GOVERNMENT OF THE UNION OF MYANMAR UNITED NATIONS DEVELOPMENT PROGRAMME FOOD AND AGRICULTURE ORGANIZATION

MYA/01/008

Myanmar Agriculture Sector Review:

Analysis and Investment Strategy Formulation

This project aims to undertake a sector review for use primarily by the Government of Myanmar (GOM), secondarily by other stakeholders, to identify issues, and define investment needs in order to stimulate broad-based agricultural growth. The review team will conduct an in-depth study for understanding the critical factors affecting pro-poor agricultural growth that includes an analysis of, and recommendations for, improving the technology and resource base, the enabling environment, the quality of support services, the effectiveness and respective potential roles of public and private sector institutions, public expenditure on agriculture and the state of physical infrastructure and human and social capital. The review team will also formulate feasible options, suitable strategies and action plans which is envisaged to provide the basic framework for future investment for agriculture development in Myanmar.

Date: 23 September 2002

Part I Situation Analysis and Project Strategy

1. Situation Analysis a. Overview International experience has lead to a renewed focus in the agriculture sector as the engine for broadbased economic growth. Compared to any other sector within an economy, the growth in the agriculture productivity has been recognized to be pro-poor1 having a direct role in raising real incomes of the rural poor, and thus reducing poverty2. This implies that in a sector such as agriculture, which requires relatively high public investments, strategically formulated and implemented policies conducive to growth could significantly contribute to the overall poverty alleviation of a country. Such agricultural development strategies would be critical for many countries to achieve the global Millennium Development Goals of halving poverty and hunger by 2015. UNDP assistance to Myanmar, since 1994, has been provided within the framework of the Human Development Initiative (HDI) under a special mandate, which stipulates that all operational activities are implemented directly targeting grassroots communities in the five key areas of basic human needs. Food security has been a major pillar in which UNDP has subsequently implemented communitybased interventions that aims to expand and protect the productive resources and assets of the poor by providing agricultural inputs, technical capacity building, credit, and marketing opportunities. In the HDI III phase (1999 to 2002), three projects promoting conservation-based food security projects were implemented in the three different agro-ecological zones of the Dry Zone (MYA/99/006), Shan Watershed (MYA/99/007), and Ayeyarwaddy Delta (MYA/99/008). In addition, the Community Development in the Remote Townships Project (MYA/99/009), based on the sustainable livelihoods model, undertook numerous initiatives in the agriculture sector that aimed to ensure food security and incomes. As a result, many achievements have been recorded through these interventions which demonstrate that small farmers and landless laborers have the potential to increase their productivity and incomes if they had access to the appropriate support structure and enabling environment. While the HDI has improved the well-being of an estimated 4.4 percent of the countrys population, the majority of the rural population living outside of the targeted villages continues to face very difficult living conditions. Even for the HDI beneficiaries, it has been observed that without the conducive regulatory and market environment, enhancement of farm-level productivity per se did not necessarily lead to the improvement of livelihoods for the those farmers. From this recognition that project impact remains restricted when the intervention is confined to the grassroots level, stemmed the need to acquire a more comprehensive understanding of the different dimensions of institutions and policies that influence primary food productivity and marketing systems, technical capacities existing at the field level, availability of the necessary inputs and support services, the state of natural resource base, and the degree to which any of these aspects affect the livelihoods of the rural population. Consequently, in September 2001, UNDP received its Executive Boards approval to undertake an agriculture sector review3 in Myanmar.

Many studies have been undertaken to shed light on the role of agriculture in poverty alleviation. One study of 35 countries developing countries demonstrated that one percent increase in agricultural GDP per capita led to a 1.6% gain in the per capita incomes of the lowest income fifth of the population. (Timmer, Peter: How Well do the Poor Connect to the Growth Process. Discussion Paper No. 178, Harvard Institute for International Development, Cambridge, MA, 1997) According to the World Bank, the average real income of small farmers in southern India rose by 90% and that of landless laborers by 125% between 1973 and 1994, as a result of the green revolution (World Bank: World Development Report 2000-2001: Attacking Poverty, Oxford University Press, New York.) When referring to the agriculture sector in this document, it includes the broader agriculture sector with its sub-sectors of agriculture, livestock, and fisheries. MYA/01/008 Agriculture Sector Review page 2

b. The Policy Framework Since the early 1990s the Government of Myanmar (GOM) has supported the market economy pursuing a policy of withdrawal from commercial activities, opening to foreign trade and investment, divestment of state enterprises, encouragement of markets and the private sector and price decontrol. Although much progress has been made, the reforms are still incomplete and, since the mid-1990s results appears to be uneven. GOM policy and strategy are expressed in the agricultural section of the current Five-Year Plan and in the Agriculture Long-term Plan 2001-2031. GOM strategies to achieve sustained agricultural growth include: (a) Provision of irrigation water, through construction of reservoirs and dams, watershed management, rehabilitation of existing reservoirs, water harvesting techniques, and utilization of groundwater; (b) Promotion of agricultural mechanization through the establishment of model mechanized farms and engagement of the private sector in the distribution of farm machinery and inputs; (c) Use of improved technologies, through generation and dissemination of modern production practices, including efficient cropping patterns, proper use of production inputs, proper extension methods, and development of high yielding varieties. (d) Engaging the private sector in the development of new agricultural land, including reclamation of cultivable waste land and lowland subject to flooding, for the production of commercial-scale production of food and industrial crops; In the medium term GOM policy aims at consolidating and increasing surpluses in rice, pulses and industrial crops for export and at reaching self-sufficiency in edible oils. The area and production targets set for some of the crops in recent years have failed to be reached. An assessment of the comparative advantages of the major crops could help putting public support to crops and farming systems development on a more economically rational basis. Although GOMs efforts to achieve rapid agricultural growth may be seen as having an implicit poverty reduction objective, experience in fast growing Asian economies teaches that growth alone is neither fast nor inclusive enough to lift the mass of poor farmers out of poverty. More focused interventions in favor of the poorest and the most vulnerable population must be part of any future agricultural development strategy. c. Other Assistance For many years there has been considerable under-investment in Myanmar. Since 1988 the country has not had any significant inflows of official development assistance (ODA). Total ODA from 19992001 has increased from approximately US$72 million to about US$126 million4, or about US$1.5-2.5 per head. Nevertheless it is still quite low than the corresponding estimated amount provided to Myanmars neighbors such as Pakistan and Indonesia US$ 4.3, Thailand US$ 10.3, Vietnam US$ 13, and Cambodia US$ 36.5. In addition to ODA, some US$ 300 million of direct foreign investment (DFI) were targeted towards Myanmar in 1999/2000. Most of it went into oil and gas exploration and some into mining and manufacture. Agriculture benefited only US$ 0.2 million and fisheries sector with US$ 2.2 million from DFI. The absence of international donors, especially of major multilateral financing institutions (MFI), has not only deprived the rural economy of much needed investment but also of a culture of rigorous pre-investment work comprising economic feasibility and environmental and social safeguard studies. This, together with an overvalued exchange rate applied in the public sector, has led to inefficiencies and misallocation of the domestic investment that took place in the 1990s.

Source: UNDP ODA Survey 2002. The 2002 figure (US$126 million) includes US$31.95 million debt relief grant provided by the Japanese Government.
MYA/01/008 Agriculture Sector Review page 3

Japan International Cooperation Agency (JICA) is currently engaged in a 2-year joint program with GOM for the preparation of economic structural adjustments. The work will terminate at the end of 2002. JICA provides technical, but presently no economic or investment assistance. The program is organized to entail intensive policy dialogue with technical assistance, through a joint task force and a number of joint working groups (WG). The WG conduct background investigations and formulate policy recommendations in four broad thematic areas: monetary and fiscal affairs, trade and industry, the agriculture and rural economy and information technology. In the agriculture sector a number of sub-sectors will be studied in detail such as public support services, the non-farm rural economy, agro-industry, and private sector development. A geographical information system (GIS) will be established for land use monitoring and planning. The work is expected to yield substantial agriculture sector information, including new primary data collection. Of particular importance is the rural household survey undertaken by the Agriculture and Rural Economy Working Group of the Task Force. It ought to furnish data on socio-economic conditions and food security in selected areas of the country that will be critical for agriculture development strategy formulation. It will be of importance for the review team to closely coordinate and cooperate with the JICA working group to avoid duplication and achieve harmonization of policy recommendations. The major MFIs have not started any new lending operations since 1988. However, some ongoing projects were completed and completion reports prepared. ADB undertook an agricultural sector survey in 1995 and the World Bank and ADB prepared economic mission reports in 1999 and 2001 respectively that contain agricultural chapters. FAO, under TCP, has supported the Myanmar rural economy since 1990 through contributions to the countrys hybrid rice program, horticultural development, market information, promotion of small livestock in border areas and emergency seed supply. In 1990 FAO was assigned by UNDP as the executing agency for the agricultural census of 1993, and from 1996 to 2002 for the agricultural component of HDI. A new census would be highly desirable in order to update relevant agricultural statistics and, to that end, upon the request of the Government of Myanmar, FAO has completed a TCP proposal for preparation of a full agricultural census to start in April 2003 that is currently being considered for funding by UNDP. UNDCP is implementing a five year Wa Alternative Development Project (99-03) which includes agriculture as one of the four core components promoting alternative livelihoods in reducing opium supply in the Wa Special Region. The project has been budgeted for US$15 million, and support to agricultural activities such as crop diversification, and livestock vaccination has increasingly become the main focus of their intervention, which has culminated in the upcoming partnership with FAO. Furthermore, UNDCP has implemented a state-wide opium production survey in the Shan state in 2001 which examined the average opium production land size, cultivation techniques and facilities, and cropping practices. Similar to UNDP a number of International NGOs are involved in humanitarian assistance at the grassroots level in the rural areas, of which a few are specifically engaged in the agriculture sector. Combined assistance disbursed by all INGOs in 2001 was estimated at US$14.2 million. There is, apart from JICA, little bi-lateral assistance to the rural areas in Myanmar although some other countries are supporting small humanitarian relief efforts at community level and are considering increasing their involvement in the near future. The multi-disciplinary humanitarian relief effort at grassroots and village level supported by international donors (UN agencies, international NGO, CIRDAP5) in recent years have resulted in what could become a roadmap towards future agricultural development initiatives that are specifically pro-poor. Community-driven development (CDD) and social funds to support farming households at village level have been successful in other countries and are increasingly being mainstreamed in international development efforts. The experience in Myanmar will be a valuable basis for a long-term
5

Centre on Integrated Rural Development for Asia and the Pacific, a Bangladesh-based institution. MYA/01/008 Agriculture Sector Review page 4

goal of rural poverty reduction. It will be important to distil the achievements of these initiatives in order to identify those that show sound cost/benefit relationship, beneficiary impact and sustainability and assess the conditions for their replicability on a wider scale. 2. Project Strategy a. Potential and Constraints By nearly all accounts the Asian region is going to experience substantial economic growth during the next decades. With the opening of the economy to trade and investments Myanmar has a good opportunity to benefit from this development. The country is endowed with abundant natural resources that can form the basis of a thriving agriculture sector. With sound management of land and water resources Myanmar can achieve solid agriculture-led growth that benefits the mass of rural poor and the economy as a whole. Economic growth in the east and south-east Asian region over the coming decades is likely to be driven by income increases, urbanization and population growth domestically and in neighboring countries. The first two will particularly boost the demand for higher value produce, such as horticulture and livestock products for which abundant potential exist in Myanmar outside paddy areas. In addition, Myanmar has the advantage that the staple foods produced by its smallholders, especially rice and pulses, enjoy strong export markets in neighboring countries that find it hard to sustain and increase local production of these relatively low value crops when domestic wages and incomes rise. Agricultural growth in Myanmar has therefore good prospects of being demand-led and to bring about broad rural poverty reduction in the long run. The four greatest constraints to a vibrant agricultural sector are the low technology level, the lack of economic incentives to rural producers, the poor nutrition and health standard of parts of the rural population and difficult access to land. These factors keep smallholder production near the subsistence threshold. Low technology expresses itself through low fertilizer use, poor quality of seeds and dated seed varieties. Lack of irrigation infrastructure means that most farmers are exposed to climatic variability and discouraged from investing in technology. The void in rural financial services exacerbates the problem of low technology use. Research and extension services in Myanmar are now suffering from shortage of equipment and qualified staff and need to be adapted to become more demand-driven and participatory- minded and flexible to respond to a diversity of farmers (especially the marginal and landless) needs and agro-ecological situations. Many international observers see a key factor for slow growth in the agricultural sector is the policy environment. At the sector level, factors that have been listed as forming disincentives to agriculture investment are: procurement policy and private export ban6 for rice; erratic trade restrictions for other agricultural commodities; inflexible land tenure, arbitrary land allocation policy7 and cropping policies. At the macro-economic level, international observers have cited the existence of multiple exchange rates (of which the one governing public sector transactions is vastly overvalued and effectively shuts out international loans to the public sector), the high budget deficit, low tax collection rate, high rates of inflation, interest rate ceilings in the inflationary environment, the heavy presence of State Economic Enterprises (SEE) in many sectors operating under soft budget constraints and inadequacy of public services and infrastructure as having a stifling effect on the rural economy and places constraints on the agriculture sector to achieve its full potential .
6 7

Except for part of the rice grown by large commercial farms benefiting from preferential land allocations. All land is formally state-owned and available on lease to farmers as long as they cultivate it. However there is no legal title to land or lease which excludes its use as loan collateral. Private land leases and transfers are not allowed (although they may occur informally). The inflexibility of land transfers hinders efficient land use. The policy of allocating large tracts of wasteland to commercial farming enterprises often does not adequately take into account previous, even though extensive, use of the land by marginal farmers and the landless and no sufficient compensation to such users is apparently offered when land is diverted from former uses. In developing the land, the commercial enterprises benefit from facilities such as imports of machinery, fertilizer and fuel at preferential rates, that are not accessible to most small farmers. There is a large body of experience available from other developing countries that, given equal incentives and support, smallholders can use land more intensively than large commercial farms due to their ability to draw on family labor and to make use of ecological niches. MYA/01/008 Agriculture Sector Review page 5

b. Needs and Justification of the Sector review Myanmar has not received any significant ODA for nearly one and a half decades and there is now a serious investment gap in the rural economy. Investments to the agriculture sector and its sub-sectors that have been undertaken from scarce domestic resources have not always been economically efficient when they were not based on solid feasibility work and underpinned by the necessary policy changes. Many observers believe that within the next few years the international donor community may increase its activities in the country. When this happens the donors will appreciate the guidance and the groundwork for their future interventions in the agriculture sector without having to undertake major preliminary studies that would delay concrete investment. At the same time GOM would benefit from the preparation of investment strategies and prioritization that would make better use of its own resources. Little systematic sector work has been published on Myanmar in recent years although some studies were carried out. There is now an urgent need for a comprehensive agriculture sector analysis and investment strategies, including a sub-sector policy review and technical recommendations, which would present a unified GOM and donors view on agriculture investment priorities and prepare the ground for future international assistance. To be relevant as a basis for future international financial engagement the results of the sector review would need to be fully endorsed by both, GOM and the international donor community. The review must therefore be undertaken in close consultation with all development partners. Myanmars agricultural development would be central to both, a broad-based national growth promotion and a poverty reduction effort. In this regard, the review will first, address GOM actual policies and investment strategies embodied in its agricultural development plans and applied in practice, analyze them on the basis of economic and technical efficiency, social equity, and environmental soundness and make recommendations for their future directions. Second, it will seek to strengthen and articulate a pro-poor orientation of Myanmars agriculture sector policy framework and investment strategy as an alternative to the prevailing commodity and output orientation. Broad-based and economically efficient agricultural growth will go a long way in contributing to reduce rural poverty, but it will not be enough. Experience shows that in a situation of overall growth, there will be losers and population segments left behind and that growth-enhancing measures show their effects only in the longer term, not immediately, when poor people need it. The majority of the countrys rural poor will continue to be dependent on agriculture production to support their livelihoods. This is the reason that the review will attempt to identify and promote concrete, economically viable, and thus sustainable technical improvements that has been field tested in Myanmar, for immediate replication in other parts of the country to support the agricultural production activities of these populations. UNDPs HDI experience in the food security projects is an excellent starting point and framework for the design of these future technical interventions. c. Project Coordination and Design The project will tentatively start in October 2002, which is towards the end of the monsoon season, and continue through June 2003 (see Annex 2). At the early stages of the Review, a Steering Committee for the project will be established that will operate as a forum of regular consultations between the review team and the key stakeholders. It will be comprised of representatives from each of the two concerned ministries8, UNDP, FAO, ADB and other selected donors contributing to the review, the Chamber of Commerce and Industry. Other representatives may be requested to attend (Ministries of Industry, Commerce and others) if crosscutting issues are on the agenda. The Steering Committee will be co-chaired by both the Ministry of Agriculture and Irrigation (MAI) and UNDP, and will meet once every two months, or about five
8

The ministries concerned with this sector review are the Ministry of Agriculture and Irrigation and the Ministry of Livestock and Fisheries. MYA/01/008 Agriculture Sector Review page 6

times during the course of the review implementation. MAI will ensure coordination of the review work among and within the two concerned Ministries and other relevant technical departments. For this purpose GOM will appoint one senior coordinator, preferably drawn from the staff of the MAI who will be working with the review team full time. His/her main tasks will be to ensure that the members of the review team obtain access to officials, sites and documentation needed to carry out their work. In view of the importance to ensure harmonization with the work of the GOM/JICA structural adjustment team, consultation meetings will be scheduled to exchange information and update the other side on work progress. In addition, regular meetings of the review team or individual team members will be arranged under UNDP auspices with representatives of all donors who are interested to increase their support to the agriculture sector, potentially, Japan, Australia, UK and ADB. These meetings will initiate a donor forum for discussions to establish an international consensus in support of broad-based agricultural development. International technical backstopping of the review team, mainly by virtual means, will be arranged with the FAO Regional Office in Bangkok or Rome headquarters as required. The review work will be organized over a ten-month period in two main time slices. This will reduce logistical and coordination problems and allow sequential fine-tuning of the review. A first mission of seven international specialists (team leader, rural sociologist, agronomist, livestock specialist, CDD specialist, agricultural economist and rural finance specialist) will work in Myanmar between October and December 2002. The focus of this team will be mainly on issues affecting primary producers and production, data analysis and definition of sub-sector priorities. The second team of eight experts (team leader, rural sociologist, agronomist, agro-industry specialist, rural finance specialist, irrigation engineer, fisheries specialist and agricultural economist) will work from January to April 2003. It will be mainly concerned with issues affecting support services and with the design of investment strategies, policies and programs. To ensure linkages between the review work and the grass-roots communities, participatory consultation processes are envisaged at various parts of the country. These consultations aim to obtain direct feedback from the representatives from the communities engaged in the agriculture sector, and to validate the reviews findings at the field-level. Two workshops, one initial and one final, will be arranged at appropriate stages of the review for consultations and dissemination of project outputs. The cost of the workshops will be borne by the project including travel of participants to Yangon from outer states and divisions. Participants will include GOM officials at senior technical level from central offices and the field, NGOs, the private sector represented by the Chamber of Commerce and Industry, and representatives of international agencies. In the course of the project FAO will arrange a training session of three to five days in Yangon for a number of technical staff in the analysis of agricultural policies and related investment projects and programs using existing training modules. The exact timing of this course will be decided according to availability of FAO training staff. d. Expected End of Project Situation By the end of this Agriculture Sector Review, a comprehensive document supported by annexes and working papers will be made available to GOM containing a review of the agricultural sector (including livestock/fisheries sub-sectors). The document9 will contain a diagnosis of the agriculture sector, an analysis of constraints and potential, sub-sector policy and investment strategy recommendations and an identification of concrete investment priorities in the short, medium and long
9

Subject to prior consultations and agreement with the counterpart ministry, this document will later be shared with a larger community of stakeholders. MYA/01/008 Agriculture Sector Review page 7

term. The document will also include project profiles for selected priority investment programs and projects with indicative cost estimates. It will facilitate the preparations of concrete assistance programs and investment loans once the donor community resumes operations in Myanmar on a larger scale. The proposals will reflect a two-track approach towards agricultural development that is widely supported by development agencies, (i) through general growth enhancing technical interventions in the agricultural sector and (ii) through promotion of agricultural interventions which address the needs of the poorest and most vulnerable rural population. In addition, it is envisaged that among the key stakeholders, a broad platform for discussing agriculture sector issues and its role in sustainable rural development will be set up so that it will serve as the basis for achieving consensus on the potentials and constraints, strategies, priority intervention areas and opportunities in the agriculture sector. Finally, at completion of the project, a number of technical staff will be familiar with practices of propoor agriculture sector analysis and investment programme identification to international standards through their collaboration with international experts in the field, specific training courses and workshops. e. Risks There are two main risks that might derail the project. First risk is that the necessary macro-economic and sector policy reforms recommended by the JICA project may not be seen as appropriate by the MAI, MLF and other counterparts. This could have a negative impact on UNDP/FAO review team to successfully advocate for increased donor commitments to the agriculture sector. Such a risk could be minimized through regular consultations among JICA, UNDP/FAO, MAI and MLF where there could be a systematic engagement to sound out policy recommendations that would reinforce each of the initiatives, and that would be acceptable to all. Second risk involves the possibility of any substantial time lag between the implementation period of this Sector Review, and the period when the international donor community agrees to commit new resources for Myanmars agriculture sector. If there are to be any delays in future investments, the data and the analysis within the review may lose relevance and similar sector assessment exercises may need to be repeated. This gap could be minimized by 1) incorporating a resource mobilization strategy within the design of the Review, and 2) soliciting interest and involvement of the donors from the earliest stages of project. The review team will consider both, an optimistic and a business as usual scenario as possible alternatives and formulate assistance proposals accordingly.

MYA/01/008 Agriculture Sector Review page 8

Part II Results Framework

Development objective The Agriculture Sector Review project aims to contribute to the achievement of two long-term development objectives:

Achieve a consensus namely with GOM and other stakeholders on the major agricultural issues, policies and strategies and intervention types to address the needs of the rural poor and Mobilize the international community to increase their engagement in improving the livelihoods of the rural poor in Myanmar

The objectives are consistent with and conducive to the four strategic objectives of GOM in respect of agriculture, namely: (i) Development of agriculture as the base and all-round development of other sectors of the economy; (ii) Proper evolution of a market-oriented economic system; (iii) Development of the economy inviting participation in terms of technical know-how and investments from sources inside the country and from abroad; and (iv) The initiative to shape the national economy must be kept in the hands of the State and the national peoples. Outcomes The long-term outcome of this project would be support for pro-poor technical, policy and institutional reforms and promotion for domestic and international investment for sustainable agricultural development (including livestock and fisheries) based on better knowledge and collaboration by all stakeholders in Myanmar. Immediate Objectives 1. To analyze potential and constraints of the agriculture and its sub-sectors in respect of contributing to long-term poverty reduction and overall economic growth in Myanmar; 2. To provide a technical basis to GOM for improving its planning and management of interventions in the agriculture sector that will improve the incomes and well-being of the poorest communities; 3. To engage all stakeholders into a dialogue on pro-poor agricultural development strategies and interventions and to raise the commitment of the international donor community to step up its support; 4. To facilitate and accelerate the preparation and implementation of pro-poor assistance programs and projects in the agriculture sector. Immediate Outputs

1. A detailed review and analysis of the up-to-date situation in the agricultural sector, including
production and productivity trends, technical capacities and assessment of comparative advantages of agriculture sector in Myanmar by commodities, ecological zones and production systems. 2. Identification and promotion of economically viable, and environmentally sustainable technical improvements for raising agricultural productivity (including livestock and fisheries) of the poorest farming communities. 3. Strategies to improve goods and services in support of agriculture sector development, including public and private research and extension, input supply, credit, marketing and processing; 4. Profiles of the poorest rural households that describe their technical as well as social and
MYA/01/008 Agriculture Sector Review page 9

economic constraints and coping strategies in improving their agricultural production; analysis of the linkages between agricultural investment and longer-term rural poverty reduction in Myanmar 5. Proposals to GOM for an agricultural development strategy and investment priorities, and identification of concrete programmes and projects; 6. Formation of a platform for concerted dialogue among key stakeholders and partners, on key policies, priority investment strategies and programs for broad-based agricultural development in Myanmar. Initiation of discussions with a group of potential donors on interventions in the agriculture sector.

MYA/01/008 Agriculture Sector Review page 10

Outputs

Activities International experts, counterpart staff International Team leader, Co-Team leader, Counterpart GOM coordinator Local experts/subcontracts

Awareness building phase

1. 3.

Briefing with Steering Committee Final selection and recruitment of local consultants

2. Organize and implement initial workshop

Resources Workshops/ training courses Initial workshop

Inputs (US$) Int. personnel Support pers. Mission cost Duty travel M&E Sub-contracts Training Equipment Miscellaneous Admin. Cost Total 19,250 600 2,347 4,400 0 0 5,000 330 740 3,267 35,933 (4.1% of total budget) 51,571 300 6,287 11,788 400 2,000 5,000 884 1,957 8,019 88,206 (10.1% of total budget)

I. Agricultural competitiveness study

1. 2. 3. 4. 5.

6.

Review of agricultural potential of different ecological zones Description of representative farming systems Data collection and analysis for farm and crop modeling Assessment of domestic price distortions, export/import parity, DRC and protection coefficients (database permitting) Profile of agricultural competitiveness by major crop, production system and farm type, special attention to: rice economy other major commercial crops livestock feed small vs. large farms rainfed and irrigation extensive vs. intensive farming animal traction and mechanization Review of policy framework and related policy recommendations in respect of food security, land allocation, tenure and use, pricing, marketing and production incentives public investment priorities

International Agro-economist, Team leader, Agronomist, Fisheries Sp., Agro-industries Sp., Livestock sp. Counterpart Coordinator, horticulturist/ tree crops specialist, irrigation expert

Crop production and marketing cost study

In-country training course

Int. personnel Support pers. Mission cost Duty travel M&E Sub-contracts Training Equipment Miscellaneous Admin. Cost Total

II. Inclusive Agricultural Development

1. Socio-economic background for pro-poor agriculture

development (including livestock and fisheries) review of literature data review at Myanmar Statistical Organization compilation of feedback from regional community consultations preparation and conducting rapid rural appraisals in selected rural areas with high food insecurity incidence preparation of an initial profile of the poorest households engaged in agriculture for livelihoods advice to other team members on pro-poor and gender orientation of sector and sub-sector recommendations design of pro-poor monitoring and evaluation systems in agricultural projects in Myanmar Review of HDI project results and provisions of follow-up phase with respect to: Services provided and demanded Participatory process Analysis of structure and operations of community-based organizations (CBO) Impact assessment and monitoring Sustainability issues Review of rural NGO/CSO strength and activities

International Rural sociologist, CDD specialist, Team Leader, Rural finance specialist, Agro-economist Counterpart cooperative specialist

Socio-economic study (secondary data collection and analysis)

Int. personnel Support pers. Mission cost Duty travel M&E Sub-contracts Training Equipment Miscellaneous Admin. Cost Total

60,250 1,200 7,345 14,671 400 3,000 5,000 1,033 2,333 9,523 104,755 (12.0% of total budget)

2.

3. Summary overview of formal Myanmar rural community

based economic system objectives, achievements numbers of beneficiaries, geographical, thematic coverage legal status management practices and performance budgets and financing financial viability impact on member incomes Assessment of role of agriculture in inducing the development of rural non-farm economy Proposals for up-scaling of successful operations with indication of major cost categories, financing needs and options,
MYA/01/008 Agriculture Sector Review-page 12

4. 5.

III. Streamlining Agricultural Support Services 1. Agricultural Research

1. 2. 3. 4. 5. 6.

Review of agricultural, livestock, fisheries research organization, management and methodology Staff/budget review Evaluation of research priorities Estimate of future skill levels and staffing needs Recommendations for developing future (demandresponsive, pro-poor) research agenda Indicative investment needs (cost categories)

International Agronomist Livestock specialist Counterpart horticulturist/tree crops sp., Livestock sp., Agro-forestry sp. International Agronomist Rural sociologist Counterpart livestock sp., Horticultural/ tree crops sp. International Agronomist Agro-economist Counterpart irrigation specialist

Int. personnel

105,786

2. Extension

1.

3. Input supply - Seeds

- Fertilizer /Pesticides (Agrochemicals)

4. Rural financial services

Review of public extension operations staffing budget extension method and impact on agricultural productivity 2. Identification of other potential extension providers 3. Recommendations for future extension service 4. Indicative investment needs (cost categories) in extension 1. Review of seeds industry distinguished by public and private operations Farmer retained/produced seed Seed imports Other seed sources 2. Estimate of demand for quality seeds 3. Review of seeds regulations, actual and needed 4. Scope and recommendations for privatization of seeds industry, whole or in part 5. Indicative cost categories of proposals for seed industry reform 1. Analysis of mineral fertilizer consumption rates by crop, region 2. Review of domestic fertilizer manufacture and distribution 3. Fertilizer regulations, actual and needed 4. Soil testing, practices and requirements Assessment of bio-fertilizer role in farming system Recommendations for integrated soil nutrient management Indicative cost categories for any fertilizer expansion program 5. Pesticides and other agrochemicals distribution (actual and needed) 1. Review of micro-credit experience Village revolving funds Private bank lending to CBO Structure of demand and purpose of micro-credit

International Agro-industries management specialist, Agronomist Counterpart Fertilizer industry specialist

International Rural finance specialist, Rural sociologist,

IV. Land and water management and development 1. Land

1.

2.

2. Water

Review of soil fertility management practices and recommendations 3. Review of Land reclamation practices by smallholders and commercial enterprises 4. Comparison of land use efficiency by smallholders and commercial farms 5. Review of experiences with: a. Watershed conservation b. Community and agro-forestry c. Shifting cultivation stabilization d. Maintenance and recovery of soil quality in irrigation areas 6. Incentives structure for sound land management 7. Description of land administration, cadasters, titling, formal and informal land transfers 8. Recommendations for improved land management and incentive structure 9. Cost estimates and cost/benefit assessment (model basis) of improved land management 1. Review of irrigation investment policies 2. Water rights policy and status 3. Potential for CAD under existing and new dam/reservoir schemes 4. Potential for improving irrigation efficiency on existing schemes 5. Management through water user groups 6. Cost recovery and water charges, taxes 7. Groundwater potential for irrigation and household use 8. Scope for private irrigation 9. Water harvesting and moisture conservation in rainfed areas 10. Recommendations for rational water use and incentive structure 11. Cost estimates, cost/benefit analysis (on model basis) for expanded and improved water resource use in irrigation

International Team Leader, Rural Sociologist, Agronomist, Agro-economist, Agro-industries sp., CDD Specialist Counterpart Horticulturist/ tree crops sp., Livestock sp. Agro-Forestry Sp.

Int. personnel

86,321

International Irrigation engineer, Agro-economist, fisheries sp., Team Leader, Rural sociologist, CDD Sp. Counterpart irrigation specialist, aquaculture sp.

Groundwater study (secondary data analysis)

MYA/01/008 Agriculture Sector Review-page 14

V. Fisheries

1. 2. 3. 4. 5.

6. 7.
VI. Livestock 1. 2. 3.

Production and productivity trends in marine capture fisheries and inland leasable fisheries Assessment of sustainability of capture fisheries Aquaculture trends and potential, distinguishing freshwater and marine shrimp aquaculture Environmental risks threatening, and originating from, different aquaculture operations Profile of fishing communities and alternative or supplemental income sources Recommendations for institutional improvements for effective sustainable fisheries management Related investment needs (cost categories) and policy changes Estimate of trends in livestock numbers and off-take Evaluation of existing livestock production systems, Analysis of sources of livestock feed for herd expansion including grazing resources, animal feed industry, feed ingredients from crops and residues Analysis of animal health and veterinary services and extension services Evaluation of the actual and future role of draught animals Analysis of the degree of integration of crop farming and livestock and recommendations on strengthening such integration Estimate of actual importance and potential of livestock as assets of poor rural households, landless and women and implications for land tenure and access to feed resources Proposals for strengthening the livestock sector in particular, their role in the farming system of poor households and their contribution to household income, risk reduction and food security, including identification of public support services and investment categories Prospects for establishing a dairy industry in Myanmar.

International Fisheries specialist, Team Leader, Rural sociologist Counterpart Aquaculture sp.

Int. personnel Support pers. Mission cost Duty travel M&E Sub-contracts Training Equipment Miscellaneous Admin. Cost Total

International Livestock Specialist, Team Leader, Rural Sociologist, Rural Finance Specialist Counterpart Livestock Specialist

4.
5. 6. 7.

Int. personnel Support pers. Mission cost Duty travel M&E Sub-contracts Training Equipment Miscellaneous Admin. Cost Total

41,375 300 5,044 9,757 400 0 5,000 709 1,582 6,417 70,584 (8.1% of total budget) 48,875 300 5,958 11,471 400 0 5,000 838 1,864 7,471 82,177 (9.4% of total budget)

8.

9.

VII. Formulation of Investment strategy and identification of investment priorities

Formulation of indicative short-, medium-, and long-term rural investment plans considering 1. Summary of investment priorities and cost categories, with consideration of geographical and sectoral distribution 2. Domestic financing sources 3. Beneficiary contribution 4. Private commercial sources 5. GOM public expenditure 6. International financing sources 7. Grants 8. Concessional and regular loans 9. DFI 10. Evaluation of investment climate for different investment sources and types 11. Capacity building requirements 12. Monitoring and evaluation proposals

Full international team, Counterpart staff

Local consultants

Final workshop

Int. personnel Support pers. Mission cost Duty travel M&E Sub-contracts Training Equipment Miscellaneous Admin. Cost Total

111,571 600 13,601 25,502 0 0 5,000 1,913 4,209 16,240 178,635 (20.4% of total budget)

MYA/01/008 Agriculture Sector Review-page 16

Part III Management and Implementation Arrangements a. Management and staffing arrangements The project will be executed by FAO in close consultation with UNDP. FAO Team Leader, the agricultural sector planner, will be responsible to his/her FAO supervisors for the final output of the project. FAO, in turn, will be responsible for the output in relation to GOM and UNDP. A senior level sociologist/rural sociologist will be assigned as Co-Team Leader. In total FAO will make available a total of ten10 well qualified and experienced international experts in their respective fields. Some specialists are expected to be seconded by other partners than UNDP. FAO will make sure that the qualification of these experts meets the same standards as its own. In addition, a project assistant will be hired for the duration of the Review to provide programmatic and administrative support to the review team. The FAO Regional Office for Asia and Pacific will provide technical backstopping to the international experts as required. The FAOR office in Yangon will, in cooperation with the FAO team, select suitable local consultants to undertake three sub-contracts (production/marketing cost study, socio-economic study, groundwater study) and will issue them local contracts according to regulations in force. The FAOR office will also assist the review team with logistical arrangements (car rental, domestic air travel funded by the project) and make available background documentation to the review team as required. Provisional Terms of Reference for both international consultants and the three sub-contracted studies are included in Annex 1. GOM will appoint one senior coordinator, and six English-speaking technical counterpart staff to work with the review team: possibly, horticulturist/tree crops specialist, livestock expert, irrigation expert, aquaculture specialist, fertilizer industry specialist, and agro-forestry specialist. The project budget will include provisions for domestic travel and per diem for the coordinator and counterpart staff at the rates applicable for local staff recruited in the UN system. The salary of counterpart staff will be borne by GOM. b. MIS Due to the short duration of the project no formal MIS will be set up. The Team Leader will be in constant contact with the individual team members and receive reports in case of possible delays or difficulties encountered. The Steering Committee will be informed during regular sessions. In addition, outside these meetings GOM, the FAO Representative and UNDP Resident Representative will be kept informed by the team leader as required on any issues that might arise. c. Project Review, Reporting and Monitoring and Evaluation Within one month of the commencement of the review, the Team Leader, with inputs from other team members will produce an inception report including a more detailed workplan. In addition, at the end of each stay in Myanmar the Team Leader will prepare an interim Report summarizing the activities undertaken and highlighting any problems. Technical contributions by the different team members will be subject to peer review by FAO specialists in Bangkok and Rome before finalization. As they become available, these technical reports will also be distributed at the workshops. The final project output will be a sector review and investment strategy formulation document with annexes and working papers as required. An expanded summary of the draft final report will be made available for discussion at the final workshop where it is expected to draw extensive feedback from the a wide range of participants. A final draft will be prepared within about one month after completion of the fieldwork in Myanmar. It will be formally reviewed by FAO experts in Rome and Bangkok and another draft be prepared for clearance by the Steering Committee. Three months after completion of
10

Number of international consultants will be subject to availability of funding.

MYA/01/008 Agriculture Sector Review-page 17

field work final version will be prepared and officially submitted to GOM. Project monitoring and evaluation will be undertaken systematically in accordance with UNDP M&E guidelines to ensure quality of project implementation, efficiency of the implementers and effectiveness of project outputs. Quarterly project reports based on UNDPs results-based management system, quarterly financial reports and end-of project report will also be explicated. The responsibility for these reports will be with the Regional FAO Office in Bangkok and the FAOR in Yangon. The cost of these services will be covered from the administrative service allowance in the project budget.

Part IV Legal Context The present document shall be the instrument referred to as such in Article I of the Standard Basic Agreement between the Government of Myanmar and the United Nations Development Programme signed between the parties on 17 September 1987. Revisions may be made to this project document with the signature of the UNDP Resident Representative only, provided he or she is assured that the other signatories of the project document have no objections to the proposed changes. The parties will make every effort not to make any significant changes in the goals, objectives and outcomes of the project but limit themselves to minor adjustments of outputs and activities, to rearrangements of the inputs already agreed to, changes in the timing of deliverables or adjustments of cost due to inflation. The project will be subject to audit according to UNDP and FAO rules and regulations. FAO is responsible for undertaking the audit.

Part V Inputs and Budget Inputs Project inputs will mainly be international personnel. In addition, inputs of local consultants, training and equipment and supplies will be financed. a. Project Personnel The main input into the project will be the salaries and travel cost of international experts. The thematic breadth of the review requires ten international experts for a total of 35 months. The experts envisaged to be made available are: 3. Team Leader, Agriculture sector planning specialist 4. Co-Team Leader, rural sociologist 5. Agronomist 6. Livestock specialist 7. Fisheries specialist 8. 9. Community development specialist 10. Agro-industry specialist 11. Rural finance specialist 12. Irrigation engineer and 13. Agricultural economist The individual description and duration of their assignments are given in Annexes 1 and 2. The project will finance salaries, international and domestic travel and per diem of the international consultants. In addition, the personnel budget will also include one project assistant to manage
MYA/01/008 Agriculture Sector Review-page 18

administrative/financial aspects of the project. Also under this budget, domestic travel costs and per diem of counterpart staff on travel outside Yangon will be earmarked. Funding for monitoring and evaluation for UNDP programme staff is also budgeted. b. Sub-contracts Three sub-contracts will be awarded to local consultants as follows: Groundwater study Socio-economic study Production and marketing cost study It is expected that each sub-contract will require two to three months work by one or two local experts and involve limited local travel. c. Training FAO will organize a training course of up to one week in Yangon during the period of fieldwork. The course will be based on an existing training module and involve the visit to Myanmar of one or two trainers. Two workshops of one or two days each will be arranged in the course of the review. The cost of domestic travel of participants from outside Yangon, will be charged to the project budget. Budget for the regional consultation meetings are also included. d. Equipment and supplies A certain amount of car rental is foreseen in Yangon and in the field. e. Total Budget The total cost of the project is estimated at US$ 874,390. UNDP will make available about US$ 599,214. ADB has expressed interest to participate in, and to co-finance, the review. In addition, limited Trust Fund resources available to the FAO Investment Centre, will be used. External funding for the fisheries expertise still needs to be identified. If external funding sources are not found the cost will need to be added to the UNDP budget or the input deleted. The combined contributions from other than UNDP sources will be about US$ 275,176. Project cost are summarized below and detailed in Annex 3. Description International personnel Support personnel Duty travel Mission cost Monitoring and Evaluation Project personnel sub-total Private sector sub-contracts Sub-contracts subtotal Training subtotal Equipment subtotal Miscellaneous sub-total TOTAL Administration and operation services 10% Grand TOTAL Cost US$ 525,000 4,500 123,000 64,000 2,400 718,900 7,000 7,000 40,000 9,000 20,000 794,900 79,490 874,390

MYA/01/008 Agriculture Sector Review-page 19