Action 2: The project will ensure

that contractors’ agreements contain

(i) gender sensitization training(s) for

construction workers; (ii) an

appropriate clause promoting the hiring

of women (30% of the unskilled

laborers will be women); and (iii) equal

pay for men and women for work of

equal value.

Not achieved

Bidding documents for all the contracts for 95 SAZ

subprojects have been finalized without such

provisions.

The gender specialists who were

engaged for a total of 7 person-

months were involved during the

consultations for the selection of

SAZ model. Thereafter, there

were no more gender specialists

to guide CPMU on this activity.

CPMU was of the opinion that

construction work is unsuitable

for women due to their physical

condition and harsh working

conditions at the construction

site. Women’s participation in

civil works was therefore not

encouraged under the project.

One of the main responsibilities

1 Training for famers. 2 Training for provincial, district, communal level staff, processing or distribution units, and others.

70 Appendix 14


of a project gender specialist is to

ensure that the CPMU

understands the rationale behind

each GAP indicator in order to

effectively implement it.

Output 3: Improved Safety and Reduced Health Hazard from Livestock Waste

3.1 Biogas infrastructure

investment

11. Target 9: Direct financial

assistance provided for the

construction of 20,000 household

biogas units (target: 50% of

beneficiaries to be women).

Achieved

68,020 women (50%) among 136,875 people in

30,078 households received assistance from the

project (training, biogas system installation, and

subsidy). Each household beneficiary received about

D1.2 million for biogas construction. Training in

biogas digester construction, maintenance and safe

operation was provided to 59,808 participants from

households, contractors, technicians, and project

staff (19,497 or 32.6% women).

3.2 Credit for biogas 12. Target 10: Financial packages

addressing the needs and constraints

faced by women, including female

heads of households, adopted by the

financial intermediaries identified by

MARD (target: 50% of beneficiaries to

be women).

Achieved

Of the 14,256 credit lines made through two project

financial institutions (VBARD and Cooperative Bank),

7,272 credit lines (51%) were under women’s names.

Financial packages addressing the needs and

constraints targeting women including those who

lack capital to invest in production and biogas plant

construction, lack land use rights certificates which

hinders their credit accessibility from formal sources.

The female heads of households were able to

access these financial packages.

Banks Total Women % women

VBARD 5,619 1,617 29.0

Cooperative

Bank

8,637 5,655 65.5

Total 14,256 7,272 51.0

The reason for Cooperative

Bank’s higher percentage of

lending to women has not

specifically been identified.

Since the biogas credit is but a

tiny fraction of VBARD’s lending

portfolio, which is 50 times

greater than Cooperative Bank’s,

it is conceivable that VBARD was

less committed to all aspect of

the biogas program. This is

reflected in the lower number of

loans issued by VBARD,

although VBARD operated

across 13 provinces compared

with 5 for Cooperative Bank.

A lesson in this respect is to

select, where possible, FIs that

have more experience with the

proposed project activity to be

financed and committed to

Appendix 14 71


lending to the target group,

including women.

3.3 Applied research

services

13. Action 3. Gender impacts from

biogas plants will be studied to assess

the impacts of the technology on

women (e.g., effects of the program on

the workloads of women and on the

division of labor between men and

women).

Achieved

An end-line survey and gender analysis was

conducted to find out the gender impacts from biogas

plants. Findings show that that the training course

given by the project helped women understand how

to operate biogas plants as well as how to pour

manure into pits or check gas pipes on their own.

Cooking using biogas helped to save time (2-4 hours

per day), giving women more time to rest and take

care of their family. Cooking with biogas also

reduced cost by up to D800,000 per month per

household, compared to using coal, industrial gas

and electric stoves.

Output 4: Project Management Support

4.1 MARD and MARD

committee for advancement

of women

14. Action 4. The project director will

be responsible for overseeing the

implementation of the GAP and

reporting on gender related

achievements in quarterly progress

reports to ADB.

Achieved

The project director oversee the project GAP

implementation. Since 2011, the gender targets and

actions in the respective project sub-components

where it was available has been included in the

quarterly progress reports. Since April 2013, a full

GAP matrix has been included in the quarterly

progress reports.

15. Action 5. The TOR of the

consultant team leader will include

responsibility for the timely and

effective GAP implementation.

Achieved

Under the consultant services package for

institutional and regulatory development and project

management, there were inputs from the social

development specialists (international and national)

who formulated detailed work plans and provided

technical support and guidance for the project

implementing agencies on the implementation of

GAP for all project activities. TOR of the consultant

team leader included “to lead the preparation of

consultants' technical working papers and progress

reports and assist the CPMU in preparing quarterly

progress reports on the project” to be submitted to

ADB.

72 Appendix 14


16. Action 6. The TOR of all

consultants will include responsibilities

to ensure GAP implementation.

Not achieved

The TOR of all consultants were prepared before

mobilizing gender consultants, thus lacking technical

assistance for this action.

Action is unrealistic as it refers to

the TOR of ‘all’ consultants.

Moreover, consultants were

already engaged, or contracts

are drafted prior to mobilization

of gender consultants. Thus, it is

important to engage gender

consultants at strategic stages of

project implementation period.

17. Action 7. Gender-sensitization

training will be carried out for all staff,

consultants, contractors, commune

facilitators and commune councillors

as part of the project orientation.

Partially achieved

The social development specialists conducted

gender sensitization training for all project staff,

including a course for CPMU and three courses for

other project implementing agencies with total of 202

participants, including 105 female participants (52%).

No gender-sensitization trainings were conducted for

consultants, contractors, and commune facilitators

and councillors.

Social development specialists

conducted courses for key

stakeholders, i.e. CPMU and

PPMUs staff with more than 200

participants. Given the limited

time of engagement of gender

specialists, such course has not

been carried out for the other

target groups referred to in

Action 7.

18. Action 8. Both female and male

staff will be given equal opportunity to

participate in training and capacity

development programs.

Achieved

The project provided equal opportunity to both

female and male staff. 144 female staff (34%) out of

421 total staff from MARD and NAFEC participated

in the training and capacity development program.

[As a point of reference, female staff in the

departments under MARD comprise 34% of all staff

(534 female staff among 1,584 total staff)].

19. Action 9. Sex-disaggregated

indicators will be established for the

project performance monitoring and

evaluation system; monitoring will be

ongoing to ensure that activities are

effectively carried out and targets

reached; progress reports will include

gender-related achievements (e.g.,

level of participation of women in

meetings and committee decisions)

and constraints.

Achieved

CPMU has developed and maintained a fairly

comprehensive sex-disaggregated monitoring and

evaluation database of nearly all project activities.

The progress reports included gender-related

achievement and constraints.

Appendix 14 73


20. Action 10. The MTR mission will

assess gender-related achievements

and constraints to GAP implementation

and propose adjustments for better

project performance.

Achieved:

The MTR mission was conducted in November 2013

and assessed gender achievements and constrains

to GAP implementation.3

ADB = Asian Development Bank, DARD = Department of Agriculture and Rural Development, DCP = Department of Crop Production, DPP = Department of Plant Protection, GAP = gender action plan, MARD = Ministry of Agriculture and Rural Development, MTR = mid-term review, NAFEC = National Agricultural and Fisheries Extension Center, NAFIQAD = National Agro-Forestry-Fisheries Quality Assurance Department, SAZ = safe agricultural zone, TOR = terms of reference, VBARD = Vietnam Bank for Agriculture and Rural Development. Source: ADB estimates.

3 GAP implementation review report (November 2013).

74 Appendix 15

ECONOMIC ANALYSIS

A. Introduction

1. The economic analysis of the Quality and Safety Enhancement of Agricultural Products and Biogas Development Project is based on the economic analysis undertaken by the monitoring and evaluation consultants (MEC) contracted by the central project management unit (CPMU) to prepare the national project completion review (PCR).1 The MEC analysis was based on data provided by the CPMU and other project management units in relation to project inputs and outputs and on the results of surveys conducted to determine the pre- and post-project benefits of participating households and enterprises. It has not been possible to review the methodology or analytical rigor used to conduct the MEC surveys.2 As such, the results of the economic analysis should be regarded as indicative. The following discussion defines the MEC analysis methodology, data sources, assumptions, and results. The data and analysis have been replicated and, as appropriate, the methodology refined for the purpose of the PCR economic analysis.

2. No overall economic analysis of the project was conducted at appraisal, on the basis that the project would adopt the sector financing modality, where the entire scope of project activities is not known at the project preparation stage. The economic analysis was, therefore, based on an assessment of the viability of the three sample subprojects. The sample subprojects included: (i) high-yield tea subproject in Lien Son district town of Yen Bai province; (ii) lychee fruits subproject in Hong Giang commune, in Luc Ngan district of Bac Giang province; and (iii) vegetable (tomatoes) subproject in Van Hoi commune, in Tam Duong district of Vinh Phuc province. The economic analysis of the sample subprojects was intended to serve both as a representative evaluation of the economic viability of the whole project as a set of benchmarking criteria for the selection of subprojects eligible for financing under the project. The appraisal analysis estimated economic internal rates of return (EIRRs) between 24.8% and 28.9%, well above the then cut-off rate of 12%. Sensitivity analysis indicated that the cash flows for the three subprojects were robust. On this basis, the appraisal analysis considered that the whole project would be economically viable.

B. Methodology

1. Approach

3. The approach covers two levels of analysis: (i) an analysis of individual components or subcomponents (outputs) and (ii) an analysis of the project as a whole. Not all project outputs have clearly defined and quantifiable benefits, and the output level analysis has been undertaken only for those which physical outputs can be identified and valued. The overall project analysis includes benefits of those productive outputs but costs for the entire project, including non-productive outputs. Given that there are significant non-quantifiable benefits related to these non-productive outputs, the overall project analysis underestimates total project benefits and, therefore, its economic returns.

1 The scope of the project completion review did not allow for conducting statistically rigorous surveys to obtain data

on project benefits. 2 According to the MEC economic analysis report, the consultants reviewed the data obtained through surveys to

ensure their reliability and accuracy. In addition, the MEC implemented a thorough review of the information collected from the households. Data of questionable accuracy and reliability were eliminated from the analysis. Household surveys were conducted in 16 provinces, covering 52 project model types and 1,586 households, an average of 31 households per model.

Appendix 15 75

4. The PCR economic analysis assumes a project life of 30 years, with a cash flow of each component or subcomponent based upon the flow of funds (costs) during implementation and the assumed life of associated outputs. The period of analysis is less than that of the MEC analysis, which is based on a 32-year term corresponding to the project loan term with implementation commencing in 2009 and repayment being completed in 2040.

5. The MEC economic analysis was conducted prior to the preparation of the CPMU project completion report, which was completed in December 2015. Data used in the MEC economic analysis do not, therefore, reflect the final level of costs and outputs at project closing. Where appropriate and where data were available at the time of this PCR, the figures used in the MEC economic analysis have been updated. The MEC analysis uses a conversion factor of 0.9 to estimate economic investment costs from financial values. The derivation of this conversion factor is not clear, nor is the reasoning for applying it only to investment costs. Under a domestic price numeraire approach, financial domestic market prices are assumed to represent the economic value of costs and benefits. Conversion factors are then applied to traded inputs and outputs based on border price equivalent values. While there is a clear potential for export of project-supported agricultural products of improved quality and safety, no information is available on the level of such exports either at present or in the future. No attempt has been made in either the MEC analysis or this PCR analysis to account for traded inputs and outputs. On this basis, no conversion factors have been used in the PCR analysis, and investment costs have been included in cash flows at their full, financial cost.

2. Output achievements and associated assumptions

6. Output 1 - Improved Regulatory Framework and Fully Operational Quality and Safety System for Agro-Products. It comprises three components: (i) improving the institutional framework; (ii) strengthening management systems; and (iii) enhancing the capacity for state agencies, testing systems and the crop food safety monitoring system. Enhancements in the areas of policy and the capacity of the relevant stakeholders to promote food safety and improve the quality of agro-products have, according to the assessment of the MEC, had a positive impact on both production and consumption. While the impact of output 1 is considered to be positive, the specific benefits have not been quantified and are, as such, excluded from the benefit side of the economic analysis.

7. Output 2 – Infrastructure and Facilities for Quality and Safe Agro-products. It consists of components:

(i) Planning of safe agricultural zones (SAZs). All 16 project provinces completed the planning of SAZs for vegetable, tea, and some fruit varieties with a total area of 182,510 hectares (ha).

(ii) Development of support infrastructure in SAZs. Based on approved SAZ planning, 95 SAZ “models” (production sites) covering 3,100 ha had been developed.

(iii) Certification of agro-products and strengthening provincial capacity for monitoring and assessment. By project closing, 26,570 enterprises or households had been certified according to the Vietnamese Good Agricultural Practices (VietGAP) standards. A total area of 9,302 ha of vegetable, fruit trees, and tea production in SAZs have a VietGAP certification.

(iv) Provision of training on VietGAP, Hazard Analysis and Critical Control Points, and other farm food safety standards practices to farmers, primary processors, and traders. Over the project period, training was delivered to 238,882 farmer participants for 7,500 courses in VietGAP, certification, and management of the

76 Appendix 15

food safety system where women accounted for 33.4%. In addition, around 23,700 participants from provincial and district administrations and processing enterprises, of which 33.7% were women, were trained through 699 courses.

(v) Replacement of pest- and disease-susceptible varieties with tolerant varieties to improve quality and safety of agro-products. By project closing, variety replacement had been completed on 15,230 ha covering 112,981 households.

(vi) Provision of support services to project provinces. By project completion, 12 laboratories had been upgraded in the Departments of Crop Protection and Plant Protection and National Agro-Forestry and Fisheries Quality Assurance Department. Over the project period, private sector laboratories emerged to provide testing and certification services. At the time of the PCR, more than 200 private sector laboratories were in operation to meet requirements related to VietGAP and other certification systems such as sanitary and phyto-sanitary certification to meet international market requirements.

8. The MEC determined that only components (ii) and (v) under output 2 can be considered as productive with readily quantifiable benefits (through surveys of production increases) for the purposes of the economic analysis. However, to eliminate possible double-counting of benefits, since areas for variety replacement are also in SAZ model areas, no additional benefits are assumed under component (v) of output 2. The four remaining components will clearly also have long-term benefits in the project area and beyond, but the quantification of these benefits was not feasible. The economic analysis of output 2 is therefore based on the benefits associated with component (ii) of output 2 and the costs of the entire component or output.

9. Assumptions made in the MEC economic analysis of component (ii) of output 2 were:

(i) Following SAZ planning and preparation, investment commenced in the fifth year following project start (2009) and was phased over 3 years. Benefits commenced in 2015 and were assumed to be earned until 2040. As noted, this cash flow period has been reduced for the PCR economic analysis.

(ii) Benefit estimates are based on the difference between net benefit (production income minus production costs) of households that participated in the project and households that did not participate in the project. Benefits of the two household categories were derived from surveys of 765 households that participated in the project and 256 households that did not participate in the project within 52 subprojects (models) in the 16 project provinces. From the assessment of the 52 models an average net benefit per ha was estimated by product group (fruit, vegetable, and tea). This was then used to extrapolate benefits to all 95 SAZ models to derive the overall net benefit for the component.

(iii) Revenue and cost of production are assumed to increase every 5 years by 5%. The MEC report provides no basis for this 5-yearly increase in production revenue and costs. Economic analysis would generally assume constant streams of costs and benefits (unless there were reasons for relative increases in specific costs or revenue items). In fact, the MEC analysis assumes constant annual operation and maintenance (O&M) cost. For the PCR economic analysis, no increases in production costs and revenues have been assumed.

(iv) Annual O&M costs for SAZ models have been assumed at 2.5% of cumulative SAZ investment (infrastructure and equipment) costs.

10. Output 3 - Biogas Development. It comprises investment in biogas infrastructure funded through project-supported financial contributions and credit for households participating in the

Appendix 15 77

program, and biogas research and development. However, research and development activities were not implemented. By project closing, 30,473 biogas digesters had been constructed. The MEC economic analysis of the biogas program differentiates between the sources of funding, identifying credit funding separately, though this is not necessary in economic analysis. It also differentiates between project implementation costs of the biogas program and the full cost of the program, with the latter including the financial contribution of those households investing in biogas. The PCR analysis is based on the latter, since all costs need to be included in the analysis.

11. Assumptions made in the MEC analysis of biogas development were:

(i) The economic life of each biogas investment is assumed to be 20 years. (ii) The main benefit is the saving in the cost of fuel by using biogas instead of

traditional materials and fuel (firewood, coal, electricity, etc.). Benefits will begin to accrue 1 year after the completion of biogas investment.

(iii) Benefit data are derived from four annual surveys over the period 2010 to 2015, covering 1,531 households across all project provinces. Values are then averaged across the four surveys. A comparison is drawn between the benefits of biogas use amongst 137 households that invested in digesters and 428 households that did not. It is not clear how these households relate to the number included in the four surveys.

(iv) The cost of investment in biogas per household is estimated at D10 million, and the annual O&M cost at D0.5 million, equivalent to 5% of investment cost.

12. Output 4 – Effective Project Management. Though critical to the successful implementation of the project, benefits of project management have not been quantified. The associated costs have however been included in the analysis of the project as a whole.

C. Results

1. Infrastructure and facilities for quality and safe agro-products

13. The MEC analysis for output 2 resulted in an economic internal rate of return (EIRR) of 16.2%. The re-evaluation for the PCR estimated an EIRR 12.3%. This indicates that the component is economically viable but is clearly highly susceptible to adverse movements in costs and/or benefits, and to the veracity of the assumptions used in the analysis. Sensitivity analysis indicates that a reduction in benefits of only 2.2% would result in the EIRR falling to the assumed economic opportunity cost of capital of 12%. On the cost side, increases of 2.7% and 15.5% in investment cost and O&M cost respectively would reduce the EIRR to 12%.

14. The MEC also undertook an economic analysis of the component by individual SAZ models, by product group, and by province. The analysis of 94 out of the 95 SAZ models indicated EIRRs ranging from 11% to 87%. The analysis by province indicated EIRRs in this same range. The analysis by product group found that investment in tea production had the highest EIRR at 42%, followed by fruit with an EIRR of 28%, and vegetables with an EIRR of 26%. No attempt was made under the PCR analysis to replicate the analysis by these groupings.

2. Biogas Development

15. The MEC analysis of the biogas development component indicates an EIRR of 33.4%. The EIRR derived in the PCR re-evaluation is 23.4%. Sensitivity analysis indicates that the EIRR

78 Appendix 15

is robust. It would require a fall in benefits of 38.1% and rises in investment cost and O&M cost of 84.2% and 244.3% respectively to reduce the EIRR to 12%.

3. Project

16. To estimate the EIRR of the project as a whole, the cash flows for outputs 2 and 3 were aggregated and the additional project investment and O&M costs included to derive an overall project cash flow on which economic analysis was conducted. On this basis, the MEC analysis resulted in an overall project EIRR of 17.7%. Re-evaluation of the PCR indicates an overall project EIRR of 13.1%. This suggest that, overall, the project is economically viable though sensitivity analysis indicates that it is susceptible to adverse changes in costs and benefits. The switching value for benefits is 6.8%, and for costs switching values for investment and O&M are 8.7% and 46.0% respectively. The EIRR is also considered to be indicative, given potential inaccuracies in the assumptions underlying the analysis.