Proposal Nep Gar

Grant Assistance Report
Project Number: 42498

November 2009
Proposed Grant Assistance

Nepal: Flour Fortification in Chakki Mills
(Financed by the Japan Fund for Poverty Reduction)
CURRENCY EQUIVALENTS
(as of 27 October 2009)
Currency Unit – Nepalese rupee/s (NRe/NRs)
NRe1.00 = $0.0134
$1.00 = NRs 74.64
ABBREVIATIONS
ADB – Asian Development Bank
DCSI – Department of Cottage and Small Industries
DDC – district development committee
DFTQC – Department of Food Technology and Quality Control
DOHS – Department of Health Services
DPIU – district project implementation unit
EAR – estimated average requirement
FAO – Food and Agriculture Organization
FCHV – female community health volunteer
JFPR – Japan Fund for Poverty Reduction
kg – kilogram
MDG – Millenium Development Goal
MI – Micronutrient Initiative
MOAC – Ministry of Agriculture and Cooperatives
MOHP – Ministry of Health and Population
MOU – memorandum of understanding
MT – metric ton
NGO – nongovernment organization
PIU – project implementation unit
ppm – parts per million
UNICEF – United Nations Children’s Fund
VDC – village development committee
WHO – World Health Organization
NOTE
In this report, ―$‖ refers to US dollars.
Vice-President X. Zhao, Operations 1

Director General K. Senga, South Asia Department (SARD)
Director T. Matsuo, Director, Agriculture, Natural Resources, and Social
Services Division, SARD
Team leader S. Sahni, Principal Project Economist, SARD
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.
JAPAN FUND FOR POVERTY REDUCTION (JFPR)
JFPR Grant Proposal
I. Basic Data
Name of Proposed Activity Flour Fortification in Chakki Mills
Country Nepal
Grant Amount Requested $1.80 million (plus $90,000 in incremental costs)
Project Duration 3 years
Regional Grant Yes / ● No
Grant Type ● Project /  Capacity building
II. Grant Development Objective(s) and Expected Key Performance Indicators

Grant Development Objectives: The objectives of the JFPR project are to (i) reduce iron deficiency
anemia as well as folic acid and vitamin A deficiency in a population of about 200,000 by adding iron,
folic acid, and vitamin A to wheat, maize, and millet milled at small community mills (chakki mills);
(ii) develop sustainable capacity in small community mills for the homogenous and high-quality
fortification of cereal flour; (iii) build central, district, and local capacity to enable fortification at small mills
via community-based social marketing, food regulation, and other services; and (iv) effectively integrate
small-mill cereal flour fortification into national nutrition planning and, in particular, into the anemia
prevention and control program. Chakki mills are usually independently owned toll milling enterprises that
collect fees in the form of grain. See design and monitoring framework in Appendix 1.
Expected Key Performance Indicators: The project is expected to result in (i) agreements with
65 village development committees (VDCs), including plans for engaging millers, implementing
community-based logistics and quality assurance and financing systems, and rasing consumer
awareness; (ii) up to 360 small millers equipped and trained to produce about 19,000 metric tons (MT) of
fortified flour, providing nutrition protection for more than 200,000 people for 2 years; (iii) procurement by
the Ministry of Health and Population of 30 MT of premix, delivery of appropriate amounts to 65 VDCs,
and twice-monthly delivery to 360 millers by VDC-based milling monitors; (iv) qualitative tests by district
and VDC quality assurance systems at each of 360 millers at least twice a month, along with quarterly
laboratory analyses of flour samples from each miller; and (v) social mobilization activities reaching more
than 90% of consumers with multiple impressions.
III. Grant Categories of Expenditure, Amounts, and Percentage of Expenditures

Amount of Grant Allocated Percentage of
Category ($) Expenditures
1. Civil Works 62,000 3%
2. Equipment and Supplies 758,457 42%
3. Training, Workshops, Public Campaigns 338,975 19%
4. Consulting Services 217,100 12%
5. Grant Management 234,875 13%
6. Contingencies 188,593 10%
TOTAL 1,800,000
Incremental Cost (see Section D.3) 90,000 5%
Note: Figures may not add up because of rounding.
2
JAPAN FUND FOR POVERTY REDUCTION
JFPR Grant Proposal

Background Information
A. Other Data
Date of Submission of 31 July 2009

Application
Project Officer Snimer K. Sahni, Principal Project Economist
Project Officer’s Division, E-mail, South Asia Agriculture, Natural Resources, and Social Services
Phone Division (SANS); [email protected]; +632 632-5079
Other Staff Who Will Need Makiko Watanabe, Young Professional, SANS
Access to Edit/Review the
Report
Sector Health and social protection
Subsector(s) Nutrition
Theme Social development, capacity development
Subtheme(s) Human development, institutional development
Targeting Classification General intervention
Was JFPR Seed Money Used to Yes [ x ] No [ ]
Prepare This Grant Proposal?
Have SRC Comments Been Yes [ x ] No [ ]
Reflected in the Proposal?
Name of Associated ADB Not applicable
Financed Operation(s)
Executing Agency Ministry of Health and Population (MOHP), http://www.moh.gov.np/
Grant Implementing Agency(ies) Director General, Department of Health Services (DOHS), Teku,
Kathmandu
Phone: +977-1- 4261436, fax: +977-1-4262896
B. Details of the Proposed Grant
1. Description of the Components, Monitorable Deliverables/Outcomes, and

Implementation Timetable
Component A
Component Name Start-Up, Site Selection, and Inception
Cost ($) $77,775
Component Description 1. Establishment of a project implementation unit (PIU) in

MOHP, with a contracted PIU management specialist and assistant.
The PIU will help the MOHP and the DOHS initiate grant activities
and form a central steering committee including the MOHP, the
DOHS, the Department of Food Technology and Quality Control
(DFTQC), the Department of Cottage and Small Industries (DCSI),
the Ministry of Education, and the Ministry of Local Development, as
well as key agencies and nongovernment organizations (NGOs)
such as the Micronutrient Initiative (MI), the United Nations
Children’s Fund (UNICEF), and the World Food Programme.
2. Meetings with stakeholders in up to six districts to identify
one project district with: (i) a high prevalence of vitamin deficiency
3
and anemia; (ii) a supportive district development committee (DDC)

and district health office; (iii) capacity and support of the district
health office; (iv) access to the DFTQC regional laboratory, and
capacity of district food inspectors; (v) indications of small millers’
willingness to participate; (vi) indications of a critical mass of village
development committees (VDCs) that are willing to participate; and
(vii) indications of local awareness of nutrition, including the success
of other micronutrient interventions such as universal salt iodization,
vitamin A capsule distribution, and anemia control programs.
3. Establishment of a district project implementation unit
(DPIU) in the district health office, with a project officer and
accountant, a milling and quality assurance coordinator, a social
mobilization coordinator, and an office assistant. The DPIU will also
contract with a local NGO for continuous support in social
mobilization and meeting facilitation.
4. Implementation of the inception process and workshops to
finalize memorandums of understanding (MOUs) with district
stakeholders describing their commitments: (i) district health office to
deliver fortificant premix to VDC health posts; (ii) VDC health post
staff to sample and test fortified flour; (iii) VDC health posts and
female community health volunteers (FCHVs) to undertake social
mobilization and awareness raising; and (iv) DFTQC to implement
food quality control including analyses in the regions and centrally.
The inception workshops will introduce key VDC leaders and health
post representatives to the project and initiate local engagement.
5. Market research and consumer analysis to identify small
milling enterprises (on the basis of their registration with DCSI),
assess cereal flour milling and consumption patterns, define key
attitudes of millers and consumers, and develop communication
strategies and messages. A Nepali research institution will be
contracted for this purpose.
6. Community meetings in 65 VDCs to secure support, build
capacity, and mobilize resources for the project. VDC coordinating
committees will be formed to work out MOUs stating locally defined
roles and responsibilities and to:
(i) work with the help of the DPIU and the NGO contracted for
social mobilization to secure the commitment of small
a
millers in the VDC to participate in the project; designate a
community member as project milling monitor to deliver
fortificant from the VDC health post to millers, monitor premix
use, collect payment for the premix (in cash or in kind), and
deliver the payment to the district health office and the
b
DPIU;
(ii) in collaboration with the district health office, designate VDC
health post staff as quality assurance monitors to implement
qualitative spot tests and forward samples to the district
DFTQC and to regional and central laboratories; and
(iii) carry out twice-yearly social mobilization activities, engaging
FCHVs and other community volunteers and leaders.
Monitorable Deliverables/Outputs 1. Contracts with PIU and DPIU staff
2. Minutes of central steering committee meetings
3. MOU with the district government selected for the project
4. Contract for the market survey and the survey report
5. Project MOU with 65 VDCs
Implementation of Major Activities: 1. PIU established: month 2
4
Number of Months for Grant 2. Central steering committee established: month 2

Activities 3. District visits completed: month 4
4. District inception process completed: month 6
5. Market and consumer analysis completed: month 7
6. VDC meetings and plans completed: month 9
7. Millers identified and engaged: month 12
a
Several years of pilot-testing in Lalitpur district by MI would seem to indicate that some millers are sufficiently
motivated by community recognition of the high quality of their product. Such recognition, together with technical
assistance, easy supply of premix, and provision of attractive mill hopper (tested and maintenance-free
technology), may be enough to secure the participation of small millers.
b
In the VDC pilot project of MI, a community member was the designated milling monitor. The early stages of the
project will require more intensive effort and oversight, and most health posts may not have sufficient or
appropriate staff. However, the project design gives each VDC the flexibility to choose the locally appropriate
solution. Thus, a health post staff could also be the milling monitor in some VDCs. This flexibility will allow different
models to be pilot-tested.
Component B
Component Name Capacity Building for Millers and Government Partners
Cost ($) $575,720
Component Description 1. Finalization of feeder design and fabrication of

360 micro-feeders to enable millers to homogenously dose cereal
flour with fortificant mix. Fabrication will begin in parallel with site
selection and inception. Testing and field trials of this innovative and
appropriate small-scale technology will be completed by the project
technical adviser (MI) by the end of 2009.
2. Training of millers and installation of fortificant
micro-feeders on the ―cascade‖ model. A master trainer will work
intensively with 10–12 local field trainers, who will in turn deliver and
install the feeders and train small millers in their use and in premix
storage and other key skills. The master training will be done by the
developers of the small-scale feeder (engineering consultant and MI)
and the DPIU milling and quality assurance coordinator.
3. Consultation between MOHP and the district health office to
define the storage and delivery of fortificant mix and the
operations of the revolving fund. The consultation will determine
the procedure and timetables for the importation of fortificant premix,
its delivery to the district, and its distribution to VDC health posts
(and thence to the millers). The consultation will also consider the
most effective way of managing the project revolving fund to
sustainably finance premix purchases. The consultation will consider:
(i) the level of fortification fee to be charged (based on pilot trials),
(ii) the process of revenue collection from mills by the VDC milling
monitors, and (ii) the process of revenue accumulation at the district
account managed by the district health office and the DPIU. Given
the current price of fortificant premix and the rise in milling fee found
acceptable to consumers in the pilot trials, the fortification fees
a
should produce a surplus to the revolving fund.
4. Training and capacity building for the central and district
DFTQC. The project will provide the DFTQC regional food laboratory
with a spectrophotometer for quantitative assessments of iron added
to milled cereals. The DFTQC central laboratory has the capacity
(high-performance liquid chromatography) to analyze iron, folic acid,
and vitamin A levels. Training in quality assurance systems for flour
fortification will be provided by a contracted local expert in the
laboratory analysis of micronutrients in foods and by the project
5
technical adviser from MI. In the project district, DFTQC food

inspectors and the DPIU milling and quality assurance coordinator
will be trained in basic sampling and quantitative spot test techniques
to enable VDC health post staff to be trained to test for iron in flour.
5. Training and capacity building for quality assurance by VDC
milling monitors and health post staff. The DPIU milling and
quality assurance coordinator, in collaboration with MI and DFTQC,
will train VDC staff to review premix use, collect flour samples, and
implement spot tests at the VDC health posts and at the mills. The
project will provide the VDC health posts with cupboards, beakers,
and other basic equipment to implement spot tests for iron in flour.
Milling monitors will also be trained in the delivery and storage of
premix, and in the collection and recording of fortification fees paid
by millers. The training workshops will be facilitated by the local NGO
contracted for social mobilization and meeting facilitation.
6. District training for social marketing and mobilization for
VDC health post staff and selected FCHVs. Four staff and
volunteers from each VDC will attend a workshop in micronutrient
deficiency and the benefits of fortification. They will be asked to
comment on and make suggestions for the project social marketing
plan, including the messages and media to be produced for the
project and distributed by VDC health post staff and FCHVs. The
workshop will be facilitated by the DPIU social marketing
coordinator and the local NGO contracted for social mobilization and
meeting facilitation.
Monitorable Deliverables/Outputs 1. Contracts with master trainers

2. Fabrication and delivery of 360 micro-feeders
3. Feeder installation at 360 project mills
4. Consultation on operations of revolving fund
5. Consultation on procurement and delivery of premix to VDCs
6. Delivery of spectrophotometer to regional DFTQC
7. Workshop for district DFTQC
8. Workshop to build food control capacity of VDC health facilities
9. Workshop for VDC milling monitors
10. Social mobilization workshop for VDCs and selected FCHVs
Implementation of Major Activities: 1. Feeder design finalized: month 2

Number of Months for Grant 2. Feeders built: months 2–12
Activities 3. Master training conducted: month 7
4. Feeders installed: months 7–12
5. District training completed: month 8
6. VDC training completed: month 11
a
From the small sample observed during the processing mission, the milling charge is about 10% of the grain and
the fortificant fee is estimated to be 2.5%, representing the cost of the fortificant premix plus overhead for
distribution and monitoring. Initial discussions with consumers indicated that they found this rise in milling fee
acceptable, knowing that they were getting a superior product.
Component C
Component Name Social Mobilization and Marketing
Cost ($) $418,555
Component Description The social mobilization component will motivate project workers and
partners and raise the visibility of the project in the community.
These activities are designed to ensure the acceptance of the
fortified product and its price, which was tested in previous trials.
6
1. Design and production of education and marketing

materials. While the final media mix and messages will be based
on comments and suggestions from the VDC coordinating
committees, the following communication materials are projected to
be designed, produced, and distributed via district, VDC, and ward
activities, as outlined below:
(i) leadership education and communication materials (1,000)
for use in initial advocacy with project partners, district
government, and other leadership audiences;
(ii) point-of-purchase displays (posters, calendars, mobiles)
appropriate for display in small mills and VDC government
and health offices;
(iii) consumer materials (stickers, trinkets, simple leaflets) to be
distributed at community events, mills, and other points
(225,000);
(iv) information leaflets or brochures to be used by development
partners and health professionals, and in schools and other
educational settings (50,000);
(v) outdoor billboard displays or wall paintings in each VDC to
be developed and rotated three times during the project;
(vi) two videos to be shown at community events and possibly
distributed to television stations; and
(vii) education and promotional audio programs for community
radio stations in the project district and for loudspeaker
broadcasts in markets and other venues.
2. District activities will include a public launching or rollout at the
time fortified flour first becomes available from the small mills. In
addition, during the 2 years of fortified flour production under the
project, two awards or recognition events will be held in the project
district to acknowledge the contributions and achievement of millers,
VDC workers, and others. The DPIU social marketing coordinator
and the NGO contracted for social mobilization will serve as
resource persons and provide technical assistance.
3. Social mobilization activities in the VDCs and wards will be
planned and organized by the VDC coordinating committees. These
committees, along with the VDC health posts and FCHVs, will be
provided with resources for twice-yearly community-wide events.
The events will take up about 5 days’ time per year from an
estimated 780 FCHVs in 65 VDCs. The DPIU social marketing
coordinator and the NGO contracted for social mobilization will
serve as resource persons and provide technical assistance. These
events will also be coordinated and integrated with other health and
nutrition promotions such as vitamin A capsule distribution. The
convening of all key stakeholders at quarterly VDC coordinating
committee meetings to review the project will also be ―internal
communications‖ events.
Monitorable Deliverables/Outputs 1. Design and production of 500 high-quality multicolor leaflets
2. Design and production of 1,500 displays for offices and mills
3. Design and production of 225,000 consumer take-home
materials
4. Design and production of 50,000 education brochures for
professionals and schools
5. Design and production of 3 billboards or wall paintings to be
rotated through each VDC over 24 months
6. Design and production of 2 videos
7. Production and monthly placement of audiotapes on 3
7
community radio stations

8. Report on 3 promotional events in the districts
9. Reports of 8 quarterly VDC coordinating committee meetings
10. Reports on 4 VDC and ward community events or festivals
Implementation of Major Activities: 1. Communication materials completed: month 12
Number of Months for Grant 2. District and VDC launch event: month 13
Activities 3. 2 district events: at the discretion of the district steering
committee in coordination with VDC events
4. VDC coordinating committee meetings: quarterly, in months 6,
10, 14, 18, 22, 26, 30, And 34
5. 4 VDC and ward events: at the discretion of the VDC
coordinating committees
Component D
Component Name Milling Implementation, Supply, and Quality Control
Cost ($) $275,607
Component Description The transaction between the consumer and the small miller will
remain essentially unchanged. Consumers will provide grain, which
the miller will put into a hopper and collect in a bag. Payment will be
in cash or in grain. The key behavior changes or added miller
activities will include:
(i) taking bimonthly delivery of premix and storing 2–
3 kilograms (kg) in a sealed plastic container;
(ii) replenishing premix in the feeder as needed, and making
occasional manual adjustments in the micro-feeder for
different grains (maize, millet, or wheat);
(iii) collecting the agreed fortification fee from consumers as part
of the milling fee;
(iv) keeping the collected fortificant fee—in currency or grain—
separate from other property and handing it over to the VDC
milling monitors twice a month.
The JFPR budget for this component is about two-thirds of the total
cost of the component, with significant contributions from the
fortificant supplier (Akzo Nobel) and the consumer-beneficiaries.
This activity will be supported and monitored as follows:
1. Central procurement of fortificant premix and delivery of
fortificant mix to VDCs via MOHP. At least twice a year, under the
direction of MOHP and with the assistance of the project technical
adviser from MI, the PIU will import premix sufficient to meet
demand from the project mills. The premix will be delivered by the
suppliers to district health posts. The district health office will then
deliver it to VDC health posts, through the same distribution system
used for other medical and supply requirements. Each shipment is
anticipated to be in the range of 7.5 MT, and each VDC will receive
about 115 kg on average. The premix will be designed to deliver
a
25 parts per million (ppm) iron (as NaFeEDTA), 1.5 ppm folic acid,
and 1 ppm vitamin A (as retinol palmitate cool water–soluble [CWS]
250 or equivalent). This will provide 50%–100% of the estimated
average requirement (EAR) of the World Health Organization
(WHO) at typical consumption.
2. Delivery of premix and collection of fortification fee through
the VDC milling monitor. With technical assistance from the
project, the VDC coordinating committee will define locally
appropriate systems for the premix to be delivered, the fortification
fee collected (in cash or in grain), and the funds deposited into the
8
project revolving fund managed by the district health office and the
DPIU. While the specifics will be left to the discretion of the VDC
coordinating committee, project guidelines will specify that premix
deliveries and fee collections should be made at least twice a month
and revenues should be deposited into the district account
b
monthly.
3. VDC quality assurance: monitoring of premix use and spot
tests for iron. The VDC coordinating committee and the VDC
health post staff will decide on a locally feasible strategy to ensure
that each fortifying mill is inspected at least twice a month in the first
year of fortification and once a month in the second year. These
inspections will involve estimating milling production, recording
premix use, conducting qualitative spot tests for iron to determine
whether fortificant mix has been added, and taking samples to be
forwarded to DFTQC. Any informal sanctions for noncompliance will
be determined by the VDC coordinating committee.
4. DFTQC mill inspection and quantitative analysis. Besides
analyzing the samples forwarded to the district by VDC staff,
DFTQC will make twice-yearly inspections of each mill, during which
it wil conduct a spot test on the premises and take samples for later
analysis in the laboratory. The total number of samples taken by the
DFTQC and VDC workers will be sufficient for: (i) quarterly
spectrophotometry analysis of iron levels at the regional DFTQC
food laboratory, and (ii) additional laboratory analysis for folic acid
and vitamin A at the central DFTQC laboratory in Kathmandu.
Monitorable Deliverables/Outputs 1. Receipt of around 30 MT of fortificant mix in at least four 7.5 MT
shipments
2. Records of delivery of fortificant premix to VDCs according to
MOPH routine procedures
3. VDC health facility records of 2 deliveries per mill via VDC
milling monitors for 24 months
4. Twice-monthly bank deposits from VDC into project revolving
fund
5. Twice-monthly reports from the milling monitor on mill
production and premix use
6. Twice-monthly spot tests for iron at each mill in year 1 (8,640
tests)
7. Monthly spot test for iron at each mill in year 2 (4,320 tests)
8. Quarterly laboratory analysis for iron for 24 months (2,880 tests)
9. Intermittent tests for vitamin A and folic acid (1,000 tests over
2 years)
Implementation of Major Activities: All activities ongoing: twice a month, monthly, or quarterly, months
Number of Months for Grant 24–36
Activities
a
Na = sodium, Fe = iron, EDTA = ethylenediaminetetraacetic acid.
b
Other than the occasional topping up with premix, there will be very little additional work for the millers. The
feeder mechanism is sealed and maintenance-free. The proposed fortification fee is about NRs0.45 per kg of
grain, to cover the cost of the premix as well as the costs of distribution and quality management. The basic
objective will be to provide local sustainability.
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Component E
Component Name Grant Management, Evaluation, and Policy Development
Cost ($) $263,750
Component Description The activities in this component will ensure that the project results
enable informed consideration of national policy on the future
expansion of small-mill fortification in Nepal.
1. Operation of steering committees. Under the supervision of
the MOHP, multisectoral steering committees will meet twice a year
to ensure the optimal participation of government, NGOs,
international agencies, and other partners. MOHP, DFTQC, DCSI,
and the Ministry of Local Development will be represented in both
central and district steering committees.
2. Midterm and final stakeholder review meetings. In addition to
the steering committee meetings, DOHS will gather together public
and private stakeholders involved in project implementation in the
district and VDCs, to review activities and progress, and to discuss
revisions to address any bottlenecks.
3. Biological impact evaluation. The fortificant mix specified for
the project is anticipated to be highly effective, delivering 50%–
100% of the EAR to average consumers. However, given the
importance of leveraging the project results to engage national
policy makers, a full biochemical analysis is proposed. A respected
research institution will be contracted to conduct both baseline and
endline surveys, with indicators including hemoglobin (anemia),
serum ferritin (iron deficiency), serum retinol (vitamin A deficiency),
and serum folate (folic acid deficiency). This evaluation will be a key
factor in the benefit–cost analysis and policy recommendations
outlined below. In addition, the evaluation team will work closely
with the DPIU social marketing coordinator to include a qualitative
knowledge, attitudes, and practices (KAP) segment in the design of
the baseline and endline surveys.
4. Economic and sustainability evaluation. An organization
experienced in nutrition and health economics and business
development will be contracted to undertake an economic, financial,
and sustainability analysis of the project. This team will work
regularly with the DOHS, the PIU, and a team of national experts to
analyze project activities, results, and finances, and to assess the
prospects for sustainability and expansion, by
(i) analyzing the costs against results documented by the
various project systems for production, quality control, social
marketing, and financing of the revolving fund;
(ii) estimating the costs of expanding these project systems on
a national, regional, or subregional scale, and
recommending the most affordable and feasible expansion;
(iii) developing a national micronutrient damage assessment
report analyzing the health and economic consequences of
anemia and folic acid deficiency in Nepal; and
(iv) projecting a benefit–cost ratio on the basis of (a) the
damage assessment report; (b) the costs of the
recommended strategies; and (c) the reduction in national
economic damage from anemia as a result of improvements
measured in the project biological evaluation.
5. Policy and advocacy workshop. MOHP will hold a
multisectoral workshop for steering committee members, donors,
and other relevant stakeholders to review the analysis and
10
recommendations resulting from the intensive, multilayered

evaluation and recommend policies for the integration of small-mill
fortification into national health and nutrition programs.
6. International dissemination workshop. Small-scale
fortification is a much-discussed topic throughout the world.
However, the feasibility and the cost of small-mill fortification cannot
be determined, for lack of concrete data and experience. The
proposed JFPR project will be the most extensive small-mill
fortification project to date. Therefore, a workshop is proposed to
inform the international community and to elicit further perspectives
on sustainable expansion in Nepal.
Monitorable Deliverables/Outputs 1. 6 central and district steering committee reports
2. Recommendations of the midterm and final review workshops
3. Reports of baseline and endline surveys, along with an analysis
of the impact of fortification on the nutrition status of consumers
in the project areas
4. Report on the economic feasibility and sustainability of project
expansion
5. Workshop report on national consensus projections of the
economic consequences of anemia and folic acid deficiency
6. Benefit–cost analysis report
7. Policy recommendations from the national workshop
8. Recommendations of the international dissemination workshop
Implementation of Major Activities: 1. Project steering committee meetings: months 2, 8, 16, 20, 26,
Number of Months for Grant and 32
Activities 2. Midterm evaluation workshop: month 17
3. Final stakeholder evaluation workshop: month 34
4. Biological evaluation preparation and baseline survey: months
4–11
5. Baseline survey report, micronutrient damage assessment
report, economic feasibility and sustainability analysis: months
30–34
6. Endline survey report and report on biological impact: months
29–30
7. National micronutrient damage assessment report: month 4
8. Benefit–cost analysis report: months 34–35
9. Policy workshop and recommendations: month 35
10. International dissemination workshop: month 35
2. Financing Plan for Proposed Grant to be Supported by JFPR
Funding Source Amount ($)

JFPR 1,800,000
Government 122,000
Private sector
Akzo Nobel (fortificant supplier) 4,725
Millers (through in-kind labor) 10,000
Beneficiaries (consumers, through fortification fees) 130,095
Total 2,066,820
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3. Background
1. Nepal’s annual per capita income of $340 makes the country one of the world’s poorest.
About two-thirds of its people live in the rural areas and depend largely on agriculture for their
livelihood. Poverty is widespread and is much more severe in the countryside. While poverty
rates have declined across Nepal, disparities are growing. Some development indicators have
improved, but child malnutrition and maternal mortality rates remain high.
2. According to the Demographic and Health Survey of 2006, anemia is a severe public
health problem in Nepal, affecting 48% of children under 5 years of age and 36% of adult
women. A report published by the United Nations Children’s Fund (UNICEF) and the
Micronutrient Initiative (MI) in 2001 estimated that more than 700 maternal deaths and possibly
10,000 perinatal deaths yearly are due to anemia in pregnant women.1 Anemia accounts for
about $28 million in lost productivity yearly, the report said, and for about $9.7 million per year in
future productivity losses due to retarded cognitive development in children. While there are no
data on folic acid deficiency in Nepal itself, birth defects related to folic acid deficiency occur in
about 1–4 per 1,000 births in East and South Asia, for about 1,000–3,000 cases per year. The
prevalence of anemia and of folic acid deficiency will therefore have to be reduced significantly if
Nepal is to achieve the Millennium Development Goals (MDGs), particularly those related to
poverty reduction, maternal and child mortality, and gender equity.2
3. The Ministry of Health and Population (MOHP) is implementing a program of iron

supplementation for the highest-risk pregnant and lactating women. This high-risk group,
however, is only about 15% of anemic women in Nepal. Moreover, iron supplementation
programs face many challenges, such as cost, logistics, and compliance. Targeted approaches
like iron supplementation are difficult to apply to public health problems that affect more than
one-third of the population. Global experience over the past 75 years has shown that, within 1
year, flour fortification can reduce national rates of vitamin and mineral deficiencies among
consumers. Wheat, maize, and millet flour is consumed throughout Nepal. The average annual
consumption of these three staple cereals—about 93 kilograms (kg) per year, according to the
Food and Agriculture Organization (FAO) Food Balance Sheets3—suggests that the proposed
fortification can deliver nearly half of the estimated average requirement (EAR) for iron
recommended by the World Health Organization (WHO) and 100% of the EAR for folic acid.
4. MOHP is also drawing up a national flour fortification program for the country’s 18–20
large roller mills. However, commercial roller mills process only about 20% of Nepal’s wheat
flour consumption, or 8% of overall cereal (wheat, maize, and millet) consumption. 4 These
grains are processed mostly by about 10,000 small water mills and electric chakki mills,5 which
serve the poor, rural, and most vulnerable populations. Therefore, small-mill fortification of
wheat, maize, and millet flour remains the best hope for significant population-wide reductions in
iron and folic acid deficiency in Nepal.
5. But, despite the promise of significant health and nutrition benefits, fortification at small
mills faces a range of challenges including the lack of appropriate technologies, supply and
1
UNICEF and Micronutrient Initiative. 2002. Global Vitamin and Mineral Damage Assessment Report.
2
A reduction in the prevalence of anemia will (i) improve adult work performance in agriculture and manual labor
(MDG 1: poverty reduction); (ii) disproportionately benefit women and girls, among whom the disease is more
prevalent (MDG 3: gender equity); (iii) reduce perinatal mortality (MDG 4: under-5 mortality rate; a reduction in folic
acid deficiency will lower the rates of death from birth defects, and a reduction in vitamin A deficiency will bring
down the rate of deaths from diarrhea and respiratory infection, now at 23%); and (iv) lower maternal mortality, now
about 20% worldwide (MDG 5: maternal mortality).
3
FAO. 2009. FAO food balance sheets. http://faostat.fao.org/site/368/default.aspx#ancor
4
Current technology does not enable cost-effective fortification of rice at the small-scale village level.
5
Chakki mills are usually independently owned toll milling enterprises that collect fees in the form of grain.
12
quality assurance systems, and population awareness. Fortification at large roller mills has been
proven safe, effective, and sustainable in both developed and developing countries; small-mill
fortification, on the other hand, is bogged down by insufficient technical and market experience.
For the past several years, the government, along with MI,6 has been trying out new technology
and innovative program approaches to small-mill fortification. The JFPR project offers the
opportunity to accelerate pilot-testing and expansion using the achievements of this
collaboration.7
4. Innovation and Knowledge Sharing
6. The fortification of maize, wheat, and millet flour presents a prime opportunity to reach
vulnerable populations in Nepal with key vitamins and minerals. However, while capacity for
fortification has been built at large roller mills, low-income consumers in Nepal typically bring
whole grains to local water-powered or electricity-powered chakki millers for grinding into flour.
Innovation is needed to enable fortification at these small enterprises and extend the benefits of
fortification to the poor. Many development agencies have identified the need for innovation, but
only scattered, small-scale technical pilot projects have been undertaken. Key technical,
regulatory, business, and marketing issues have not been addressed.
7. In Nepal, MI, working in cooperation with MOHP, has introduced low-cost technologies
for fortification at water-powered chakki mills, facilitated the design and fabrication of low-cost
fortification feeders from domestic companies, and pilot-tested the innovations. These technical
trials have shown that small mills can add fortificant mix to flour to produce a safe, homogenous,
and acceptable product. However, small mills in Nepal are a mix of water-powered and
electricity-powered chakki mills. Electricity-powered chakki mills are more typical in areas of the
terai,8 where anemia rates are about twice those in the hill and mountain areas.
8. Having addressed the major challenges of fortification in an environment with no

electricity, MI is testing an electric feeder for use in electricity-powered chakki mills. This
technology, which is expected to be tested by the end of 2009, provides small mills throughout
Nepal, whether powered by water or by electricity, with the technical potential to fortify flour. The
project will build on this foundation of innovative and appropriate technology to implement a
district-wide fortification program in 360 small water and electric chakki mills. With an average
capacity of 200 kg per day, the 360 small mills serve about 200,000 people.
9. Beyond these technical innovations, small-mill fortification on a market scale is still

untested and will require more innovations. The MI pilot trials have shown little public resistance
to the increase in milling fee necessary to sustain the recurring costs of fortification, but
engaging small local mills in fortification as a routine best practice presents additional
challenges: supply and support systems, capacity for monitoring and quality assurance, and
consumer awareness and demand. The project will therefore develop a range of innovations
including:
(i) central MOHP and Department of Health Services (DOHS) import of fortificant
premix and its distribution to village development committees (VDCs) and millers;
6
MI is a not-for-profit organization registered in Canada that specializes in finding solutions for micronutrient
malnutrition.
7
While there have been several pilot projects involving three to six small mills in India, Nepal, and Pakistan, as well
as some countries in southern Africa, this will be the first project to reach hundreds of operating small mills (360
proposed) and to test a sustainable cost recovery structure.
8
Nepal is broadly divided into three ecological regions: the mountains, the hills, and the terai. The terai region is a
26- to 32-km-wide belt of alluvial and fertile plain in southern Nepal that extends from the westernmost part of the
country to the easternmost, and covers about 17% of total land area.
13
(ii) a balance between simple, community-based quality assurance and

more-sophisticated food control provided by the Department of Food Technology
and Quality Control (DFTQC) of the Ministry of Agriculture and Cooperatives
(MOAC);
(iii) new channels, strategies, and messages for generating community demand; and
(iv) options for community VDC financing of the recurring costs of fortification,
including channels for converting in-kind payments of grain for milling services to
hard currency.
10. The project will clarify these issues and, through national workshops and international
dissemination consultations, will recommend realistic and innovative strategies for the
sustainable expansion of flour fortification at both water-powered and electricity-powered chakki
mills throughout Nepal.
5. Sustainability
11. The JFPR project will define the conditions, capacities, and resources needed for the
sustainable expansion of small-mill flour fortification, particularly to benefit the poor and the
vulnerable. Fortification will be more expensive for small mills than for larger ones. Therefore, if
there is no help from government, costs to the lowest-income and most vulnerable groups will
be greater than those for the more affluent. The results of a pilot project of MI at the VDC level
would seem to indicate that an increase in milling fee to cover the incremental recurring cost of
fortification would be largely acceptable to consumers. 9 The main barrier to sustainable
consumer financing of recurring costs would be the conversion of grain provided by consumers
as in-kind payment for milling services to hard currency needed for further purchases of
fortificant mix. The project will suggest options for the purchase of grains by public and private
stakeholders in the communities.
12. Beyond the incremental recurring costs, local communities may not be able to fully
finance initial milling equipment and supplies, and regulation, quality assurance, monitoring, and
marketing may require government and donor support. The project assumes that full fees may
be more difficult to collect at the start: 66% of recurrent costs will be collected in the first
6 months of the project, 83% in the next 6 months, and 100% in the last 6 months. Individual
millers will thus be able to phase in a cost increase, and a learning curve can be provided for in
the collection process. Therefore, the project will work to:
(i) define and quantify the resources to make the key investments and implement
key activities;
(ii) document health and other public benefits from investments in fortification—and
define benefit–cost ratios—to make a persuasive case for public financing of
start-up, capital, and government functions; and
(iii) recommend public policy for sustainable expansion and convene initial advocacy
and resource mobilization activities.
13. The project outcomes may or may not show that flour fortification can be expanded to all
small mills in Nepal. However, the project will define the conditions under which small-scale
fortification can be sustainably expanded, and the manner in which the expansion can begin.
Significant investment in project monitoring—for biological impact and business systems
evaluation, and cost–benefit analysis—will yield the rationale and conditions for expansion, and
a specific action plan and financing proposal. Government and donor agencies will thus
understand the kind and scale of public investments that must be made to sustain small-mill
fortification for the most vulnerable people in Nepal.
9
On average, the cost of milling is estimated to go up by 25%, from 10% of the value of the grain to 12.5%.
14
6. Participatory Approach
14. While fortification at large mills is usually a topdown legislated intervention, the success
of small-scale milling depends on community production, action, and support. Local millers must
have the capacity to upgrade a locally grown product to improve the nutrition and health of
consumers. Therefore, although it will be important to capitalize whenever possible on the
technical expertise and efficiencies of scale offered by centralized services (for example, via
MOHP-DOHS and MOAC-DFTQC), production, marketing, and monitoring of small-scale
fortification will ultimately depend on the engagement of local government, millers,
nongovernment organizations (NGOs), and consumers.
15. As public services are decentralized, the engagement of district development

committees (DDCs) and VDCs will be a key factor in engaging government human and financial
resources. Therefore, project inception, launch, implementation, and evaluation will involve
participatory planning workshops and other activities to build cooperation and support among
local partners, and a multisectoral district steering committee as well as VDC coordinating
committees will be formed.
16. Sixty-five VDCs will have a critical role in the project. The fortificant premix will be
delivered via the MOHP supply system to the VDC health facility. From that point, VDC
coordinating committees will be empowered and provided with sufficient resources to develop
VDC-appropriate strategies and workers to:
(i) designate or hire a community member as project milling monitor to deliver
fortificant to millers, monitor the use of premix, collect the payment for the premix
(in cash or in kind), and deliver the payment to the district MOHP and district
project implementation unit (DPIU);
(ii) in collaboration with the district MOHP, designate VDC health facility staff as
quality assurance monitors to collect samples, implement qualitative spot tests,
and forward the samples to the district MOHP; and
(iii) organize twice-yearly social mobilization activities for female community health
volunteers (FCHVs) and other community volunteers and leaders.
17. Rural and low-income communities have few traditional channels for marketing new
products. Literacy is low and traditional media outlets are scarce, limiting opportunities to
educate consumers and create awareness of the added value of fortified flour. Therefore, a key
objective of the project will be to design new community mobilization processes to reach
grassroots VDC health staff and FCHVs, as well as small mills and their consumers. These
processes will use community radio, ―video on wheels,‖ community billboards and wall
paintings, and point-of-purchase and VDC community coordinating communities and other
face-to-face channels.
15
Primary Beneficiaries and Other Affected

Groups Other Key Stakeholders
Rural, low-income communities will be the primary Other key stakeholders will be (i) millers, who will
beneficiaries through health benefits from flour gain the capacity to fortify flour along with their
fortification. Improved nutrition through fortification milling activities, and who will collect and deposit
will provide productivity and income gains to these the incremental fee for the fortification;
communities, as well as longer-term gains by (ii) community workers, who will be responsible for
enabling children to do better in school through social mobilization and monitoring; (iii) VDC and
improved cognitive abilities. DDC administration, which will distribute the
fortificant, collect fees from millers, and undertake
monitoring activities; (iv) DFTQC staff, who will
test the quality of the fortified flour; (v) DOHS
staff, who will be responsible for procurement and
overall implementation; and (vi) MI, which will act
as the project technical adviser.
DDC = district development committee, DFTQC = Department of Food Technology and Quality Control, DOHS =
Department of Health Services, MI = Micronutrient Initiative, VDC = village development committee.
7. Coordination
18. The JFPR appraisal mission briefed Kenichi Tanimoto, Second Secretary, Economic
Cooperation Section, Embassy of Japan, in Kathmandu on 18 March 2009, on the project
design proposed for funding from JFPR. Mr. Tanimoto expressed support for the project on the
basis of the project outline shared with him. A copy of the mission’s aide-mémoire, detailing the
project design, was also shared later with the embassy.
8. Detailed Cost Table
19. The summary cost table is in Appendix 2, the detailed cost estimates are in Appendix 3,
and the funds flow arrangement is in Appendix 4.
C. Link to ADB Strategy and ADB-Financed Operations
1. Link to ADB Strategy
20. ADB’s country strategy and program (CSP) 2005–2009 for Nepal is centered on
promoting inclusive development to reduce poverty in Nepal over the long term—a focus
reconfirmed in the country operations business plan for 2008–2010. The CSP is closely aligned
with the Tenth Plan (FY2003–FY2007) 10 , whose overarching goal—also the government’s
poverty reduction strategy—was to reduce poverty through broad-based economic growth,
inclusive social development, good governance, and targeted programs and rural infrastructure
development. Inclusive social development is aimed at ensuring the provision of basic social
services such as education, health, and water supply and sanitation, which would in turn
empower the poor and the disadvantaged and give them better access to economic
opportunities. Anemia is recognized as a severe public health problem in Nepal. The economic
costs of anemia in adult women are estimated in terms of lower productivity in manual labor at
about $28 million yearly. In children below 5 years, the net present value of lost future
productivity due to cognitive development deficits is estimated at $10 million per year.
10
National Planning Commission. 2002. Nepal: Tenth Plan (FY 2002-2007)
16
21. Strategy 2020 11 confirms that health is vital to development, productivity, social
inclusion, and gender equity. The strategy also recognizes that health affects—and is affected
by—poverty and development in complex ways, including malnutrition. The strategy envisages
ADB working even more closely in partnership with health agencies and other development
partners with complementary technical skills. ADB’s Special Evaluation Study of Selected ADB
Interventions on Nutrition and Food Fortification highlighted the need to strengthen national food
fortification as the most cost-effective intervention to reduce micronutrient deficiencies. ADB’s
Operational Plan for Improving Health Access and Outcomes under Strategy 2020, approved in
October 2008, recommends ADB’s engagement in highly selective health sector projects in
partnership with relevant technical agencies. The proposed JFPR grant will pilot-test a new
approach in partnership with MI, in a highly selective activity that will also help in achieving the
MDGs.
Document Document Number Date of Last Discussion

NEP: Country Strategy and Program, 2005–2009 Sec. M76-04 September 2004
NEP: Country Operations Business Plan (2008– IN.161-07 July 2007
2010)
Special Evaluation Study of Selected ADB SST: REG 2004-19
Interventions on Nutrition and Food Fortification
Operational Plan for Improving Health Access and October 2008
Outcomes under Strategy 2020
2. Rationale for Grant Funding versus ADB Lending
22. The JFPR grant project is proposed to pilot-test an innovative approach to widening the
reach to at-risk populations through low-cost technology that is being developed and tested by
MI. MI has implemented the technology and systems for water-powered chakki mills (more
common in hilly areas) in one VDC of one district, and is now developing a low-cost technology
solution for electric-powered chakki mills (more common in the terai areas) but has not yet
tested it. On the basis of the outcomes of the proposed pilot project in one district under JFPR
funding, ADB will plan to expand the approach through its country assistance program in Nepal.
Project preparatory technical assistance for this purpose is being programmed for 2012.
D. Implementation of the Proposed Grant
1. Implementing Agency
23. DOHS will be the implementing agency for the proposed project grant, and MOHP will
be the executing agency. 12 In the districts and VDCs, health facility workers, FCHVs, and
community monitors will be employed in project activities. A central project implementation unit
(PIU) and a district PIU will be formed. The central PIU will be responsible for contracting with
suppliers of fortificant premix and with contractors for the fabrication and installation of the
required equipment at the small mills. A central steering committee and VDC coordinating
committees will be responsible for oversight and monitoring. The DFTQC, through its central
and regional laboratories, will be responsible for testing samples of fortified flour. The chart in
Appendix 5 shows the proposed implementation structure.
11
ADB. 2008. Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank, 2008–2020.
Manila.
12
ADB has not worked with these agencies in the past. However, MOHP has been working with organizations such
as UNICEF. Financial due diligence of the MOHP and the DOHS will be undertaken at the time the grant
implementation manual is prepared, in consultation with development partners working in the health sector in
Nepal.
17
24. All procurement under the JFPR grant will conform to ADB’s Procurement Guidelines
(2007, as amended from time to time). ADB will recruit MI through direct selection to act as the
project technical adviser. The PIU will contract local NGOs and consultants for social
mobilization and capacity building in accordance with ADB’s Guidelines on the Use of
Consultants (2007, as amended from time to time).
2. Risks Affecting Grant Implementation
Type of Risk Brief Description Risk Mitigation Measures

Miller resistance New modes of business and production Revolving fund provides initial premix
and higher milling fees may discourage at no charge. Revolving fund finances
producers from participating. anticipate slow collection of
fortification fees from millers.
Miller will be provided with fortification
equipment at no charge.
VDC social mobilization and
recognition events will provide
positive reinforcement.
Consumer resistance Negatively perceived change in the Social marketing will address
traditional product may make potential objections and reinforce
consumers reluctant to purchase the acceptance and positive attitudes.
fortified flour.
Limited Traditional media channels do not reach Marketing and communications are
communication and have much impact in these developed by VDC coordinating
infrastructure communities. committees to ensure
appropriateness to communities.
Low sustainability of With end of project funding, recurring Given current prices and conservative
financing costs of premix cannot be financed. projections of fortification fee
collection, the revolving fund will have
$50,000 or more at the end of the
project, enough to finance 1–2
tranches of premix purchases.
Low sustainability of With end of project, government and Project includes extensive evaluation
public contributions donors will not finance ongoing cost of and economic analysis to support
regulation, logistics, and other nonlocal policy recommendations to sustain
costs. and conditionally expand fortification.
VDC = village development committee.
3. Incremental ADB Costs
Component Incremental Cost to ADB

Amount requested $90,000
Justification MI, a Canadian NGO with offices in Nepal, is a leader in the
global effort to reduce vitamin and mineral deficiencies. MI has
worked closely with a range of governments in Africa, Asia, and
Latin America, and partnered with FAO, UNICEF, WHO, and
the World Bank in supplying critical nutrition protection to
millions of women and children. In 2001, MI was a major
financier and organizer of the Manila Forum, a regional
meeting on micronutrient malnutrition hosted by ADB.
MI has been collaborating with the Government of Nepal in
developing programs to reduce vitamin and mineral
deficiencies in the country, including national vitamin A capsule
and salt iodization programs. MI has worked closely with the
18
MOHP-DOHS nutrition section in developing a coordinated

national anemia control program, pilot-testing iron folic acid
supplementation of pregnant and lactating women, and
promoting the fortification of wheat flour at Nepal’s large roller
mills. For the past 5 years, MI has worked to develop
technology and pilot fortification at small mills in Nepal and in
2006 began collaborating with ADB staff in developing
concepts to expand small-mill fortification.
ADB does not have the technical expertise to guide the
implementation of the project. Therefore, continuing MI’s
participation is critical, and will require partial outside funding.
However, MI cannot receive any JFPR funds channeled
through the government because of its status as a registered
international NGO. Therefore, with the full support of the
government, including MOHP and the Ministry of Finance, it is
proposed that MI’s continued work in this project be financed
through incremental funds channeled directly from ADB.
Type of work to be rendered by ADB 1. Transfer pilot experience, including fortification technology,
(through MI) to JFPR project;
2. Use technical knowledge in identifying and vetting key
project contractors;
3. Provide technical assistance in finalizing fortification
technologies;
4. Provide knowledge of channels for procuring fortificant
premix from international suppliers; and
5. Provide project technical management and evaluation
support, as required.
ADB = Asian Development Bank, DOHS = Department of Health Services, FAO = Food and Agriculture Organization,
JFPR = Japan Fund for Poverty Reduction, MI = Micronutrient Initiative, MOHP = Ministry of Health and Population,
NGO = nongovernment organization, UNICEF = United Nations Children’s Fund, WHO = World Health Organization.
4. Monitoring and Evaluation
Key Performance Indicator Reporting Mechanism Plan and Timetable for M&E
Agreements with 65 VDCs including MOU of PIU/MOHP with district Month 6
locally approved plans for engaging health office
local millers, implementing
community-based logistics and
quality assurance and financing
systems, and raising consumer
awareness
MOU of DPIU/district health Months 6–9
office with 65 VDC coordinating
committees
DPIU reports on capacity Months 8–11
building workshops with 65
VDC coordinating committees
Reports on DPIU review and Months 9–12
approval of VDC plans for
monitoring, social mobilization,
and collection of fees
Up to 360 small mills equipped and MOUs between project Months 6–11
trained, enabling the production of (DPIU/district health office/VDC
19,000 MT of fortified flour providing health post) and up to 360
nutrition protection for more than millers
200,000 people for 2 years
19
DPIU report on training of Month 6
trainers
DPIU milling coordinator Months 7–12
monthly reports on completion
of feeder installation and miller
training
Twice-monthly reports from Months 13–36
VDC milling monitor on flour
milling volumes and use of
fortificant premix at project mills
MOHP procurement of 30 MT of PIU bidding documents, Months 8, 15, 22, 29
premix, delivery of appropriate invoices for purchase of
amounts to 65 VDCs, and fortificant
twice-monthly delivery to 360 millers
by VDC milling monitors
District health office/DPIU Months 10,17, 24, 31
report on receipt of shipment
VDC health post/DPIU reports Months 11, 19, 27, 33
on receipt of shipment
Central, district, and VDC quality Twice-monthly (months 13–24) Months 13–36
assurance systems provide and monthly (months 25–36)
qualitative results from each of 360 reports from VDC-designated
millers at least twice a month along health worker on results of spot
with quarterly quantitative analysis test for iron
Quarterly reports from regional Quarterly from month 14
MOAC-DFTQC lab on iron
levels in flour
Quarterly reports from central Quarterly from month 14
MOAC-DFTQC lab on levels of
iron, folic acid, and vitamin A in
flour
Revolving fortificant premix fund is DPIU/district health office Month 12
replenished by fees collected from establishes bank account for
small millers and accumulates more revolving fund
than $50,000 by the end of the
project to ensure future
procurement as well as fund
operations
Twice-monthly reports of milling Months 13–36
monitors to VDC/DPIU on
collections from millers
Twice-monthly reports from Months 13–36
VDC health post on receipt of
funds from milling monitors
Records of monthly deposits Months 13–36
from 65 VDC health facilities
into district account
Social marketing and mobilization Consumer and market study Months 4–6
activities reach more than 90% of with audience segmentation,
consumers in project area with communications, and message
multiple impressions recommendations
PIU/DOHS approval of Month 7
messages and graphics
Contract with production Months 7–12
companies and receipt of Months 18–24
promotion materials for phase 1
20
(months 13–24) and phase 2
(months 25–36).
Recommendations from Month 17
midterm review meeting and
PIU/DOHS approval of revised
messages and graphics
DPIU reports on distribution of Months 12–36
materials from VDC events
Baseline and endline survey Months 11 and 29
reports on fortification
awareness indicators from
impact survey
Evidence-based objectives
proposed along with cost-effective
programs for sustainable expansion
of small-mill fortification as part of
national nutrition and anemia
control programs
Preparation of a baseline Months 4–11
survey for biological impact
evaluation
Endline survey and report on Months 29–34
biological impact evaluation
Baseline report of the nutrition Months 3–5
economics team, including a
national damage assessment
report
Final report from nutrition Months 31–35
economics team:
recommendations for financing
and feasible expansion and
benefit–cost analysis
National policy advocacy Month 35
workshop
International dissemination Month 35
workshop
DFTQC = Department of Food Technology and Quality Control, DOHS = Department of Health Services, DPIU =
district project implementation unit, M&E = monitoring and evaluation, MOAC = Ministry of Agriculture and
Cooperatives, MOHP = Ministry of Health and Population, MOU = memorandum of understanding, MT = metric ton,
PIU = project implementation unit, VDC = village development committee.
5. Estimated Disbursement Schedule
Fiscal Year (FY) Amount ($)

FY2010 1,087,800
FY2011 329,600
FY2012 382,600
Total Disbursements 1,800,000
21
-----------------------------------------------------------------------------------------------------------------------------
Appendixes
1. Design and Monitoring Framework

2. Summary Cost Table
3. Detailed Cost Estimates
4. Funds Flow Arrangement
5. Implementation Arrangements
6. Summary Poverty Reduction and Social Strategy (SPRSS) (mandatory)
22 Appendix 1
DESIGN AND MONITORING FRAMEWORK
Data Sources and

Design Performance Targets and Reporting
Summary Indicators Mechanisms Assumptions
Impact
Reduced iron deficiency Prevalence of anemia Biochemical The government

anemia, and folic acid and among children under 5 evaluation regularly procures and
vitamin A deficiency, years of age is reduced distributes fortificant
among the population of from 48% in 2006 to 30% in
one district in Nepal 2011
Prevalence of anemia
among adult women is
reduced from 36% in 2006
to 25% in 2011
Outcome
Assessment of the About 200,000 people in Baseline and final Government budget for
feasibility, cost, and impact the pilot district consume surveys flour fortification will be
of sustainably providing fortified flour over 2 years maintained
flour fortification through
chakki mills Revolving fund is Households are willing
capitalized by the end of to pay incremental cost
year 3, sufficient for at least of fortification
12 months’ premix supply
Outputs
Output 1:
Increased awareness of At least 90% of households Baseline and final Fortified flour will be
the benefits of fortified flour in pilot district know about surveys available to and
the adverse effects of IDA consumed by target
households
Draft strategy for expanding Policy advocacy
flour fortification developed workshop report Continued political and
by the end of the project financial
commitment of the
government to expand
flour fortification
Output 2:
Strengthened institutional Flour fortification Baseline and final Millers accept low-cost
and technical capacity for technology adopted and surveys fortification technology
the fortification of flour at millers trained in about 360
chakki mills chakki mills in pilot district
by month 12
Output 3:
Strengthened institutional VDC milling monitors Reports to PIU and Government capacity
and technical capacity to conduct spot tests every 2 DPIU for food analysis and
test quality of fortified flour months regulation is as officially
described
DFTQC district office
conducts iron analysis
Appendix 1 23
Data Sources and

Design Performance Targets and Reporting
Summary Indicators Mechanisms Assumptions
every quarter
DFTQC periodically tests

for folic acid and vitamin A
Output 4:
Strengthened grant Detailed implementation Project monitoring and
implementation, and monitoring guidelines evaluation reports
monitoring, and evaluation are developed by month 1
Activities with Milestones Inputs
1. Increase awareness of the benefits of fortified flour (months 1–12) ADB will provide
1.1 Conduct stakeholder meetings in up to 6 districts to identify project district (i) inception and review
(months 1–5) missions, (ii) $1.80
1.2 Launch district activities on the basis of the agreed MOU (month 6) million from JFPR for
1.2 Conduct community meetings in about 65 VDCs and agree on MOU with each project implementation,
VDC (months 7–12) and (iii) $90,000 from
1.3 Design and produce education and marketing materials (by month 12) JFPR to cover the
1.4 Organize VDC and ward social mobilization activities (months 12–36) incremental costs of
1.5 Conduct promotional events in the districts (month 13 and twice thereafter) technical management
and support of
2. Strengthen capacity for the fortification of flour at chakki mills (months 1–12) Micronutrient Initiative
2.1 Finalize engineering design (months 1–4)
2.2 Contract fabrication of equipment (month 4) The government will
2.3 Conduct training of trainers (month 7) contribute the
2.4 Install equipment and train millers (months 7–12) equivalent of $122,000
2.5 Procure and deliver fortificant premix (every 6 months) as staff costs toward
supervision and
3. Strengthen capacity to test the quality of fortified flour monitoring
3.1 Procure equipment (spectrophotometer) for DFTQC central laboratory
(month 6) Akzo Nobel will
3.2 Train DFTQC staff in laboratory analysis of micronutrients (months 6–8) contribute fortificant
3.3 Train district staff in basic sampling and quantitative spot test technique valued at $4,725
(months 6–10)
Millers and
4. Manage grant implementation, monitoring, and evaluation communities will
4.1 Establish PIU, DPIU, and steering committee (months 1–6) contribute the
4.2 Prepare baseline and endline biochemical and KAP evaluation (months 10, equivalent of $10,000
30–34) toward mill
4.3 Conduct economic analysis and evaluation of project activities (months 4 and improvements and
31–34) $131,000 as payments
4.4 Prepare proposed 10-year program, financing plan, and benefit–cost analysis toward the procurement
(months 32–35) of premix and support
4.5 Conduct policy and advocacy workshop, and document policy and program of monitoring,
recommendations (month 36) management, and
4.6 Conduct international dissemination workshop, and prepare and publish final marketing services
outputs (months 35–36)
ADB = Asian Development Bank; DFTQC = Department of Food Technology and Quality Control; DPIU = district project
implementation unit; IDA = iron deficiency anemia, KAP = knowledge, attitudes, and practices; MOU = memorandum of
understanding; PIU = project implementation unit; VDC = village development committee.
24
SUMMARY COSTS TABLE
($)
Appendix 2
Component E
Grant Components
Component A Component B Component D
Component C Grant
Capacity Building for Milling
Social Management, Total
Inputs / Expenditure category Start-Up, Site Millers and Government Implementation, Percent
Mobilization Evaluation, (input)
Selection, and Partners Supply, and
and Marketing and Policy
Inception Quality Control
Development
1. Civil Works 62,000 62,000 3
2. Equipment and Supplies 10,400 376,700 181,050 180,307 10,000 758,457 42
3. Training, Workshops, Seminars, Public Campaigns 27,500 59,950 175,025 76,500 338,975 19
4. Consulting Services 15,000 21,600 6,000 0 174,500 217,100 12
5. Grant Management 24,875 55,470 56,480 95,300 2,750 234,875 13
Subtotal JFPR grant financed 77,775 575,720 418,555 275,607 263,750 1,611,407 89
6. Contingencies 188,593 10
Subtotal JFPR (including contingencies) 1,800,000 100
JFPR % Total Project 87
Government Contribution (in-kind) 15,000 12,000 35,000 40,000 20,000 122,000 6
Other Contributions (Akzo-Nobel iron fortificant) 4,725 4,725 0
Community's Contributions (in kind and payment) 10,000 130,095 140,095 7
Estimated Costs (excluding contigencies) 15,000 22,000 35,000 174,820 20,000
Total Estimated Costs 2,066,820 100
Incremental Costs (the MI) 90,000
Component A Component B Component C Component D Component E FY Total

Fiscal Year 1 77,775 575,720 181,050 82,682 50,000 967,227 60
Fiscal Year 2 118,753 165,364 20,000 304,117 19
Fiscal Year 3 118,753 27,561 193,750 340,063 21
77,775 575,720 418,555 275,607 263,750 1,611,407 100
MI = Micronutrient Initiative, VDC = village development committee.
Source: Asian Development Bank estimates.
DETAILED COST ESTIMATES
($)
Costs Contributions
Code Supplies and Services Rendered Unit Quantity Cost Total
Other
Units Per Unit $ JFPR Government
Donors
Communities
Method of
Amount Procure-
ment
Component A: Start-Up, Site Selection and Inception Subtotal 92,775 77,775 15,000 0
1.1 Civil Works
1.2 Equipment and Supplies
1.2.1 PIU Office Start-Up Lump Sum 5,000 5,000
1.2.2 DPIU Office Start-Up Lump Sum 2,500 2,500
1.2.3 DPIU Motorbikes (lease) Month 6 150 900 900 DP
1.2.4 Project Advocacy Materials Lump Sum 2,000 2,000
1.3 Training, Workshops, Seminars

1.3.1 District Stakeholder Advocacy Meetings (5–10 participants at each) District Workshops 6 250 1,500 1,500
1.3.2 Social Mobilization and Meeting Facilitation Services Months 3 1,500 4,500 4,500 LCS/SSS
1.3.3 District Inception Meeting District Workshops 1 1,000 1,000 1,000
1.3.4 VDC Inception and Coordinating Committee Meetings (50–70 participants) VDC Workshops 195 100 19,500 19,500
1.3.5 PIU/DPIU Staff Orientation and Trainings Workshop 1 1,000 1,000 1,000
1.4 Consulting Services

1.4.1 District Market Survey and Consumer Analysis Lump Sum 15,000 15,000 LCS
1.5 Management and Coordination of this Component

1.5.1 PIU Recruitment Lump Sum 1,500 1,500
1.5.2 PIU Management Specialist months 5 500 2,500 2,500
1.5.3 PIU Office Assistant months 4 200 800 800
1.5.4 DPIU Recruitment Lump Sum 200 200
1.5.5 DPIU Project Officer/Accountant months 1 300 300 300
1.5.6 DPIU Milling and Quality Assurance Coordinator months 1 300 300 300
1.5.7 DPIU Social Mobilization Coordinator months 1 300 300 300
1.5.8 DPIU Office Assistant months 1 75 75 75
1.5.9 PIU Office Rent and Operations month 5 1,000 5,000 5,000
1.5.10 DPIU Office Rent Operations month 1 300 300 300
1.5.11 PIU Travel Person Trips 16 400 6,400 6,400
1.5.12 MOE Travel Person Trips 4 400 1,600 1,600
1.5.13 MLD Travel Person Trips 4 400 1,600 1,600
1.5.14 MOAC DFTQC Travel Person Trips 2 400 800 800
1.5.16 MOHP Travel Person Trips 8 400 3,200 3,200
1.5.17 MOHP, MOAC, MLD, and MOE Supervision 15,000 15,000
1.6 Other Project Inputs (Specify: e.g. costs for NGO's, microfinance)
Component B: Capacity Building for Millers and Government Partners Subtotal: 597,720 575,720 0 12,000 0 10,000
2.1 Civil Works

2.1.1 Mill Improvements: Walls, Roof, and Brickwork Mills 360 200 72,000 62,000 SH 10,000
Appendix 3
2.2.1 Prototype Lump Sum 5,000 5,000 DP
2.2.2 Dies for Feeders Lump Sum 10,000 10,000 SH
2.2.3 Fabrication of Feeders Feeders 360 950 342,000 342,000 NCB
2.2.4 DPIU Motorbikes (lease) Months 18 150 2,700 2,700 DP
2.2.5 Spectrophtometer for Regional Food Laboratory (DFTQC) Spectrophotometer 15,000 15,000 SH
2.2.6 Training Materials Healthworkers Workbooks/Manual 600 2 1,200 1,200 DP
2.2.7 Training Materials for Millers Workbooks/Manual 400 2 800 800 DP
25
26
Costs Contributions
Other
Donors
Communities
Appendix 3
Method of
Amount Procure-
ment
2.3 Training, workshops, seminars
2.3.1 MOPH Training in Premix Procurement and Loigists and Revolving Fund Lump Sum 5,000 5,000 LCS/SSS
2.3.2 District MOAC DFTQC Training (Laboratory and Inspector) Lump Sum 2,500 2,500 LCS/SSS
2.3.3 VDC Social Mobilization Training at District (2 days) Participants 260 25 6,500 6,500 LCS/SSS
2.3.4 VDC Quality Assurance training at District Participants 130 10 1,300 1,300 LCS/SSS
2.3.5 VDC Mill Monitor Training at District (2 days) Participants 130 25 3,250 3,250 LCS/SSS
2.3.6 DPIU Motorbikes (lease) Months 16 150 2,400 2,400 DP
2.3.7 Engineering Consultants for Feeder Finalization Lump Sum 30,000 30,000
2.3.8 Master Trainer Engineer Trainer Months 1 1,500 1,500 1,500
2.3.9 Master Quality Assurance Trainers Months 1 1,500 1,500 1,500
2.3.10 Social Mobilization and Meeting Facilitation Services Months 4 1500 6000 6000

2.4.3 Mill Installation Services 4 days/360Feeders 1440 15 21,600 21,600 LCS/SSS

2.5.1 PIU Management Specialist months 6 500 3,000 3,000
2.5.2 PIU Office Assistant months 6 250 1,500 1,500
2.5.3 DPIU Project Officer/Accountant months 6 300 1,800 1,800
2.5.4 DPIU Milling and Quality Assurance Coordinator months 6 300 1,800 1,800
2.5.5 DPIU Monitoring Assistants months 6 750 4,500 4,500
2.5.6 DPIU Social Marketing Coordinator months 6 300 1,800 1,800
2.5.7 DPIU Project Office Assistant months 6 75 450 450
2.5.8 PIU Office Rent and Operations month 6 1,000 6,000 6,000
2.5.9 DPIU Office Rent and Operations month 6 300 1,800 1,800
2.5.10 Mill Installation Per Diem days 1440 10 14,400 14,400
2.5.12 Consultant Travel Person Trips 3 400 1,200 1,200
2.5.13 DPIU Travel (3 people) Person Trips 108 15 1,620 1,620
2.5.14 MOE Travel Person Trips 2 400 800 800
2.5.15 MLD Travel Person Trips 2 400 800 800
2.5.16 MOAC DFTQC Travel Person Trips 6 400 2,400 2,400
2.5.15 MOAC DFTQC Supervision 4,000 2,000 2,000
2.5.17 MOHP Travel Person Trips 12 400 4,800 4,800
2.5.18 MOH, MOAC, MLD and MOE Supervision 10,000 10,000
2.6 Other Project Inputs (Specify)

Component C: Social Mobilization and Marketing (28 months) Subtotal: 453,555 418,555 35,000
3.1.1 Leadership Communication Materials Lump Sum 500 5 2,500 2,500 DP
3.1.2 DPIU Motormikes (lease) Months 36 150 5,400 5,400 DP
3.1.3 Mill and Office Displays (Point of Purchase) Poster 1,500 2.00 3,000 3,000 DP
3.1.4 Consumer Take Home Materials Stickers, Leaflets 225,000 0.30 67,500 67,500 SH/NCB
3.1.5 Educational Leaflets (Schools) Brochures 50,000 0.50 25,000 25,000 SH/NCB
3.1.6 Public Billboards/Materials Billboards/Wallpainting 195 150 29,250 29,250 SH/NCB
3.1.7 Video Lump Sum 2 12,500 25,000 25,000 SH/NCB
3.1.8 Community Radio Programs (3 stations) Month 78 300 23,400 23,400 SH/NCB
3.2 Training, Workshops, and Seminars

3.2.1 District Launch Events Event 1 2,500 2,500 2,500
3.2.2 VDC Community Launch Event 1 Event/VDC 65 250 16,250 16,250
3.2.5 VDC Coordinating Committee Twice Annual Meeting 6 Meetings/VDC 390 100 39,000 39,000
3.2.6 Annual Community/VDC Events 2 Events/VDC 130 200 52,000 52,000
3.2.7 VDC MOHP Health Facilities (45) Per Diem (2 days/month) 325 5 1,625 1,625
3.2.8 FCHV Per Diems 780 FCHV 10 dys/yr 7800 0.50 3,900 3,900
3.2.9 Annual District Award Events Volunteers and Millers 2 events @ 300 People 600 25 15,000 15,000
3.2.10 Teacher Training Workshop (2 teachers per school 2 schools/VDC) Participants 260 25 6,500 6,500
3.2.11 Secondary School Nutrition Education and Flour Testing Activity 3 events/school 390 75 29,250 29,250
3.2.12 Social Moblization and Meeting Facilitation Services Months 6 1,500 9,000 9,000
Costs Contributions
Other
Donors
Communities
Method of
Amount Procure-
ment
3.3.1 Creative and Graphics Design Services Months 3 2,000 6000 6000 LCS/SSS

3.4.1 PIU Management Specialist Months 10 500 5,000 5,000
3.4.2 PIU Office Assistant Months 12 250 3,000 3,000
3.4.3 DPIU Project Officer/Accountant Months 12 300 3,600 3,600
3.4.4 DPIU Social Marketing Coordinator Months 24 300 7,200 7,200
3.4.5 DPIU Office Assistant Months 12 75 900 900
3.4.6 PIU Office Rent and Operations Months 12 1,000 12,000 12,000
3.4.7 DPIU Office Rent and Operations Months 12 300 3,600 3,600
3.4.9 DPIU Travel Person Trips 96 15 1,440 1,440
3.4.10 MOHP Trip Districts Person Trips 16 400 6,400 6,400
3.4.11 MOHP District Person Trips 16 15 240 240
3.4.12 MOE Coordinator Trips Person Trips 8 400 3,200 3,200
3.4.13 MOE District Coordinator Trips Per Diem 20 15 300 300
3.4.14 MOE Supervision 10,000 10,000
3.4.15 MOHP Supervision 25,000 25,000
Component D: Milling Implementation, Supply, and Quality Control Subtotal: 450,427 275,607 40,000 4,725 130,095

4.1.1 Premix Procurement kg 37,446 6.0 224,676 89,856 SH 4,725 130,095
4.1.2 Premix Distribution and storage 15% of Premix Costs 15% 224,676 33,701 33,701 SH
4.1.3 VDC Spot Test Equipment Cupboard, Balance 65 150 9,750 9,750 DP
4.1.4 VDC Reagents for tests Tests 12,960 0.50 6,480 6,480 DP
4.1.5 DPIU Motorbikes (lease) Month 36 150.00 5,400 5,400 DP
4.1.6 MOAC DFTQA Onsite Inspection/Spot Test Reagents 1,440 0.50 720 720 DP
4.1.7 MOAC DFTQA Lab Quarterly Samples/Mill/Year Shipping/Reagents 2,880 5 14,400 14,400 SH/NCB
4.1.8 MOAC DFTQACentral Quarterly Samples Shipping/Reagents 1,000 20 20,000 20,000 SH/NCB
4.2 Training, Workshops, and Seminars

4.2.1
Appendix 3
4.4.3 PIU Office Assistant Months 12 250 3,000 3,000
4.4.4 DPIU Project Officer/Accountant Months 12 200 2,400 2,400
4.4.2 DPIU Milling and Quality Assurance Coordinator Months 24 300 7,200 7,200
4.4.6 DPIU Office Assistant Months 12 75 900 900
4.4.7 PIU Office Rent and Operations Months 12 1,000 12,000 12,000
4.4.8 DPIU Office Rent and Operations Months 12 300 3,600 3,600
4.4.10 DPIU Travel Trips 192 10 1,920 1,920
4.4.11 65 Monitoring Assistant Incentive 2 days/Month 3,120 5 15,600 15,600
27
4.4.12 Monitoring Assistant Per Diems Days 3120 2 6,240 6,240
4.4.13 VDC Health Post Per Diems 3120 Mill Inspections2/dy 3120 2 6,240 6,240
4.4.14 MOA FTQC Per Diems for Mill Visits 3 days/Month 72 25 1,800 1,800
4.4.15 MOAC DFTQC Supervision 30,000 15,000 15,000
28
Costs Contributions
Other
Units Per Unit $ JFPR Government Communities
Appendix 3
Donors
Method of
Amount Procure-
ment
Component E: Grant Management, Evaluation, and Policy Development Subtotal: 283,750 263,750 20,000

5.1.1 Policy and Advocacy Materials Lump Sum 10,000 10,000 SH
5.2 Training, workshops, seminars

5.2.1 Central Steering and Advisory Committee Biennial Meeting Meetings 6 1,000 6,000 6,000
5.2.2 District Steering and Advisory Committee Biennial Meeting Meetings 6 250 1,500 1,500
5.2.3 Policy and Advocacy Workshop Lump Sum 20,000 20,000
5.2.4 International Dissemenination Workshop Lump Sum 40,000 40,000
5.2.5 District Midterm Review Training Participants 150 30 4,500 4,500
5.2.6 District Miller Review and Input Workshop Participants 150 30 4,500 4,500
5.3.1 External Audit Audit 3 1,500 4,500 4,500 LCS/SSS
5.3.2 Baseline Survey and Impact Assessment Lump Sum 90,000 90,000 LCS/SSS
5.3.3 Economic and Sustainability Assessment Lump Sum 80,000 80,000 LCS/SSS
5
5.4.2 PIU Office Assistance Months 3 250 750 750
Components A to E = Subtotal Sub-total: 1,878,227 1,611,407 0 122,000 4,725 140,095

Contingency (Maximum 10% of total JFPR Contribution) 188,593 188,593
TOTAL Grant Costs Total: 2,066,820 1,800,000 122,000 4,725 140,095
Incremental Cost Details
Finalization of Technology 15,000
Technical Briefings to PIU Staff 15,000
Development of Training for District and VDC Health Staff 15,000
Technical Assistance to DFTQC Laboratory 15,000
Quality Assure Project Suppliers 5,000
Assist in Midterm Review 5,000
Regional and International Dissemination of Project Results 20,000
TOTAL Incremental Costs 90,000
DP = direct purchase under PAI 3.04, LCS = least cost selection, NCB = national competitive bidding, SH = shopping, SSS = single source selection.
Appendix 4 29
FUNDS FLOW ARRANGEMENT
1. The government will establish a grant imprest account immediately after the signing of the
letter of agreement for the Japan Fund for Poverty Reduction (JFPR) grant, at a bank acceptable to
the Asian Development Bank (ADB). The imprest account will be managed, replenished, and
liquidated in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to
time) and detailed arrangements agreed on between the government and ADB. ADB will initially
channel $100,000 to the imprest account as advance for day-to-day project implementation during
the inception period, and will replenish the imprest account every 3–6 months on the basis of the
replenishment requests from the GIU through the Ministry of Health and Population, and in
accordance with ADB’s statement of expenditures (SOE) procedure. The SOE procedure will apply
to all payments and transactions under $10,000 to speed up project implementation. A separate
account will be established for the incremental administration amount, and similar procedures will be
followed for payments to the Micronutrient Initiative. Detailed implementation arrangements, such as
the flow, replenishment, and administrative procedures will be detailed in the GIM, and be
established between ADB and the government through the JFPR letter of agreement. The schematic
fund flow for the JFPR project is shown in Figure A4.
2. The use of the imprest account and the SOE procedure will be audited annually by auditors
acceptable to ADB, and a separate audit opinion on the use of the imprest account and SOE
procedure should be included in the annual reports. All procurement under the project will conform
to ADB’s Procurement Guidelines (2007, as amended from time to time). Consultants will be hired
according to ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time) and
other arrangements satisfactory to ADB for the hiring of national consultants.
3. Interest earned on the JFPR imprest account can be used for the project subject to ADB’s
approval, within the approved total amount of the JFPR grant. Upon the completion of the project
and before the JFPR account is closed, any unused interest should be returned to the JFPR account
maintained at ADB. If the remittance fee and other bank charges exceed the interest earned, there
will be no need to return such interest to the JFPR account maintained at ADB.
Figure A4: Fund Flow Arrangements for Japan Fund for Poverty Reduction Project
Asian Development
Bank
$ 90,000
$1,611,407
Component A: Startup, Site $77,775 Grant Imprest Account held at

Selection, and Inception
Grant Implementation Unit
Component B: Capacity Building $575,720

for Millers and Government Incremental Administration
Partners
$418,555
Component C: Social Mobilization
and Marketing
Component D: Milling $275,607 $188,593

Implementation, Supply and Quality Contingencies
Control
Component E: Management, $263,750

Evaluation, and Policy Development

IMPLEMENTATION STRUCTURE
30
Appendix 5
National Steering Committee MOAC -
ADB JFPR Project Funds MOHP - EA DFTQC, MOI-DCSI, MOE, MLD,
DOHS - IA Collaborating Intern ational Agencies/NGOs
~ $1.80 million
PIU
Manager
Incremental Project Suppliers and Contractors District SC
Funds District Health
Office
Milling Technology DPIU Social Mobilization
Advisor Manager Advisor/NGO
Project
Tech Milling and Q/A Social Marketing
Adviso National Coordinator Coordinator
The MI Laboratory MOE - Schools
65 VDC Coordinating Committees
District DFTQC
Lab & Inspector
65 VDC Health Facility Workers
65 VDC Monitors 780 FCHV
360 Small Mills

37,000 MT Fortified Maize, Wheat, Millet 200,000 Consumers
Legend Suppliers Government Project Governance

ADB = Asian Development Bank, DCSI= Department of Cottage and Small Industries, DFTQC = Department of Food Technology and Quality Control,
DOHS = Department of Health Services, EA= executing agency, FCHV= female community health volunteer, IA= implementing agency, JFPR = Japan
Fund for Quality Control, MOAC = Ministry of Agriculture and Cooperative, MOHP = Ministry of Health and Population, NGO = nongovernment
organization, VDC = village development committee.
Appendix 6 31
SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY
Country/Project Title: NEPAL Flour Fortification in Chakki Mills
Lending/Financing Department/
JFPR Grant Project SARD/SANS
Modality: Division:
I. POVERTY ANALYSIS AND STRATEGY

A. Linkages to the National Poverty Reduction Strategy and Country Partnership Strategy
Nepal is one of the world’s least-developed countries, with low per capita income and generally low socioeconomic
indicators. As a result of the very low level of economic development, poverty and food insecurity are widespread in
Nepal. Continuing high population growth, slow growth in agricultural output, lack of adequate livelihood opportunities,
shortage of nutritious food, high poverty, lack of heath-care facilities, and lack of education and public awareness have
resulted in a number of nutritional problems.
ADB’s country strategy and program (CSP) 2005–2009 for Nepal is focused on promoting inclusive development for
reducing poverty in Nepal in the long-term, and this focus is reconfirmed in the Country Operations Business Plan 2008-
2010. The CSP was formulated in close alignment with the Tenth Plan (FY2003–FY2007). The overarching goal of the
Tenth Plan—which was also the Government’s Poverty Reduction Strategy—was to reduce poverty through broad-based
economic growth, inclusive social development, good governance, and targeted programs and rural infrastructure
development. Inclusive social development aims to ensure provision of basic social services such as education, health,
and water supply and sanitation, which would in turn empower the poor and disadvantaged sections of the population
and enhance their access to better economic opportunities
The Government, through the Ministry of Health and Population (MOHP), is developing a national flour fortification
program targeting the country’s 18–20 large roller mills. However, commercial roller mills are estimated to process only
18
about 20% of Nepal’s wheat flour consumption, an 8% share of overall cereal wheat, maize and millet consumption.
The predominant consumption of these grains comes from possibly 10,000 small water mills and electric chakki mills.
Moreover, these small mills are service the poor, rural and most vulnerable populations. Therefore, small mill fortification
of wheat, maize and millet flours remains the best hope for significant population-wide relief reductions in iron and folic
acid deficiency in Nepal.
B. Poverty Analysis Targeting Classification: GI
1. Key Issues
Poverty Reduction
Anemia contributes to poverty reduction via three pathways. First, anemic individuals in the workforce suffer 5%
performance deficits in general manual, and 17% deficit in heavy manual, labor. Therefore, for those involved in
―piecework‖, correction of anemia can result in immediate income gains. Secondly, anemic children suffer cognitive
deficits ranging from 0.5-1 standard deviation, which are associated with 4% future earnings. Thirdly, anemia among
pregnant women results in 15-20% higher maternal and perinatal mortality and consequent lost work force.
Gender Equity
Anemia disproportionately affects women’s and girls’ health, survival, school attendance and work performance.
Corrections or improvements will likewise disproportionately benefit women and girls.
Child and Female Mortality
Anemia and folic acid deficiencies are associated with perinatal mortality via mother’s anemia or folic acid related birth
defects, and about 29% of maternal mortality is associated with complications arising from anemia in pregnant women.
2. Design Features
The project is pro-poor because it focuses on developing the capacity of small mills to deliver higher quality nutrition. This
supply and distribution mechanism (small mills) is predominantly used by the poor and rural populations.
18
Current technology does not enable cost-effective fortification of rice at the small-scale, village level.
32 Appendix 6
II. SOCIAL ANALYSIS AND STRATEGY

A. Findings of Social Analysis
Key Issues
The Demographic and Health Survey (DHS) 2006 finds anemia is a severe public health problem in Nepal, affecting 48%
of children under 5 years of age and 36% of adult women. In 2001 a report published by UNICEF and the Micronutrient
Initiative estimated that more than 700 maternal deaths annually and possibly 10 thousand perinatal deaths annually are
a
attributable to anemia among pregnant women. The report projected the current value of lost productivity due to anemia
in women at $28 million annually. Future productivity losses due to anemia-related retarded cognitive development in
children is estimated at $9.72 million per year. The prevalence of Vitamin A deficiency among children under 5 years old
b
has been estimated at 32.8% and associated with the deaths of 6,880 children annually. While there is no data on folic
acid deficiency in Nepal, data from East and South Asia suggest that folic acid-related birth defects occur at 1 to 4 per
1000 births, suggesting 1-3 thousand cases per year. Significant reductions in the prevalence of anemia as well as folic
acid deficiency will be essential for the achievement of the Millennium Development Goals (MDGs) in Nepal, particularly
c
goals related to poverty reduction, maternal and child mortality as well as gender equity.
The Government of Nepal, through MOHP, is implementing a program of iron supplementation targeting the highest-risk
pregnant and lactating women. However, this high-risk group represents only about 15% of anemic women in Nepal.
Moreover, iron supplementation programs face a range of challenges including cost, logistics, and compliance. It is
difficult to apply targeted approaches like iron supplementation to population-wide public health problems affecting more
than more than one-third of the population. Global experience of 75 years indicates that within 1 year, flour fortification
can reduce national rates of vitamin and mineral deficiencies among consumers. Wheat, maize, and millet flour is
consumed by all strata of Nepali society. The average annual consumption of these three staple cereals of approximately
93 kg/yr (FAO Food Balance Sheets) suggests that proposed levels of fortification can deliver nearly half of WHO’s
estimated average requirements (EAR) for iron and 100% of EAR for folic acid.
Despite the promise of significant health and nutrition benefits, fortification at small mills faces a range of challenges
including lack of appropriate technologies, systems of supply and quality assurance, as well as population awareness.
While large roller mill fortification has proven safe, effective, and sustainable in both developed and developing countries,
there is insufficient technical and market experience with small-mill fortification. For the past several years, the
Government of Nepal along with the Micronutrient Initiative (MI) has been developing new technology and innovative
program approaches to small-mill fortification. The JFPR project offers the opportunity to accelerate, pilot-test and
expand small-mill flour fortification on the basis of the achievements of this collaboration.
B. Consultation and Participation

1. Provide a summary of the consultation and participation process during the project preparation.
The project was designed in a consultative manner. Consultations were held at Kathmandu with government and
nongovernment stakeholders and with development partners working on similar issues. Focus group discussions were
also held with participants of similar ongoing interventions in one district, where the Micronutrient Initiative (MI) is
implementing a pilot project. The project district will be identified at the start of implementation in a consultative and
participative manner.
2. What level of consultation and participation (C&P) is envisaged during the project implementation and monitoring?
Information sharing Consultation Collaborative decision making Empowerment
Stakeholder consultations will be held in up to six districts at the start of project implementation, to identify one project
district. Community meetings will then be held in about 65 village development committees (VDCs) in the identified
district, to secure support, build capacity, and mobilize resources.
At the VDC level, consultation and capacity building will proceed in parallel with the formation of VDC coordinating
committees. These committees will open a collaborative channel among the VDC health post, the VDC government, and
other stakeholders including millers and electric supply personnel. Based on general guidelines and project objectives,
VDC coordinating committees will decide local options for achieving project activities and resources.
The project will also include wide consultation at the national and district levels to coordinate the capacities of various
Appendix 6 33
vertical ministries into a multisectoral collaboration. These will include formal steering committees for the project, and will
involve:
(i) MOHP: Key objectives in anemia reduction, experience in international procurement of vitamins and medical
supplies, infrastructure extending to VDC (health post) and ward (female community health volunteers) levels.
(ii) MOAC: MOAC DFTQC has a national mandate for food regulations and quality control as well as experience in
vitamin and mineral inspection and analysis in foods. Includes regional food labs and district food inspectors.
(iii) DSCI: Has annual contact with all legal chakki millers who must register with department in order to get electricity.
(iv) MLD: Offers channels to DDC and VDC local governments.
3. Was a C&P plan prepared? Yes No

No separate C&P plan was prepared as the design of the project includes key elements of consultation and participation
C. Gender and Development

1. Key Issues.
In addition to MDG issues outlined above, women are often involved in the key project transaction: bringing grain to small
mills.
Poverty is widespread in Nepal Women bear the burden A woman at a water mill
2. Key Actions.
Measures included in the design to promote gender equity and women’s empowerment—access to and use of relevant
services, resources, assets, or opportunities and participation in decision-making process:
Gender plan Other actions/measures No action/measure
Summarize key design features of the gender plan or other gender-related actions/measures, including performance targets,
monitorable indicators, resource allocation, and implementation arrangements.
III. SOCIAL SAFEGUARD ISSUES AND OTHER SOCIAL RISKS
Significant/Limited/ Plan or Other Measures

Issue No Impact Strategy to Address Issue Included in Design
Involuntary No Impact Full Plan

Resettlement Short Plan
Resettlement Framework
No Action
Indigenous Peoples No Impact Plan

Other Action
Indigenous Peoples
Framework
No Action
Labor No Impact
Employment Plan
opportunities Other Action
Labor retrenchment No Action
Core labor standards
34 Appendix 6
Affordability
Limited Impact Beneficiaries will be required to Action
pay a small fee for the No Action
fortification, in addition to what
they pay for the milling, to make
this a sustainable activity. From
MI’s experience at a pilot site,
beneficiaries are able to pay this
additional fee and do not find it
unaffordable. However, during
the initial phase of
implementation of this project,
affordability will be assessed as
part of the social mobilization
activities.
Other Risks and/or
Vulnerabilities No Impact Plan
HIV/AIDS Other Action
Human trafficking No Action
Others(conflict, political
instability, etc.), please
specify
IV. MONITORING AND EVALUATION
Are social indicators included in the design and monitoring framework to facilitate monitoring of social development activities
and/or social impacts during project implementation? Yes □ No
CSP = country strategy and program, DDC = district development committee, DFTQC = Department of Food Technology and
Quality Control, DHS = demographic and health survey, DSCI = Department of Small and Cottage Industries, EAR = estimated
average requirement, FAO = Food and Agriculture Organization, MDG = Millennium Development Goal, MI = Micronutrient
Initiative, MLD = Ministry of Local Development, MOAC = Ministry of Agriculture and Cooperatives, MOHP = Ministry of Health
and Population, UNICEF = United Nations Children’s Fund, VDC = village development committee.
a
UNICEF and Micronutrient Initiative. 2002. Global Vitamin and Mineral Damage Assessment Report.
b
ibid
c
A reduction in the prevalence of anemia will (i) improve adult work performance in agriculture and
manual labor (MDG 1: poverty reduction); (ii) disproportionately benefit women and girls, among whom
the disease is more prevalent (MDG 3: gender equity); (iii) reduce perinatal mortality (MDG 4: under-5
mortality rate; a reduction in folic acid deficiency will lower the rates of death from birth defects, and a
reduction in vitamin A deficiency will bring down the rate of deaths from diarrhea and respiratory
infection, now at 23%); and (iv) lower maternal mortality, now about 20% worldwide (MDG 5: maternal
mortality).

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Grant Assistance Report

Project Number: 42498

Proposed Grant Assistance

Vice-President X. Zhao, Operations 1

Team leader S. Sahni, Principal Project Economist, SARD

Project Duration 3 years

Regional Grant Yes / ● No

Grant Type ● Project /  Capacity building

II. Grant Development Objective(s) and Expected Key Performance Indicators

III. Grant Categories of Expenditure, Amounts, and Percentage of Expenditures

JAPAN FUND FOR POVERTY REDUCTION

JFPR Grant Proposal

Date of Submission of 31 July 2009

B. Details of the Proposed Grant

1. Description of the Components, Monitorable Deliverables/Outcomes, and

Component Description 1. Establishment of a project implementation unit (PIU) in

and anemia; (ii) a supportive district development committee (DDC)

Number of Months for Grant 2. Central steering committee established: month 2

Component Description 1. Finalization of feeder design and fabrication of

technical adviser from MI. In the project district, DFTQC food

Monitorable Deliverables/Outputs 1. Contracts with master trainers

Implementation of Major Activities: 1. Feeder design finalized: month 2

1. Design and production of education and marketing

community radio stations

recommendations resulting from the intensive, multilayered

2. Financing Plan for Proposed Grant to be Supported by JFPR

Funding Source Amount ($)

3. The Ministry of Health and Population (MOHP) is implementing a program of iron

4. Innovation and Knowledge Sharing

8. Having addressed the major challenges of fortification in an environment with no

9. Beyond these technical innovations, small-mill fortification on a market scale is still

(ii) a balance between simple, community-based quality assurance and

15. As public services are decentralized, the engagement of district development

Primary Beneficiaries and Other Affected

8. Detailed Cost Table

C. Link to ADB Strategy and ADB-Financed Operations

1. Link to ADB Strategy

Document Document Number Date of Last Discussion

2. Rationale for Grant Funding versus ADB Lending

D. Implementation of the Proposed Grant

2. Risks Affecting Grant Implementation

Type of Risk Brief Description Risk Mitigation Measures

3. Incremental ADB Costs

Component Incremental Cost to ADB

MOHP-DOHS nutrition section in developing a coordinated

4. Monitoring and Evaluation

5. Estimated Disbursement Schedule

Fiscal Year (FY) Amount ($)

1. Design and Monitoring Framework

DESIGN AND MONITORING FRAMEWORK

Data Sources and

Reduced iron deficiency Prevalence of anemia Biochemical The government

Data Sources and

DFTQC periodically tests

Activities with Milestones Inputs

Component A Component B Component C Component D Component E FY Total

1.3 Training, Workshops, Seminars

1.4 Consulting Services

1.5 Management and Coordination of this Component