climate-friendly agribusiness value chains sector project ... · demonstrate and train farmers and...

Climate-Friendly Agribusiness Value Chains Sector Project (RRP CAM 48409-002)

Feasibility Study Report for Tram Kak On-farm Water Management Subproject

Project Number: 48409-002 May 2018

Cambodia: Climate-friendly Agribusiness Value Chains Sector Project

http://www.adb.org/Documents/RRPs/?id=48409-002-3

LIST OF ABBREVIATIONS

ADB - Asian Development Bank CAMGAP - Cambodia Good Agricultural Practice

CSA - climate smart agriculture EIRR - economic internal rate of return GAP - gender action plan MAFF - Ministry of Agriculture, Forestry and Fisheries O&M - Operation and maintenance PDA - Provincial Department of Agriculture PMU - project management unit RGC - Royal Government of Cambodia SPS - Sanitary and Phytosanitary Measures

NOTE

In this report “$” refers to United States dollars.

I. SUBPROJECT SUMMARY

Subproject Context and Rationale

1. The total area of mango production in the three villages in Trapang Kranhoung Commune; Prey Kdouch, Bos Taphang and Prek Talonh is estimated to be 7,128 hectares with a total of 278 households involved in mango production. The commune has the largest area under mango production in Takeo Province. On average the farmers who reside in the villages and work their orchards have mango production units of from 1-5 ha. There are absentee farmers living in Phnom Penh who have large units of up to 200 ha and subcontract managers or buyers to manage the units or rent the units.

2. Few farms irrigate mangoes and the crop is dependent on rains. Late rains and lack of rain has an impact on yields, fruit quality (juice content, size etc.) and flavor as well reducing the success in achieving floral manipulation (achieving two crops rather than one crop in 12 months). Mangoes are selected according to three grades; with the first grade being export quality. With the drought of 2015 and early 2016 few orchards have produced a high proportion of Grade A quality fruit, averaging 20% of Grade A fruit. The yields are also low fluctuating from 10 - 15 tons per hectare which is below the national average of 20 tons per ha however yields of 25 tons per hectare have been reported by some mango farmers.

3. This subproject will demonstrate drip irrigation to improve the quality of the fruit, increase yields and will address climate change issues being experienced in the province; relating to late onset of rains and extended drought periods. Higher than normal temperatures will reduce flower fertility and irrigation will reduce orchard ambient temperature.

4. The pilot drip irrigation demonstration will encourage buyers to have closer linkages with the production units as such units will have a higher proportion of grade A fruit (60% and above) which is export quality. Drip irrigation will improve flower manipulation practices whereby the water supply to the trees can be controlled which will assist farmers to stress and destress the crop. Flower manipulation will encourage off season production or extend the season reducing the risk of marketing fruit when prices are depressed.

5. Furthermore, the demonstrations will encourage other farmers to accept the new technology, which will make the industry more efficient and proactive to market demands by scheduling cropping. At present farmers do not work together there is no mango producers association. The coming together at the demonstrations supported by the project, may encourage greater dialog between like-minded farmers to group together to exchange ideas and market their produce jointly

Subproject Design

Site and location of the mango drip irrigation feasibility study

6. The farmer offering his land for the pilot drip irrigation infrastructure is Mr. Chea Phal. The mango farm is located in Prey Kdouch village, Trapang Kranhoung commune and Tram Kak district. Prey Kdouch village is located in West of Takeo provincial town about 52 km on the road no. 130A and about 40 km from Angta Som district town on road no.130A. The mango production statistics for the Trapang Kranhoung Commune are detailed in Table 1.

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Table 1. Trapang Kranhoung Mango Production

No Name of village Name of

commune

Name of

District

# HHs in village

# HHs involved in Mango

production

Area production

1 Prey Kdouch Trapang

Kranhoung Tram Kak

603 50 1,000 ha

2 Bos Taphang 226 48 4,645 ha

3 Prek Talonh 209 180 1,475 ha

Total 1,038 HHs 278 HHs 7,128 ha

HH = households

7. The mango farm size is 2.5 ha and has produced fruit in the last 2 years and is its fifth season. Currently, the farmer has used a small pond for supplementary irrigation, but the water is not sufficient to produce a higher percentage of grade A fruit and to be able control/manipulate flowering. The variety grown is Keo Romeat which lends itself to floral manipulation and the orchard started to produce fruit 3 years after planting with a single crop annually of an initial yield of 1.5 tons per ha.

Subproject Cost and Financing Plan

8. The estimated equipment cost for the subproject is $16,375 with a base cost of $17,797 and an economic cost of $17,320. This cost includes training for the operation and maintenance of the system, through the use of private sector subcontractors and an allocation of project management costs being $922.

9. The ADB will fund 91% of subproject costs and the government will fund the remaining 9% in the form of waived taxes.

10. The economic internal rate of return (EIRR) for the subproject is 25.4%, reflecting the significant benefits that drip irrigation provides to both the quantity and quality of mangoes produced. A failure to achieve with project yields or an unexpectedly low proportion of Grade A fruit would most likely lead to an EIRR below 12%, but the effects of properly managed irrigation for mango production are well established so these must be regarded as unlikely outcomes. Volatility in mango prices might also have a negative impact on subproject outcome if they fell significantly and remained low for an extended period. But this also seems an unlikely scenario given the high demand for quality mangoes in domestic and international markets

Implementation Arrangements

11. The Tram Kak drip irrigation demonstration subproject investment is primary to introduce drip irrigation, show its benefits in relation to climate change and improve farm incomes through quality and yield improvements and achieving off season or extended cropping season production. The management and operation of demonstration site will be the responsibility of the Takeo PDA, however prior to installation the drip irrigation suppliers and installers will be responsible to the provincial agency and private sector consultant engaged to review and revise if required, the detailed design, bid document preparation and supervision of construction.

12. With its new mandate the Department of Agricultural Engineering will have an oversight on the technical and infrastructure aspects of the pilot drip irrigation scheme.

13. Following installation, the drip irrigation contractors will take the lead role in demonstrating the operation and management of the scheme which includes the development of a crop

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production blueprint, in conjunction with the MAFF General Department of Agriculture on the rational use of inputs in line with Cambodia Good Agricultural Practice (CAMGAP), when elaborated under the policy and standards development activities. The private sector contractors will not only be hired to demonstrate the use and operation of drip irrigation systems but also to demonstrate and train farmers and government staff in all aspects of mango production this includes; orchard floor management, pest and disease monitoring and control, harvesting and post-harvest operations

Subproject Impact

14. It is estimated that the majority of subproject beneficiaries will be women given the levels of out migration of males from the area. The main expected subproject impacts are:

(i) a 10% increase in rural household income (from a base of KR 1.16 million/$290) of farmers including women, and those employed in modern agribusiness operations and service providers over the lifetime of the project

(ii) Drip irrigation will improve flower manipulation practices whereby the water supply to the trees can be controlled which will assist farmer to stress and destress the crop. Flower manipulation will encourage offseason production or extend the season reducing the risk of marketing fruit when prices are depressed. Average farming household income from mango production. Mango yields are expected will increase by 30% (from a base of 13 tons/ha) with a higher percentage of grade A fruit (base A 20%) raising the percentage to 60%.

(iii) Mango orchard units will become more resource efficient in terms of water savings in comparison to flood or furrow irrigation (approximately 40% efficiencies realized) and will address climate change issues being experienced in the province; relating to late onset of rains and extended drought periods

(iv) with expanded mango production opportunities, the subproject may lead to (i) some reduction in out migration levels as fruit production becomes more profitable; (ii) school drop out levels may decrease as families are better able to pay for their children's education; (iii) women's access to extension services and technical information will be improved; (iv) men and women will be empowered through training in improved drip irrigation and orchard techniques; and, (v) increased household incomes will lead to a reduction in household debt levels, and a subsequent decrease in the incidence of domestic violence in farming households.

(v) Furthermore, the demonstrations will encourage other farmers to accept the new technology, which will make the industry more efficient and proactive to market demands by scheduling cropping. At present farmers do not work together and there is no mango producers association. The coming together at the demonstrations may encourage greater dialog between like-minded farmers to group together to exchange ideas and market their produce.

15. Introducing drip irrigation into a mango orchard leads to higher yields and better quality, with an increase, in particular, in Grade A fruit. The result is higher income for the orchard owner. For the subproject orchard owner, the incremental income arising from the installation of the drip irrigation system, over and above what his income from the orchard would be without irrigation, is estimated at $6,269 per year once full production is reached, i.e., two years after completion of the system. Labor requirements on the orchard may also increase slightly, so there may be a small benefit for workers employed. This level of incremental income is for an orchard of 2.5 ha.

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Critical Risk

16. Risk: the price of mango is distressed, and returns are not sufficient for growers to stay in mango production. Assumption: with Climate Smart Agriculture (CSA) production systems and the increase in productivity and efficient use of resources, gross margins will be sufficient to withstand the market downturn. More efficient flower manipulation with irrigation “stressing” will help growers supply fruit in the off season where less product is available on the market and prices are firmer. In conjunction with CSA, drip irrigation will improve fruit quality and in a glut market quality will sell over poorer quality fruit. With CAMGAP and CSA, there are ever increasing export outlets, providing SPS protocols are met.

17. Risk: the excessive use of agro-chemicals which includes growth regulators for flower manipulation. Assumption: precise irrigation scheduling will reduce the amount of growth regulators to be used and CSA will also rationalize pesticide use. The proposed training will use the irrigation system to apply nutrients which is a very efficient means of precision fertilizer application, some diluted and applied through the drip irrigation system.

18. Small numbers of workers will be present at the start of the subproject during installation of the drip irrigation system. The risk of increasing the local population's exposure to communicable diseases is rated as very low as workers will be on site for weeks rather than months when compared with other infrastructure investments that the project will support.

II. SUBPROJECT CONTEXT AND RATIONALE

Need for Investment

Provincial and District Development Policies

19. The development vision of Takeo province is to achieve sustainable economic development with improved public services through the promotion of agricultural productivity, small and medium industries and tourism sectors. To achieve this vision, the province has to improve the good governance and human resources while protecting its environmental and natural resource base. The development objectives are multifaceted covering economic and social development areas. Its includes (i) the strengthening of food security, agricultural and income diversification; (ii) the promotion of small to medium industries with particular attention given to trade expansion capacity and management; (iii) the promotion of tourism for creation of rural employment opportunities; (iv) the development of public infrastructure; and (vi) the development of human resources to contribute for better public sector management services of Takeo province.

20. The natural resource sector development is a priority through a 5 year of provincial development plan. Key elements of relevance to the subproject include (i) the development of water resources through irrigation development, (ii) the strengthening of farmer cooperatives to enhance their business capacity in agribusiness value chain and access to technical support services and good quality of inputs, (iii), to improve food safety in the province, (iv) the enhancement of road maintenance and the rehabilitation of communications throughout the province, (v) to extend the rural road network to the more remote locations and (vi) adopt improved land management practices to ensure sustainability of the resources for the future. The objectives of the subproject are consistent with the provincial development objectives and national development priorities.

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21. Takeo province is one of 8 provinces along the Cambodia-Viet Nam border and both governments plan to build 13 new border gates to help boost trade that has already been growing between the two countries. For the border gate connectivity plans are being developed to connect the central highlands of Cambodia with the Mekong Delta region of Viet Nam. The new border gates plan will improve provincial trade with Viet Nam. Cambodia's total exports to Viet Nam rose 4% to $504 million in 2013, while during the same period Viet Nam's exports to Cambodia reached to $2.93 billion. Trade between Cambodia and Viet Nam has been rising fast in recent years, reaching $3.3 billion in 2012, up from $2.8 billion 2011 and $1.8 billion in 2010. The two countries plan to increase trade volume to $5 billion by 2015-2016.

22. There are five national roads (no. 2, no.3, no.21, no.31 and no.41) passing through the province, and a railroad connecting Phnom Penh and Sihanoukville that stops in the province. Water transportation routes connecting to Viet Nam via the Takeo River have also been developed. The existence of the 79 ha Duong Chhiv Special Economic Zone and an abundant electricity power supply are also expected to contribute to further industrial development at the border in Phnom Den between Cambodia and Viet Nam.

23. The provincial government is committed to improving all related sectors to attract more investors and further support existing entrepreneurs and business. The provincial government needs to strengthen the investment environment and considers agribusiness as the cornerstone of that strategy. The provincial government has already set up a one stop service to reduce the time and costs establishing businesses. A provincial investment sub-committee and provincial investment secretariat has also been established.

Natural Features

24. Takeo Province is located in the southwest part of the country and borders the provinces of Kampot to the west, Kampong Speu to the northwest and Kandal to the north and east. Its southern boundary is the international border with Viet Nam. Takeo consists of 10 districts: Daunt Keon City, Tram Kaka, Kirivong District, Angkor Borei, Prey Kabas, Sam Rong, Bati District, Triang, Koh Andet and Borei Chulsar.

25. To reach Takeo it is a 1.5 hour drive from the capital, Phnom Penh, and 2.5 hour drive to Sihanoukville, which has the country’s deepest international seaport, and a 45 minute drive from Phnom Penh, the international border crossing with Viet Nam. The province land area is small compared to other provinces; Takeo has a total area of 3,563 km2. The province is famous for being the rice bowl of Cambodia. Good soil conditions and well-developed irrigation systems have enabled increases in the production volume of agricultural products in the province; not only rice but also cash crops such as mango and vegetables. The well developed transportation infrastructure increases business opportunities for the private sector for both domestic and international markets. Table 2 belowprovides an overview of the province

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Table 2: General information of Takeo Province

Provincial Capital Takeo

Provincial area 3,562.70 km2

Landscape Flood plains and mountainous area

Total Population 999,842 persons

Population Density 271 persons/km2

Population age over 18 years

Male - 297,123 Females – 327,092

Temperature 21.1 oC - 37.6 oC

An average rainfall 1,076.17 mm/year

Administrative Boundary Number of cities: 1 Number of communes: 97 Number of districts: 10 Number of villages: 1,118 Number of sangkats: 3

Provincial Border East: Kandal province and Viet Nam West: Kampong Speu and Kampot provinces North: Kandal province South: Viet Nam

Social and Cultural Environment

26. The total population of Takeo in 2014 was 999,842, and the number of females was 515,492 which is equivalent to 51.57%. The number of males under 18 years was 187,227; the number of females under 18 years was 188,400; males over 18 years numbered 297,123 and females over 18 years were 327,092 (Table 3). The total number of households was 210,150 of which 18.8% were female headed households. The location of the demonstration drip irrigation scheme is in Trapang Kra Nhuong commune, Tram Kak District in Takeo province. There are three villages within Trapang Kranhoung commune and it has the largest area under mango production in Takeo province.

27. The source of livelihood: The number of people in Takeo that have work associated with agriculture is 387,335 or 77.4% of the population. The complement of the PDA is 51 staff members. There are no economic land concessions in Takeo province.

Table 3: Size of Population in Takeo Province

Province Male>18

years

Female>18

years

Male<18

years

Female <

18 years

Total

male

Total

female Total

Takeo 187,227 188,400 297,123 327,092 484,35 515,492 999,842

Source: Royal Government of Cambodia, Ministry of Planning. 2014. Cambodia Socio-Economic Survey. Phnom

Penh.

28. The total number of households in the subproject area is 1,034 households (both mango farmer and non mango farm households), of which 154 are female headed households. The total population is 4,527 persons of whom 2,128 are females. There are 55 ID-Poor 1 households and 201 ID-Poor 2 households. ID-Poor households are characterized by having very little land, or are landless. There are no ethnic minorities in the area. The total area of available land for farming is

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4,229 ha for rice and 4,304 ha for other crop production, indicating that there is a relatively larger area of land available for the community to farm. Average farm size is 1.5 ha. 421 persons have out migrated from the commune of whom 244 are female. Out-migration of adults has led to labor shortages for farming. The community is characterized by substantial numbers of older women who are taking care of their grandchildren, and receiving remittances from their adult children working in urban areas.

29. Women and men differ in their roles and in their economic, educational, and health status. It is mostly men who do the heavy work in mango farming. Women are exclusively responsible for managing household budgets and taking responsibility for identifying local sources of credit for the household. About 50% of men also share responsibility for housework and men are responsible for looking after large animals such as cattle. Some men also help women take care of small children.

30. There is joint access and control to productive resources such as land between husband and wife. The land title or social land concession that the household possesses is in both husband and wife’s names and joint agreement is necessary before land can be sold. There is joint access to and control over capital. For accessing a loan, both signatures are required on the bank loan agreement.

31. The access to information, knowledge and education is still limited for both men and women. Women are less likely to be functionally literate. Approximately 20% of the adult community is illiterate and the majority of those illiterate are elderly women. Some women in this locality are able to drive small tractors, and some women expressed their wish to learn how to drive tractors and agricultural machinery.

32. There is equal access of men and women to markets. Both husband and wife jointly agree when, where and to whom to sell their crops, but it is the wife who contacts the local collector.

33. Poverty, household debt and migration in subproject area: Most mango farmers in the area have either used revenue from rice production or borrowed money from the bank or used remittances from their children in order to plant their mango orchards. Mango cultivation is very costly for farmers and because they do not have sufficient capital, labor or knowledge of mango cultivation, it is a common practice for farmers to lease their orchards to private contractors.

34. It was reported that approximately 15% of the total number of households in the commune have lost their lands because of distress sales due to debt caused by either medical emergencies or crop failure due to extreme weather. In Prek Taloy village alone, 33 households out of 209 households have lost their land because of debt.

Subproject Rationale

35. Mangoes are considered drought resistant, but with climate change the late onset of the rains and extended drought periods, which includes periods within the rainy season, the crop does suffer and is affected. The yield does not achieve its optimum potential and the quality of the fruit is poor leading to a low percentage of grade A fruit and sub optimal prices. Few farms irrigate mangoes and the crop is dependent on rains; late rains and lack of rain has an impact on yields, fruit quality (juice content, size etc.) and flavor as well reducing the success in achieving floral manipulation (achieving two crops rather than one crop in 12 months). Mangoes are selected according to 3 grades; with the first grade being export quality. With the drought of 2015 and early 2016 few orchards produced a high proportion of Grade A quality fruit. The yields fluctuate from 10 - 15 tons per hectare with irrigation yields of over 20 tons per hectare have been

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reported. Drip irrigation will address the climate change issues relating to drought, dry periods and water deficiencies. Furthermore, drip irrigation systems will lend itself to a more rationale, efficient and safer use of agricultural inputs particularly fertilizers.

36. There has been a drive to plant more mangoes as an investment strategy and as a direct result of buoyant prices in the last two seasons, it is estimated that there is now more than 7,000 ha in Tram Kak district of Takeo province, which border Kampong Speu (the main mango producing province). The support to mango farmers in relation to advice on how to produce a good crop and produce for the market demand is not available, there is a need for mango production and marketing advisory services

37. The government is actively looking for new international markets for fresh mangoes out of Southeast Asia, particularly to the richer Asian countries of Japan and Republic of Korea, there is already a memorandum of understanding related to a mango sanitary and phytosanitary measures (SPS) Protocol with Government of Republic of Korea which was signed on 9 December 2015 to export to Republic Korea, but Cambodia mangoes will still need to satisfy Republic of Korea's quality standards.

38. At present mango farmers work in isolation and they do not work together; there is no mango producers association and there are no mango producer cooperatives, and therefore no cluster development in order that the government can support such clusters with infrastructure as promoted in the Industrial development policy. Demonstration units will start the grouping together process.

39. The rationale of the subproject, installing drip irrigation systems in mango orchards at least when the trees have entered or entering their third season, is based on the need (i) to address the climate change issues relating to drought, dry periods and water deficiencies; (ii) improve advice on crop production and marketing; (iii) develop an export oriented raw material supply; and (iv) through demonstrations encourage cluster development.

Subproject Objectives

40. The objective of the subproject is to demonstrate drip irrigation on orchards of 3 years or more, to improve the quality of the fruit, increase yields and address climate change issues being experienced in the province relating to late onset of rains and extended drought periods. Higher than normal temperatures will reduce flower fertility and irrigation will reduce orchard ambient temperature.

41. Pilot drip irrigation demonstration will encourage buyers to have closer linkages with the production units as such units will have a higher proportion of grade A fruit which is export quality. Drip irrigation will improve flower manipulation practices whereby the water supply to the trees can be controlled which will assist farmer to stress and destress the crop. Flower manipulation will encourage off season production or extend the season reducing the risk of marketing fruit when prices are depressed.

42. Furthermore, the demonstrations will encourage other farmers to accept the new technology, which will make the industry more efficient and proactive to market demands by scheduling cropping and export orientated.

43. Finally, the subproject will encourage dialog between producers and will encourage cluster development.

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Related Development Initiatives

44. There have been very few donor or government initiatives in mango production, processing and marketing and private sector initiatives are limited.

45. MAFF signed a MOU related to a Mango SPS Protocol with the Government of Korea on 9 December 2015 to export to Korea, but Cambodia mangoes will still need to satisfy Korea's quality standards. The MOU stipulates that there are only five Cambodian provinces which are qualified to export fresh mango fruits to Republic of Korea; they are Kampong Speu, Takeo, Kampong Cham, Siem Reap and Pursat. To meet the export requirements, farms will need to be registered, and be able to process and pack the fruit with facilities that have vapor heat treatment and undergo pre-clearance inspection by quality assurance inspections. Such packhouses do not exist in the future project's provinces.

46. Concerning private sector development the most noticeable are (i) the Mong Rithy Group Company which has recently jointly invested $2 million with King Fruit, a Singaporean company, in a processing unit in Koe Phos commune in Preah Sihanouk Province for the packaging and export of Cambodian mangoes. The company has a large mango farm of about 290 hectares and (ii) Kirirom mango processing which has about 500 ha of mango production in Kampong Speu province, producing secondary processed dried mango and is evaluating other processed mango products.

47. There have been little donor partner development initiatives, with only the following being of importance:

(i) IFC contracted Fresh Studio to study a number of Cambodia fruit and vegetable value chains which included mango (April 2009). The study was commissioned to determine what value chain initiatives could be supported by IFC. The donor concentrated in vegetables before targeting rice; at that time mangoes were not considered a priority.

(ii) ACIAR Project HORT/2012/003 Building a resilient Mango Industry in Cambodia and Australia. The outputs include best-practice workshops and training resources, pest surveys, disease-free plant nurseries, safe pesticide techniques and a supply chain evaluation report, to be completed by 30 April 2017. The project is also taking back Cambodian mango production practices to test under Australian conditions, this includes flower manipulation practices.

Subproject Justification

48. The justification for the subproject is based on the strategies and plans as well, climate change justifications and how the activities fit within the value chain.

49. The strategies and plans are included in the (i) the Agricultural Sector Strategic Development Plan (2014–2018); under Program 1: Enhancement of Agricultural Productivity, Diversification and Commercialization, Sub-program 1.4: Promote horticulture and subsidiary crop development, which is to increase horticultural crop production by increasing yields and adopting climate change adaptation practices, increasing the area under fruit tree production to over 22% and (ii) the Cambodia Industrial Development Policy (2015–2025) which promotes diversification and value addition in the key industrial sectors of which agribusiness is one. The policy supports cluster development to improve economies of scale to improve efficiencies in high value crops.

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50. The climate change justification is mango is a drought tolerant crop but its yields are affected by climate change and flower manipulation is more difficult to manage, therefore irrigation will mitigate the effects of climate change. Mango orchards produce a green canopy which can contribute to decreasing Cambodia’s carbon footprint.

51. The work will fit in will the objectives of improving the value chain, to improve the quality of the fruit and to encourage buyers to have closer linkages with the production units that will have a higher quality fruit using drip irrigation. Flower manipulation will encourage off season production or an extended season reducing the risk of marketing fruit when prices are low.

III. SUBPROJECT DESIGN

Subproject Description

52. The proposed intervention is to set up a drip irrigation system for an existing 2.5 ha of mature mango orchard. The mango trees are all of the same age and have been planted in a uniform pattern. The farm is owned and managed by a local farmer who lives in the community where the farm is located. The farmer is willing to let the project equip his farm with an irrigation system, and volunteer to let the project use this as a demonstration site during the project implementation.

53. The soils of the area are sandy and generally highly permeable. There are no limitations with regard to soil salinity, sodicity or high water table.

54. Double cropping of mangoes (flowers manipulation) is achievable in the project site as well as in the project area if there is sufficient water in the dry season to develop the fruit which sets in response to stressing and the appropriate time.

55. Potential water sources for the irrigation include an existing water pond recharged by surface runoff and rainwater harvesting but running dry during the dry season or development of a new groundwater tube well. The tube well will be developed to supply the irrigation water.

56. As the major demand for irrigation water is during the dry season, the likelihood of the pond drying out is not acceptable if double cropping of the mangoes is to be achieved. Consequently, the preferred source of water is the tubewell which will ensure maximum return on the capital expenditure for the irrigation system.

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Figure 1: Farm layout of Drip Irrigation Subproject

Engineering Requirement

a. Irrigation Water Requirement

57. Mango is one of the crops which is resistant to drought. But in severe droughts trees can die, especially the young trees of less than 4 years old (The mango farmers in the commune have confirmed that they have lost trees due to drought). Without enough water supply, it has been observed that the yield of mango dropped significantly, in both quantity and quality. To tackle this issue, additional irrigation to the rain water is required in order to avoid crop damage and to increase the yield per cropping season. In addition, for the Keo Romeat mango variety which most of the farmers in project target area produce, with enough water supply, this mango variety can be flower-manipulated to achieve two crops per year.

58. The amount of water to supply to each mango tree depends on the climatic conditions and the age of the tree. Water requirement for each mongo tree can be calculated using the calculation below:

GIR = ETc / AE

Where GIR : Gross Irrigation Requirement for a tree NIR : Net Irrigation Requirement which is considered as the Evapotranspiration from

the crop (Mango), ETc and AE : Application Efficiency, which depends on the irrigation method, in this case drip

irrigation is applied, and its assumed efficiency is 80% (or 0.80).

59. Evapotranspiration of tree (ETc) can be calculated by a simplified equation below:

ETc = ETo x Kc x Kr,t

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Where ETo : Evapotranspiration Reference, [mm/day], Kc : Crop coefficient, constant which varies upon the development stage of the crop.

The maximum value of this constant is 1.151, and it will be used for the calculation of the ETc at this stage and

Kr,t : is an empirical coefficient relating the ET of an orchard of incomplete cover to that of a mature orchard. Here, the Kr,t is related to the horizontal projection of the tree shade (ground cover).

60. ETo derived from the Kampot climate data processing is used for this calculation while the pilot is close to the meteorological station of Kampot province than one in Takeo. Based on the table below, the maximum ETo is in April which is about 160 mm/month. The average daily ETo can be simplified by dividing the monthly ETo by 30 day. So the daily ETo is approximated 5.33mm/day. This value will be carried forward to the calculation of ETc.

61. Kr,t can be seen in Figure 3 below. It relates to the horizontal projection of the tree (ground cover). An example is also given in the graphic below. Assuming the ground cover is 30%, then the approximate Kr,t is 0.58.

1 The maximum Kc is used as we need to design the irrigation system to cope with the peak demand of irrigation at the

full development or production stage of the mango.

0

50

100

150

200

250

300

350

400

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Rai

nfa

ll/ET

o (

mm

.m)

Month

Figure 2: Average Monthly Rainfall/ETo of Kampot Province

Monthly Rainfall Monthly Evaporation

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Figure 2: Relationship between tree horizontal projection at midday (Percent ground cover) and the reduction coefficient, Kr,t , relating the ET of orchards with partial cover to that of mature, full cover plantations formed by isolated trees.

Source: FAO, 2012. FAO Irrigation and Drainage. paper 66.

62. The daily crops water requirement can be calculated as following: ETc = 5.33 x 1.15 x 0.58 = 3.56 mm/day or Net Irrigation Requirement is NIR = 3.56 mm/day, or in other format NIR = 35.6 m3/ha.day.

63. The Gross Irrigation Requirement is GIR = 35.6 / 0.80 = 44.5 m3/ha day. The irrigation supply for the whole orchard area of 2.5 ha, in the critical condition is then 111.30 cubic meter per day (111.3m3/day).

64. In the whole 2.5 ha orchard area, the mango trees are planted 6m x 6.5m or there are 860 trees within the block. The gross water requirement per tree is 129 liters per day (129l/day). However, this figure is for the peak demand which may happen once a year. The calculation of the net and gross irrigation requirement is made in response to the worst case scenario, with the evapotranspiration reaching its maximum within a year, and for a month (between March and May) when there is no rainfall. The irrigation requirement for other months of the year is expected to be much less or there will no demand for irrigation in some months when there is enough, or more than enough rainfall, mainly in the months of September, October and November. For design purposes, the peak demand is used to determine the dimension of the irrigation supply channels.

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Table 4: Required ground water tube well abstraction capacity by different pumping period.

65. It is noted that for the critical demand period, if the pump runs 24 hours a day to pump water, the supply capacity shall be at 4.64 cubic meter per hour (see Table 4 above). Both water supply capacity and irrigation water requirement per tree increases when pumping time (operation time) decreases. The selection of any operation time will then effect on the size and the cost of the construction of the water supply infrastructure (water source) and drip irrigation system.

66. For this subproject pilot site, a 10 hour operation for the critical time is selected. The required water supply capacity is 11.13 m3/hour and irrigation requirement per tree is 12.94m3/hour per tree accordingly.

b. Water sources

67. There are two existing small ponds which already connects to each area in the same farm, at the south end. These two ponds, according to the farm owner, are used to store and supply water for the mango trees when there is demand for irrigation, especially in the dry months. However, according to the engineer’s investigation, they are relatively small which cannot capture enough water to supply a year round supply for the mango trees. This judgment was confirmed by the farm owner during the engineer’s visit to the site that earlier this year (2016), the ponds were dried up after being pumped a number of times to irrigate the mango. Crop damage caused by drought is one of the big concerns of the farmer and he cannot increase the size of the pond due the limited land availability.

68. Groundwater is an alternative choice for the farmer but has not been used much in the project area especially for agriculture. There are some wells in the district to extract ground water, but water is being used for domestic use only (drinking, washing, cooking etc.). However, there are some poultry and livestock farms which are using ground water.

69. The project proposes to dig a tubewell with enough extract capacity to meet the peak irrigation demand of the mango (more than 11.13 m3/hour). According to the information by from the farmers and local authority of the project area, there are two depths of well which can extract the ground water, one is of 30 to 40m deep, and the second range is between 80 to 100m deep. The wells with 30 to 40m depth are the ones drilled for the use of domestic purposes, while the deeper wells are used for poultry raising. The deeper well can be pumped 24 hours without running dry. The well with a depth ranging from 80m to 100m is selected by engineer for this pilot subproject.

Pumping Duration Supply Capacity Requirement per tree

[hour] [m3/hour] [liter/hour]

24 4.64 5.39

14 7.95 9.24

12 9.28 10.78

10 11.13 12.94

8 13.91 16.18

6 18.55 21.57

4 27.83 32.35

2 55.65 64.71

1 111.30 129.42

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c. Irrigation method

70. A complete drip irrigation system will be equipped for the mango orchard of 2.5 ha or 860 mango trees. Groundwater will be pumped (through a tube well) using pump which is driven by solar power system. The farmer/owner will be trained by the drip irrigation supplier on the system operation and maintenance procedures. Farmers will be supported by the contractor for two years after installation. The details on mode of operation is detailed in the design section below.

d. Drip Irrigation Design

71. The detailed design of the Solar panel and its associated system, and determination of characteristic of the groundwater pumps will be performed during the project implementation stage. The groundwater abstraction capacity was already determined in the previous sections.

72. The concept and draft design of the drip system is presented in this study report.

Figure 3: Drip system arrangement

73. As shown in Figure 3 above, the farmer has planted his mango tree in a grid of 6m x 6.5m. The plants alignments do not run parallel to the border of the farm in any direction. This planting arrangement, to some degree, provides not only difficulties in drip system installation but also the farm operation. However, according to topography of the ground, the drip lines are designed to align with tree lines in 6.5m interval direction. The secondary line runs from the corner of the farm to both directions of the farm boundary. One inlet line will be connected from the pump to both secondary lines. The whole layout of the system is detailed fully in Annex III.

74. The main purpose of the design of the drip irrigation is to determine the dimensions for each supply channel in the system including the discharge capacity of drip emitter. The design starts from tree level to the system level.

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75. The maximum irrigation water requirement is 12.93 liters per hour, to be supplied during 10 hours. To meet this requirement, 4 drip emitters of 4 liters per hour capacity is designed to be distributed around 1 mango tree. The supply discharge is 16 liters per hour, which is more than the demand capacity.

Drip line (DN20mm)

Mircrotube (DN12mm) connects from the drip lines and runs around tree trunk.

Tree trunk

Drip emitter of 4 liters per hour

Figure 4: Drip emitter distribution for each.

e. Drip line

76. The drip line diameter can be determined in relation to the number of trees that the line supplies irrigation water for. According to the layout of the farm presented in Figure 4, the length of the drip line varies from one to another. The drip line running along the diagonal of the farm is the longest line. It means that this line supplies water for irrigation to the most number of mango trees (28 trees). Hence the required capacity of the drip line is 28 trees x 16 liters = 448 liters per hour.

77. Table 5 below shows the proposed deign section and capacity of the drip line. The design section is applied for other drip lines in the whole system.

Table 5: Proposed design section of the drip lines

Proposed dripline diameter

Dripline Area

Assumed Velocity in

dripline

Discharge Capacity

Head loss

factor

Required Discharge

[mm] [mm2] [m/s] l/hr 0.75 l/hr

16 201 1 724 543 448

78. The design section above is applied for other drip lines in the whole system.

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f. Drip secondary line

79. There are two secondary lines in the system, one line covers about 1 hectare of orchard or 500 mango trees. The required discharge is 500 trees x 16 liters = 8,000 liters per hour or 8m3

per hour.

80. The design section of the secondary line is presented in Table 6 below. The same design as presented below is applied for both secondary lines.

Table 6: Proposed design section of the secondary lines

Proposed Secondary Line

diameter

Secondary Line Area

Assumed Velocity in

Secondary Line

Discharge Capacity

Head loss

factor

Required Discharge

[mm] [mm2] [m/s] m3/hr 0.75 m3/hr

64 3217 1 11.58 8.7 8.0

g. Intake line

81. The required discharge capacity of the intake lines is the required capacity of the whole system, or the required capacity to irrigate all the mango trees in orchard. The design of the intake lines is presented in the Table 7 below. The intake line runs from the pump to the secondary lines in the farm.

Table 7: Proposed design section of the line lines

Proposed Intake diameter

Intake line Area

Assumed Velocity in Intake

line

Discharge Capacity

Head loss

factor

Required Discharge

[mm] [mm2] [m/s] m3/hr 0.8 l/hr

90 6362 0.80 18.32 14.7 11.3

82. Besides the distribution lines of the drip system (drip lines, secondary lines and intake line or main line), to enable system to function properly, a number accessories will be required and they are listed as in Table 8

Table 8: Accessories required to be used with the drip irrigation system Accessories Description

DRIPPERS Drippers will be used to discharge water to the trees

PRESSURE GAUGE Several pressures gauges will be needed to be equipped with the system in order to control the pressure in the system.

VALVES Valves of different sizes will be used to control water flow (open or close) part of the system or entire system depending on the location of the valves.

AIR RELEASE VALVES This type of valves is used to let the air flashed out of the tube.

ON-LINE PLUG The plug is used to connect one tube to another tube in the same line.

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OFF-TAKE CONNECTORS

The connector is used to connect the dripline to the secondary lines, or secondary lines to the main lines

FILTERS Filters will be required to install at the end of the system to remove all the particles in the flow, before letting water goes through the system. This can avoid clogging in the drippers.

DRIP LINE END CLAMP The clamp will be used to tail of the drip lines.

Mango Cropping Production and Marketing

83. Rice is the main crop and the area under cultivation in 2014 was 296,739 hectares. Takeo province also produces some agro industrial crops such as maize and cassava. Mango production has potential for expansion in this province but current production data is not available at MAFF and PDA. There is no official statistical data on mango production at the Ministry of Agriculture, Forestry and Fisheries but according to ACIAR project study in 2014 it shows that there are two major mango production regions in Cambodia, (Table 9). The South-East region provinces of Kampong Cham, Tboung Khmum, Kampong Speu and Takeo with an estimated production of about 10,000 ha planted, and the North-West region provinces are Siem Reap, Battambang, Pailin and Banteay Meanchey with an estimated 7,000 ha under production. Mango production in Cambodia is mostly through small scale household families rather than commercial farms. On average the mango production units are from 1 - 3 ha per household. Larger units do exist; the Mong Rithy group has the largest mango farm in the country with about 290 hectares and Kirirom mango processing has about 500 ha of mango production in Kampong Speu province, and other large farms of between 10 to 30 hectares exist in Kampong Speu province.

Table 9: Estimated Cambodia Mango Production (2014)

Regions Cultivated Area (ha) Yield

(Tons) Production

(Tons)

South East 10,000 15 150,000

North West 7,000 15 105,000

Total 17,000 255,000

Source: ACIAR/Traders 2014

84. There has been a drive to plant more mangoes as an investment strategy and as a direct result of buoyant prices in the last two seasons. Based on mango trader interviews, it is estimated that there is now more than 15,000 ha in Kampong Speu, and more than 7,000 ha in Tram Kak district of Takeo province, which border Kampong Speu.

85. There are many local mango varieties in Cambodia with the majority producing a single crop per year. Recently the Keo Romeat variety, which is the most popular among the local varieties, has the ability to produce two crops per year and under intensive production and it can even be sequenced to fruit throughout the year. However, this type of cropping may affect the health of the trees. Without the flowering manipulation Keo Romeat mango variety will only produce one crop a year. The two crops per year are achieved by flower manipulation to produce fruit from February to April and again in June to October.

86. Mango after rice is now the crop of choice for farmers in Prey Kdouch village of Trapaing Kranhoung commune after rice production. Other crops grown include sweet corn, and vegetables which are mainly for household family consumption. Usually, the farmer in Trapaing Kranhoung

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commune grows such crops in small plots by home garden (less than 100 square meters) and in general supplementary irrigation water is taken from the ponds that many household have. Most of the produce is for home consumption but the surplus is sold to local markets in close proximity to the village.

a. Market and Prices

87. Most small farmers work their farms and sell the fruit directly to traders either from Viet Nam or Khmer buyers that consolidate consignments in Phnom Penh and ship to Thailand and or domestic markets. However, the larger farms subcontract their units to managers who will manage the crop and then sell produce to traders or be traders in their own right. An estimated 80% of the larger farms subcontract their units with many owners residing in Phnom Penh.

88. Takeo province has good road connectivity to the Viet Nam border which is just a 45- minute drive away, traveling through national road no.2. The location of the drip irrigation subproject is Prey Kdouch village which is 1.5 hours to the Viet Nam border through Takeo via national road no.2 or Kampot province via national road no.3.

89. In Cambodia, most of the transport is done by land. However, road haulage has a higher cost in comparison to Vietnamese and Thai rates where both countries make greater use of their national waterways; only the Mekong River is navigable in Cambodia.

90. In the last two years, the mango fruit prices have been good, the price depends on the grade as detailed in the Table 10 below

Table 10: On-Farm Mango Prices in relation to quality grades (per kg)

Year Grade A Grade B Low grade

2014 KR2,500 KR1,200 KR800

2015 KR3,500 KR1,500 KR800 – 1,000

91. According to traders, the out of season mango price can command price premiums of KR800-1,000 per kg above that the in season mangoes.

92. For Keo Romeat the planting density is 260 – 270 trees per ha, but the density can go as high as 280 trees and the trees will start bearing fruit 3 years after planting with yields of 1.5 - 2 tons per ha, Year 4 yields are expected to be 4 - 5 tons per ha and at year 5 the trees can be encouraged to produce 2 crops in 12 months using flower manipulation techniques, whereby two crops can be produced of 7 and 8 tons per ha each. The sixth year after planting the trees enter full production at 17 tons per ha. Providing there is good orchard management trees will remain in full commercial production for the next 15 years.

93. The mango yields are projected to increase by 30% with the use of drip irrigation and the crop will have a higher percentage of grade A. The utilization of drip irrigation will support flower manipulation by the use of water stress techniques (Table 11).

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Table 11: Estimated of mango yield with and without drip irrigation

Fruit yield (tons/ha)

6-year old trees first crop

6-year old trees second crop

Non-irrigated 7.00 6.00

Drip irrigated 9.15 7.85

94. The drip irrigation will provide the farmer a tool to support flower manipulation of the tree and therefore achieve two crops per year; (i) the first crop was from June to October and (ii) the second crop from February to early of May.

95. There can be problems for a two crop season particularly the harvesting during February to April and May because the climate at that time of year is hot and dry, although the mango can produce two crops without drip irrigation the percentage of grade A fruit will drop during the dry period. To maintain the quality of the mango fruit during hot and dry periods, irrigation is required.

Figure 5: Cropping Pattern of Proposed Mango Drip Irrigation Subproject

Scale and Capacity

96. The scale, dimensions and capacities have been designed based on established drip irrigation and engineering principles for irrigation systems in Cambodia combined with local characteristics of topography and soil type. The design is presented in Annex 3.

Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar

Keo Romeat mango cropping pattern (without flowering manipulation)

Flowering manipulation cropping pattern

Natural crop of Keo Romeat mango

Wet season rice production (local variety)

Second crops of Keo

Romeat

First crop of keo Romeat

Home garden vegetable Home garden vegetable

Second crops of

Keo Romeat

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Associated Investments

97. Associated initiatives will include activity dedicated to capacity building this will including training in CSA and CAMGAP compliance. There will be a CSA training and capacity building program to help agriculture undergo significant transformation to meet the climate change challenges. CSA includes (i) soil and nutrient management which includes increasing the use of organic fertilizers; (ii) improved water harvesting and retention; (iii) understanding the changing distribution and pest control management; (iv) encouraging resilient ecosystems which includes variety climatic adaptation; and (v) improving efficiencies in post harvest management practices to reduce losses.

98. It is hoped that through the drip irrigation demonstrations, the mango farmers will be drawn together to form mango producer and marketing group association/s. That initiative can link into the capacity building work related to the agribusiness training activities or even the formation of a cooperative which would then use the resources of the GDA Department of Cooperative Development relating to the Law on Agricultural Cooperatives, and training in cooperative management (bookkeeping, accounts and business plans etc.)

99. The project will prepare training materials, if such materials do not exist. There is a JICA project in Takeo, Kampong Cham, Svay Rieng and Kampong Speu provinces, which started August 2013, to develop business orientated agricultural cooperatives and this can be built upon in the provinces of Takeo and Kampong Cham. The project will use existing JICA elaborated training manuals and guidebooks on agricultural cooperative management, business planning, auditing, monitoring and facilitation and develop further training materials particularly with emphasis on trading and crop marketing

Location and Site

District and Provincial Plans

100. The development vision of Takeo province is to achieve the sustainability of its economic development with improved public services through the promotion of agricultural productivity, small and medium industries and tourism sectors. The natural resource sector development has also been guided by the 5 years provincial development plan. Key elements of relevance to the subproject include (i) the development of water resources through irrigation development; (ii) the strengthening of farmer cooperatives to enhance their business capacity in agribusiness value chain and access to technical support services and good quality of inputs; (iii) to improve food safety in the province; (iv) the enhancement of road maintenance and the rehabilitation of communications throughout the province; (v) to extend the rural road network to the more remote locations; and (vi) adopt improved land management practices to ensure sustainability of the resources for the future. The objectives of the subproject are consistent with the provincial development objectives as they are to national development priorities.

101. There are five national toads (no. 2, no.3, no.21, no.31 and no.41) passing through the province, and a railroad connecting Phnom Penh and Sihanoukville that stops in the province. Water transportation routes connecting to Viet Nam via the Takeo River have also been developed. The existence of the 79 ha Duong Chhiv Special Economic Zone and an abundant electricity power supply are also expected to contribute further to the industrial development at the border in Phnom Den between Cambodia and Viet Nam.

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Socioeconomic Conditions

102. The total number of households in the subproject area is 1,034 household (both mango farmer households and nonmango farm households), of which 154 are female-headed households. The total population is 4,527 persons of whom 2,128 are females. There are 55 ID-Poor 1 households and 201 ID-Poor 2 households. ID-Poor households are characterized by having very little land, or are landless. There are no ethnic minorities in the area. The total area of available land for farming is 4,229 ha for rice and 4,304 ha for other crop production, indicating that there is a relatively larger area of land available for the community to farm. Average farm size is 1.5 ha. There are 421 persons who have out migrated from the commune of whom 244 are female. Out-migration of adults has led to labor shortages for farming. The community is characterized by substantial numbers of older women who are taking care of their grandchildren, and receiving remittances from their adult children working in urban areas.





107. Poverty, household debt and migration in subproject area. Most mango farmers in the area have either used revenue from rice production or borrowed money from the bank or used remittances from their children in order to plant their mango orchards which are typically approximately 5-7 ha. Mango cultivation is very costly for farmers and because they do not have sufficient capital, labor or knowledge of mango cultivation, it is a common practice for farmers to lease their orchards to private contractors – usually Cambodian companies after 3-4 years when the trees are established and beginning to bear fruit.

108. It was reported that approximately 15% of the total number of households in the commune have lost their lands because of distress sales due to debt caused by either medical emergencies or crop failure due to extreme weather. In Prek Taloy village alone, 33 households out of 209 households have lost their land because of debt.

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Identification Process

109. The identification to site a drip irrigation demonstration in specific farms, has and will have, the following criteria and requirements:

(i) be a smallholder and not an absentee farmer; (ii) the recipient must have a land title or the land is secured in his or her name; (iii) has marketing contacts that require Grade A fruit or has the potential of gaining

such contracts; (iv) be growing the Keo Romeat variety; (v) have access to the water or water is available for a borehole and pond construction

(if of sufficient size or replenishment to satisfy the water demands of irrigating mango);

(vi) the farmer is willing to work with the project and accepts the technical innovation of drip irrigation and solar pumping;

(vii) the farmer commits not to sell or transfer the land to a third part during the life of the project, in order to achieve capital gain; and

(viii) has no objection for his or her farm to be used as a training and demonstration location for the duration of the project.

Land Acquisition and Resettlement

110. As already reported, the proposed intervention is to set up a drip irrigation system for an existing 2.5 ha of mature mango orchard. The farm is owned and managed by a local farmer who lives in the community where the farm is located. The farmer is willing to let the project equip his farm with an irrigation system, and volunteer to let the project use the site as a demonstration during the project implementation. The household was selected according to criteria detailed under Section 3 above and this included security of tenure on the plot. There is no involuntary resettlement, economic or other dislocation and no land acquisition. As such the ADB Safeguard Policy Statement (2009) is not triggered. The subproject is classified as Category C with no impact and therefore no further action is needed under Safeguard 2 (see Annex VI)

Indigenous People

111. The mango growing community is comprised solely of ethnic Khmer and there are no indigenous people (IP) or ethnic minority groups (EMG) in the subproject area or connected in any way to the mango orchard operations. The subproject has been classified as Category C in respect of Safeguard 3, with no impact on IPs or EMGs. As indicated under ADB SPS (2009), no further action is required (See Annex VI).

Environment

Environmental Criteria and Standards

112. Screening Criteria and Categorization: At an early stage of the project, ADB screens and categorizes proposed projects based on the significance of potential project impacts and risks. Screening and categorization is undertaken to (i) reflect the significance of potential impacts or risks that a project might present; (ii) identify the level of assessment and institutional resources required for the safeguard measures; and (iii) determine disclosure requirements. A project's category is determined by the category of its most environmentally sensitive component, including direct, indirect, cumulative, and induced impacts in the project's area of influence. The nature of

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the environmental assessment required for a project depends on the significance of its environmental impacts, which are related to the type and location of the project; the sensitivity, scale, nature, and magnitude of its potential impacts; and the availability of cost-effective mitigation measures. Projects are screened for their expected environmental impacts, and are assigned to one of the following four categories:

(i) Category A. Projects could have significant adverse environmental impacts. An EIA is required to address significant impacts.

(ii) Category B. Projects could have some adverse environmental impacts, but of lesser degree or significance than those in category A. An IEE is required to determine whether significant environmental impacts warranting an EIA are likely. If an EIA is not needed, the IEE is regarded as the final environmental assessment report.

(iii) Category C. Projects are unlikely to have adverse environmental impacts. No EIA or IEE is required, although environmental implications are reviewed.

(iv) Category FI. Projects involve a credit line through a financial intermediary or an equity investment in a financial intermediary. The financial intermediary must apply an environmental management system, unless all projects will result in insignificant impacts.

113. Standards: Subprojects are obliged to conform to environmental standards of both the ADB and RGC. Based on the ADB's Rapid Environment Assessment Checklist, the project is classified as Category B, requiring the preparation of this initial environment examination (IEE) report.

114. Legal framework: The Law on Environmental Protection and Natural Resource Management, the subproject has to be compliant with the Law which was enacted by the National Assembly and launched by the Preah Reach Kram/NS-RKM-1296/36 on 24 December 1996. This law has the following objectives:

(i) To protect and promote environment quality and public health through prevention, reduction and control of pollution;

(ii) To assess the environmental impacts of all proposed projects prior to the issuance of a decision by the government;

(iii) To ensure the rational and sustainable conservation, development, management and use of the natural resources of the Kingdom of Cambodia;

(iv) To encourage and provide possibilities for the public to participate in the protection of environment and the management of the natural resources; and

(v) To suppress any acts that cause harm to the environment.

115. In addition, there are agricultural standards that have control criteria that relate to site selection and environment safeguards, which include full record keeping and traceability requirements. The two standards that the project will promote are the (i) Sustainable Rice Platform, and (ii) Cambodian Good Agricultural Practice. Climate Smart Agriculture practices and procedures also have environmental safeguards, primarily the rational use of agricultural inputs and agronomical practices to reduce GHG emissions:

116. At the national level there are additional relevant regulation and evaluation standards supported by a range of legal instruments, as follows (See Annex VII for full details):

(i) Law on the Management of Pesticides and Fertilizers; (ii) Law on Water Resources Management;

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(iii) Water Pollution Control Sub-decree; (iv) Solid Waste Management sub-decree; (v) Air Pollution Control Sub-decree; (vi) Silt/Sediment Quality (from Japan and PRC standards); (vii) National Integrated Pest Management Program; and (viii) Environmental, Health and Safety Guidelines.

Management Solutions for Environmental Protection

117. Two significant environmental enhancement measures have been identified. The storage of water during the dry season would benefit (i) the local villagers around the reservoir and canals as a source of domestic water supply and irrigation; and (ii) water in a semi natural environment for indigenous wildlife. Through the enhancement of agricultural activities and local incomes, in migrant employment will benefit local communities with job creation and employment opportunities

118. The improved water control and management as a result of the drip irrigation scheme will enable the mango farmers to manage the drought, achieving a higher percentage of grade A fruit and have more flexibility in achieving floral manipulation. Training on irrigated agriculture practice through the use of CAMGAP will improve farmers' knowledge and capacity in the standard control criteria which include (i) site assessment and selection; (ii) planting material; (iii) soil and substrates; (iv) fertilizers and soil additives; (v) irrigation quality and use; (vi) pesticide use; (vii) waste management; (viii) worker health and safety; (ix) documents and record keeping; (x) audits; and (xi) complaints and resolutions.

119. There are anticipated environmental impacts during the project design. These include three environmental issues expected to result from the use of drip irrigation which are concerned with water extraction (i) the water table and its replenishment; (ii) the quality of water and its hardness (hard water blocks emitters); and (iii) the quality of the design with its climate resilient facets.

120. There are no significant environmental concerns with the mango drip subproject site. The subproject is totally independent and there will be no construction of surface water systems off the farm to cause possible major environmental problems. Furthermore, the farmer has a land title and it is not within a protected area. The surrounding farms are mango orchards.

121. A number of environmental management measures will be implemented in the pre-construction phase to ensure that appropriate design, plans and documentation to determine environmental performance of drip installation and operation of subprojects are in place. These include:

(i) Mitigation measures defined in the Tram Kak drip demonstration EMP will be updated and incorporated into the detailed design to minimize adverse environmental impacts. This will be the responsibility of the PMU and the relevant project implementation consultants (PICs);

(ii) Final designs relating to the layout of the drip lines, siting of the head works and the sinking of the tubewell will be completed after taking into account the provisions of the EMP;

(iii) Engineering design will consider avoiding impacts on environment and social impacts and also consider long term use and sustainability, particularly the impacts of climate change;

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(iv) Environmental clauses will need to be included in the installation and subsequent capacity building contract documents, including an EMP and monitoring plan in the terms of reference;

(v) Establishment of the Grievance Redress Mechanism during the subproject design which will be updated during project activities to meet the actual situation in real time and will follow ADB and Government of Cambodia guidelines; and

(vi) Effective capacity building on implementation and supervision of the EMP and environmental monitoring plan. The project officers and local MOE officers will be involved in the training. This will be the responsibility of the PMU Safeguards Officer through the PMU.

122. Impacts and mitigation measures during the installation phase. The EMP will be implemented by a contractor to avoid or minimize negative impacts following the IEE documents. To ensure that construction contractors are able to implement the mitigation measures effectively, the PMUs will put in place the following arrangements: (i) environmental specifications will be included in the bidding documents to contractors; (ii) an appropriate environment section describing standards and responsibilities will be included in the terms of reference for bidders; and (iii) clauses referencing the EMP mitigation provisions and monitoring plans will be written into the construction contracts. Following the award of installation contracts, the successful contractor will prepare a Site Environmental Management and Supervision Manual, including an emergency preparedness and response plan for construction emergencies and site environmental health and safety plan, for approval by the PMUs. The contractor will prepare quarterly reports on environmental management to PMUs. The PMU's Safeguards officer, along with PDA will be active in site supervision, management and appraisal, particularly during construction, so as to identify problems and solve them in a timely manner.

123. Protected areas. No protected areas exist in the subproject location. The subproject area has been farmed over a number of generations, with mangoes being the new crop. No significant natural terrestrial or aquatic habitats exist and natural biodiversity comprises only common wildlife living among humans with domesticated animals and feral pests and rodents at the location. There is no evidence of protected or endangered species and there will be no significant loss of native flora and fauna as a result of the project.

124. Cultural heritage. During construction, contractor will ensure that any local cultural sites (including shrines, graves, and other believe) will be kept clear of construction material and protected from other disturbance. Access to these sites will not be impeded, and after construction is finished any disturbed surroundings will be restored to pre-construction standards. If there is any issue, it must be reported to the PMU through the PDWRAM immediately.

125. Construction camps. The construction contractors will establish a limited work camp for a short period of time (2 months). This will generate wastewater and solid waste which can cause environmental pollution and unsanitary conditions. Proper disposal of these wastes will be essential. It will be the responsibility of the drip installer to provide toilets with pump-out and disposal facilities and sufficient waste bins at strategic locations to ensure that they are (i) protected from birds and vermin; (ii) emptied regularly (using the nearest landfill or site which is approved by the authority); and (iii) ensure there is no waste overflow. The contractors will clean the camps area after completion of works.

126. Hazardous and polluting materials. Construction material handling and disposal guidelines and directions that include spill responses will be prepared and implemented as part of the Site Environmental Management and Supervision Manual. The following measures will be

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taken to prevent pollution of soil and surface water/groundwater: (i) storage facilities for fuels, oil, cement, and chemicals will be within secured areas on impermeable surfaces, provided with bunds and clean up installations; (ii) vehicles and equipment will be properly stored in designated areas to prevent contamination of soil and surface water; (iii) vehicle, machinery, and equipment maintenance and refueling will be carried out in such a way that spilled materials do not seep into the soil; (iv) oil traps will be provided for service areas and parking areas; and (v) fuel storage and refilling areas will be located at least 50 m from canals and channels and will be protected by temporary drainage bunds to contain spills.

127. Air pollution. During the sinking of the borehole and the laying down of the main drip lines heavy and light machinery will be used that they will generate gases including CO2, NOx, etc. This will be minimized by good equipment checking and maintenance to meet a high standard to ensure efficient fuel burning and quality. Vehicle emissions will be in compliance with relevant Cambodian emission standards.

128. Dust. An adverse environmental impact could occur during the construction phase in case of improper construction management but is not likely significant. Water shall be sprayed during construction if the construction zone will be located close 50 m to urban areas such as village, hospital, school and so on to ensure that dust is minimized throughout the construction zone.

129. Soil Erosion. Soil erosion will not be an issue as there will be no heavy earth movement with the land topography remaining the same and no replanting of the natural vegetation will be necessary.

130. Noise. Noise can be expected during the sinking of the borehole and laying of the drip main line. Noise intensity from these machines is typically in the range of 80-90 decibels at the site (5m from operating machinery). The transport of material, aggregate, concrete and waste material to and from sites will also cause noise impacts along the haulage routes. Activities with intensive noise levels will not only have an impact on the residents, but may also cause injury to construction workers operating the equipment.

131. Environmental Impact and mitigation measures during operation. Poor and inadequate operation and maintenance (O&M) of the newly installed drip irrigation system can cause unintended adverse environmental impacts. The beneficiary farmer's capacity building is important and the installer will also commit in the contract to providing 2 years capacity building and support to the system and the farmer. Selected PDA staff will also receive support in capacity building from the private sector service provider, so they in turn can transfer the drip irrigation technology to other farmers.

132. Water pollution and chemical fertilizer use. The benefits resulting from the project's drip irrigation facilities will accrue to the beneficiaries through intensification of mango production. With an increase in agriculture comes a potential increase in the use of agricultural chemicals. The primary objective of the Project is to provide irrigation to improve the yield and quality of the crop. With irrigation there will be increased agrochemical and fertilizer use. However, the use of drip irrigation does provide a vehicle for more precise applications, some of which can be applied through the drip lines and therefore more environmentally friendly. Diluted acids such as phosponic, hydrochloric and sulfuric acids are used to clean drip lines (algae build up) This training will include the use of CSA and CAMGAP which includes integrated pest management. Any agrochemical products used must be registered and meet RGC quality and use regulation.

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133. Worker health and safety of both workers and residents may be threatened by installation activities. Numerous workers will gather within the construction site, with potentially relatively low living conditions such as unclean water, poor food, and increased risk of diseases infection and transmission. Surrounding residents may also be affected by noise and dust. Workers will confront construction safety risks as well. In addition, some workers will include non-skilled workers, operators and drivers as well as surveyors and construction supervisors.

134. The measures to protect the community will include (i) planning installation and tubewell sinking activities so as to minimize disturbances to residents, utilities and services. Temporary land occupation will be planned well ahead of construction to minimize its impact. Land will be reinstated to its original condition after construction and (ii) implementing safety measures around the construction sites to protect the public, including warning signs to alert the public to potential safety hazards, and barriers to prevent public access to construction sites and unsafe areas

135. Measures to ensure occupational health and safety will include: (i) contractors shall be required by the PMU to ensure that their workers and other staff engaged in the proposed construction are in a safe environment; (ii) following the award of construction contracts, the contractors will prepare site environmental health and safety plan for approval by the PMU; (iii) contractors shall ensure that: (a) all reasonable steps are taken to protect any person on the site from health and safety risks; (b) the construction site is a safe workplace; (c) machinery and equipment are safe and in good working order; (d) adequate training and instruction for occupational health and safety is provided; (e) adequate supervision of safe work systems is implemented; (f) means of access to and egress from the site are without risks to an individual's health and safety, (g) protected equipment such as gloves, face mask etc. are provided by contractors to ensure that all workers are in safety.

136. If any unanticipated impacts during construction and operation become apparent during project implementation, the PMU will (i) inform and seek ADB's advice; (ii) assess the significance of such unanticipated impacts; (iii) evaluate the options available to address them; and (iv) prepare or update the EIA including EMP. ADB will assist the PMU mobilize the resources required to mitigate any adverse unanticipated impacts or damage.

IV. TOTAL INVESTMENT AND FUNDING ARRANGEMENTS

Total Investment Cost

137. The total cost of the subject includes both engineering investment cost and capacity building for operation and maintenance for the farmers owner cost. The summary of the estimated cost of the different cost categories is presented in the table below:

Table 11: Summary of estimated cost for Drip Irrigation Subproject (for Mango farm) No. Items Estimated Cost ($)

1 Supply and installation of a completed set of drip irrigation system

3,875.00

2 Supply and installation of a complete set of solar pump 9,000.00

3 Construction of a tube well of 0.15 diameter, and 80m to 100m depth

3,500.00

4 Capacity building for farm own in O&M of the system 500.00

Total 16,875.00

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Estimation Methods

138. Drip irrigation system cost is estimated in accordance with the quotations received from different local companies during the subproject feasibility study. Cost for the construction of the tubewell is estimated based on the information from consultation with some people in the project province. The cost for supply and installation of the solar panel is based on previous project in the country. Though, an additional cost of about 5% is added to each item in the case of inflation. All taxes and supplier/contractor’s benefits are already included in the estimated costs.

Total Costs and Financing Plan

139. The estimated base cost for the subproject is $16,500 and including contingencies the cost will be $17,870. This cost includes training for the operation and maintenance of the system. The ADB will fund 91% of subproject costs and the government will fund the remaining 9% in the form or waived taxes.

V. IMPLEMENTATION AND OPERATING ARRANGEMENTS

Execution and Implementation Agencies

140. The Provincial Department of Agriculture (PDA) of Takeo province will be the key implementation agency for this pilot subproject. The PDA will work closely with the installers and contractors who will have the responsibility of installation, operation and maintenance as well as develop and implement a training program not only for mango farmers but also PDA staff, so the latter can gradually take over the capacity building/extension programs

Detailed Design Phase

141. A further detailed design shall be done to reconfirm the draft design at this stage. The design works shall be start right after the mobilization of the PIC, and the PIC’s irrigation engineer and the team will lead this design. Some of the design work may need to be out-sourced such as the solar power system, determining the ground water availability and abstraction capacity of the pumps, pump selection, etc. Apart from designing of the drip system, the irrigation engineer of PIC will supervise all the design works undertaken by a subcontracted designer.

142. The result of the final design of the drip irrigation subproject will determine the final cost estimate of the subproject. The detailed Bill of Quantity (BoQ), detailed technical drawings, construction specification, and detailed specification of the required materials (such as characteristic of drip system pipe and tubing, discharge capacity of the emitters, characteristic of solar panels, capacity of the pump, etc.) will be prepared in advance and will be used for the bidding documents.

Bidding Phase

143. Bidding shall be done after the completion of preparation of the technical documents (detailed design, technical drawings, Bill of Quantity and technical specifications). The bidding process should be undertaken during the wet season and be completed before the beginning of the dry season. Ideally the construction activities should be planned to take place in the dry months of the year which is usually from January to June.

144. The bidding should be open to local contractors and local suppliers. Preference should be given to ones who are based in Takeo province where the subproject is located in.

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Construction Phase

145. It is always ideal to let the construction take place during the dry months of the year. During the wet season, there will be difficulties in both mobilization of the heavy equipment, construction materials as the local access roads in the community; especially ones connecting the site to the feeder roads are weak. Continuous rainfall will cause a lot of interruption to the construction works on the site. All these difficulties potentially affect the quality of the construction; therefore, the construction work is strongly recommended to be performed during the dry season, from January to June only.

Operational Phase

146. The drip irrigation subject project will be operated and maintained by the farm owner after the completion of the construction activities. The farmers will be trained on both operation and maintenance procedures of both the drip system, solar power system, and the pump by the supplier. The cost of the on the job training will part of the supplier’s service.

147. This project site will be used as a field school for the future training purpose on drip irrigation to others farmers and PDA staff in the same subproject province or ones from the other project target provinces. The initial training and demonstration work will be the responsibility of the private sector drip irrigation supplier

148. All the costs related to the operation and maintenance of the system will be part of the training costs and be part of the capacity building budget related to CSA and CAMGAP for tropical fruit. The project will provide the technical support and logistical support for open days and field days and will actively seek the support of the PDA.

Subproject Implementation Management

149. The Tram Kak drip irrigation demonstration subproject investment is primary to introduce drip irrigation, show its benefits in relation to climate change and improved farm incomes. The management and operation of demonstration site will be the responsibility of the PDA. Prior to installation the drip irrigation suppliers and installers will be responsible to the provincial agency and private sector consultant engaged to review and revise if required, the detailed design, bid document preparation and supervision of construction.

150. Following installation the drip irrigation contractors will take the lead role in demonstrating the operation and management of the scheme which includes the development of a crop production blueprint on the use of inputs in line with CSA and CAMGAP (when elaborated). The training will not only include O&M of drip irrigation but also orchard floor management, pest and disease monitoring and control, harvesting and post harvest operations

151. The subproject implementation, as presented in the PAM and below, outlines responsibilities of the provincial agencies and departments involved in subproject implementation. All activities will be monitored and progress reports submitted to the PMU with technical line agencies having the responsibility to ensure the technical aspects of the subproject are addressed adequately.

Subproject Organization and Implementation

152. The PMU is ultimately responsible for deciding to proceed with the investment in the location proposed by the design consultants. Concerning reporting, the PMU will receive

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implementation progress reports and edit for onward submission to ADB to determine that the subproject investment is consistent with provincial development plans. The PMU will (i) approve annual work plans and budgets to implement the drip irrigation demonstration subprojects; (ii) the recruitment of the drip irrigation company supplier and installer; (iii) approve detailed designs for subprojects based on recommendations from the technical line agency and PIC, but more importantly the supplier; (iv) monitor and request release of payments (if required) for not only installation but also post-installation payments when the supplier undertakes the training activities for 2 years after installation; and (v) provide guidance to relevant provincial departments in the implementation of the subprojects in the Province

Role of the PDA

153. The following tasks will be completed by PDA under the management of the PMU:

(i) In association with training advisers develop a suite of capacity building programs related to on farm water management, climate smart agriculture and CAMGAP;

(ii) The PDA will organize and arrange field days and training days at the site in conjunction with the private sector service provider;

(iii) With its new mandate the Department of Agricultural Engineering will have an oversight on the technical and infrastructure aspects of the pilot drip irrigation scheme;

(iv) The PDA will seek guidance from the Department of Agricultural Engineering on the technical and infrastructure aspects of the pilot drip irrigation scheme. The latter department will have oversight on activities relating to on farm water management;

(v) Work with mango farmers to see if there is an appetite to form a mango producer group or a cooperative and promote joint marketing initiatives;

(vi) Assist in detailing crop production protocols for extending seasons or achieving multiple harvest windows, utilizing flower manipulation methodology; and

(vii) Assist the PMU M&E consultants in monitoring the impact from the subproject investment by carrying out annual impact monitoring surveys of beneficiary farmers and other value chain stakeholders.

Role of Contractors/Installers

154. The contractor will be responsible for the detailed design, construction and quality of works to be established under the contract and will prepare and submit construction diaries in order that PDA and PMU can monitor progress. The contractor will be responsible for on time handover of the infrastructure as per the contract.

155. Agronomic and technical support and training will be provided on mango production by the drip irrigation contractor for 2 years after installation for PDA staff and farmers. The training will include: pruning; orchard floor management; crop water requirements and irrigation scheduling (depth and frequency of water application; water quality considerations, emitter application measurements) and fertigation scheduling (soil and water analysis, estimation of nutrient dose, selection of fertilizers and compatibility, foliar diagnosis for nutrient deficiencies etc.); systems operation (pressure reading and maintenance, valve operation and maintenance (cleaning of filters, fertilizer tank, acid treatment, chlorination etc.).

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Role of Project Implementation Consultants

156. During the preparation of the detailed design, the Project Implementation Consultants (PIC) will support the preparation of the detailed engineering design as required. A specialist irrigation/rural infrastructure engineer will be part of the PIC and there will be assessment that adequate provision has been made to accommodate the potential impact from climate change relating to extreme weather events. The PIC will also review bid documentation to ensure that they conform to the requirements of ADB and the government.

157. The PIC will ensure that quality assurance is maintained during construction supervision and will wherever possible, work with the drip irrigation suppliers to develop management and operation training materials Approval for payments under the construction contract must be ratified by the PIC before being authorized for payment through the PMU

158. The PIC will work with the contractors and then with PDA to ensure efficient implementation given the limited resources and experience of the PMU staff related to drip irrigation systems. The PIC in conjunction with the PMU will ensure inter-agency coordination

Role of Subproject Beneficiaries

159. After the two-year period the farmers that have the systems on their land will be expected to take over the management and operation of the drip irrigation system. This will include routine maintenance and monitoring of the system to ensure uniform application of irrigation water. PDA staff member that have been trained can also work with farmers in the management and operation of the drip irrigation systems. The overriding objective is for the demonstration site to become a commercial and profitable enterprise

160. Mango farmers may also wish to cooperate further to exchange ideas and market jointly their produce and can be supported with the associated initiatives under the project, particularly cooperative development. Such beneficiary groups will be required to form cooperatives and will need to establish the cooperative with the support of the PDA to register, appoint office bearers, maintain adequate records of decisions reached and minutes of meetings etc. These will be made available to the PMU upon request.

Subproject Implementation Schedule

161. The implementation schedule for the subproject is dependent upon the time needed for program approval through ADB and the government, as well as the length of time it takes to set up implementation structures and operational accounts. While significant advance action has been proposed and the design consultants have submitted relatively detailed plans and bill of quantities providing considerable start-up support, the subprojects can commence the second quarter of 2019 providing project implementation commences mid-2018.

162. If there is uncertainty or slippage in project implementation the subproject implementation schedule is noted in months rather than dates. Implementation schedules may need to be further modified once the implementation structures have been established and operating accounts for payment opened

Procurement

163. Based on the procurement plan in the PAM, the procurement packages required to implement this subproject will be (i) consulting services for reviewing the design consultant’s

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feasibility work, later the submission of the detailed design proposed and bill of quantities elaborated, then revisions to the work and estimated costs and to prepare bid documents and supervision of infrastructure construction and (ii) the civil works construction contracts. Procurement associated with the subproject will be recruited and managed by the PMU and will be assisted by the PIC. A third procurement contract for the associated activities to maximize the benefit from the subproject investment will be specific for this subproject. In this case the drip installation installers and contractors will have included in their proposal training and capacity building for the recipient farmer and to be available to demonstrate at open days and field visits as organized by the project for the first two years following installation. The procurement package will consist of 10 sets of drip irrigation systems sufficient to irrigate a maximum of 5 ha with the corresponding capacity building and training two-year element.

164. All procurement of goods and works to be financed by the ADB loan will be in accordance with ADB‟s Procurement Guidelines. NCB procedures will be followed for contracts valued at less than $2,500,000 but more than $100,000 for civil works and less than $500,000 but more than $100,000 for goods. For NCB procedures, the provisions of the governments standard operating procedures (SOP) will be followed. In case of inconsistency between ADB procedures and the SOP, ADB procedures will apply. The proceeds of the loans will be disbursed in line with ADB's Loan Disbursement Handbook. Prior and post review thresholds are included in the procurement plan for the overall Program as part of the PAM presented in RRP.

VI. SUBPROJECT OUTCOME AND IMPACT

Subproject Outcome and Impact

Performance Indicators

165. The performance indicators are based on the outcomes of the subproject which will be:

(i) As it is a gender mainstreaming project, the number of women beneficiaries, should at least be 50%;

(ii) There a 10% increase in rural household income (from a base of KR1.16 million/$290) of farmers including women, and those employed in modern agribusiness operations and service providers over the lifetime of the project;

(iii) Average farming household income from mango production increased on the basis of a 30% increase in yield (from a base of 13 tons/ha) with a higher percentage of grade A fruit (Base 20%);

(iv) Mango orchard units are more resource efficient in terms of water savings (approximately 5-10% efficiencies realized) and addressed climate change issues; relating to late onset of rains and extended drought periods;

(v) Other indicators social indicators will include: (i) reduction in out-migration levels as fruit production becomes more profitable; (ii) school drop-out levels may decrease as families are better able to pay for their children's education; (iii) women's access to extension services and technical information improved; (iv) men and women will be empowered through training in improved drip irrigation and orchard techniques; and (v) increased household incomes will lead to a reduction in household debt levels, and a subsequent decrease in the incidence of domestic violence in farming households.

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(vi) The final indicator is to determine cluster development amongst the mango farming community, as the scale and scope in which mango farmers work together.

166. Introducing drip irrigation into a mango orchard leads to higher yields and better quality, with an increase, in particular, in Grade A fruit. The result is higher income for the orchard owner. For the subproject orchard owner, the incremental income arising from the installation of the drip irrigation system, over and above what his income from the orchard would be without irrigation, is estimated at $6,269 per year once full production is reached, i.e. two years after completion of the system. Labor requirements on the orchard may also increase slightly, so there may be a small benefit for workers employed.

167. This level of incremental income is for an orchard of 2.5 ha. For the owners of the other proposed pilot sites, benefits will be in proportion to the size of their orchard. For other farmers who adopt the technology on their orchards after seeing any of these pilot demonstrations, the incremental income benefits will be less since they will have to pay the investment costs themselves. For a 2.5 ha orchard, with amortization of the pump and inverter over 5 years and the of all other parts of the system over 20 years, incremental income would be about $1000 less per year than for the pilots (i.e. about $400 per ha). Since the increase in capital costs for larger orchards is only the cost of the additional irrigation network, the annual amortization costs would be proportionately less.

Evaluation Arrangements

168. Within 6 months of implementation a baseline study is required to verify the finding of the design consultants and to determine technical (agronomic) climate change and socioeconomic indicators within a representative sample of the surrounding area of the drip irrigation demonstration unit farm. This will include those social profiles of the household with different economic/poverty status.

169. The annual progress reports presented by the social development consultants will assess the beneficiaries (those that attend the demonstrations and farmers that take up the technology) to determine the knowledge assimilation to the new technology and impact from the investment. Subsequently, annual surveys will be undertaken to measure the overall impact in the beneficiaries. The subproject completion report should report the impacts achieved from the investment and post project impact studies at a later stage can test the sustainability of these impacts.

Reporting Arrangements

170. Four different kinds of monitoring will be carried out: (i) implementation progress monitoring of the subproject; (ii) safeguards monitoring; (iii) climate change monitoring; seasonal climate patterns in relation to mango production; and (iv) benefit monitoring and evaluation. Implementation progress monitoring will be one of the main tasks of the PMU M&E officer with assistance from the Safeguards Consultants and the PDA.

171. Safeguard monitoring with also ensure the EMP plan is implemented and achieves its expected outcomes during subproject preparation, implementation and operation, and gender action plan will be closely adhered to (Annex 8).

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Economic and Financial Evaluation

172. The economic and financial assessment of the project is in Appendix 9 below. The analysis is based on the estimated costs for implementing the drip irrigation system and the significant benefits that will accrue from higher volumes and better quality fruit.

173. The EIRR for the subproject is 26.6%. The EIRR remains above the acceptance level of 12% for reasonable variations in key variables. Volatility in mango prices might have a negative impact on subproject outcome if they fell significantly and remained low for an extended period, but this also seems an unlikely scenario given the high demand for quality mangoes in domestic and international markets.

174. Introducing drip irrigation into a mango orchard leads to higher yields and better quality, with an increase in Grade A fruit. The result is higher income for the orchard owner. For the subproject orchard owner, the incremental income arising from the installation of the drip irrigation system, over and above what his income from the orchard would be without irrigation, is estimated at $6,269 per year ($2,507 per ha per year) once full production is reached about two years after completion of the system. Labor requirements on the orchard may also increase slightly so there may also be a small benefit for workers employed.

Social Impact Assessment

175. From mixed gender discussions, women’s focus group discussions, and individual and group interviews with commune council members and commune council women and children focal point and local collectors, an assessment of social conditions in the sub-project target area has been elaborated.

176. Most mango farmers in the area of influence have either used revenue from rice production, borrowed money from the bank or used remittances from their children in order to plant their mango orchards which are can be as small as 1 ha and up to 7 ha. Mango cultivation is very costly for farmers and because they do not have sufficient capital, labor or knowledge of mango cultivation, it is a common practice for farmers to lease their orchards to private contractors – usually Cambodian companies after the crop is 3-4 years old when the trees are established and beginning to bear fruit. The cost of a mango sapling is approximately $0.5 to $1. The labor cost for harvesting mangoes is KR50,000 per day. Irrigation water for the orchard is usually from a pond a few farmers have boreholes. Depending on negotiations with contractors, farmers might receive $5-10 dollars for leasing one tree. A typical rent for a 7-ha mango orchard with 4-year old trees is $6,000-7,000 per year. The contractor then managed the orchard; weeding, fertilizing and applying insecticide to make sure the mango trees produce fruit. The orchard owner has no further responsibility or claim to the orchard. All the revenue from mango sales is through traders to dispatch to Viet Nam or the product is sent to Phnom Penh for consolidation and some will be dispatched to Thai markets. The trader can be the person that manages the orchard or he or she will sell onto the trader.

177. Contractors also provide training to farmers in how to correctly plant mango trees. Local agricultural suppliers frequently implement demonstrations of the recommended agricultural products to use for mango cultivation such as pesticides and fertilizers. They provide a 5-day training program for farmers and trainees, all are exclusively male. In the sub-project area there are many absentee mango farmers.

178. It was reported that approximately 15% of the total number of households in the commune have lost their lands because of distress sales due to debt caused by either medical emergencies

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or crop failure due to extreme weather. In Prek Taloy village alone, 33 households out of 209 households have reportedly lost their land because of debt.

179. In order to access capital, farming households usually borrow money from AMK (microcredit institution). Some households borrow money from private businessmen. For a $250 loan for example, the daily interest rate is $2. In this case, livestock or motorbikes are given as security, but not the land title or dwelling. The loan is usually arranged and organized by the wife who is then responsible for paying it back.

180. Young adults have migrated out of the area to urban areas to look for work, leaving their small children with their parents. They return home for holidays such as Khmer New Year and other national public holidays. Some children send money home – approximately $80–$100 per month. But about 20% of migrants are unable to send home any remittances.

181. The community is now characterized mainly by people aged 40 years and above. And approximately 20% of the adult community is illiterate and the majority of those that are illiterate are elderly women.

182. Vulnerability and inclusion. The service provided by the local health center is considered inadequate and is not equipped with an ambulance or any transport facilities. For this reason, it is only accessed for dealing with minor ailments. In the case of serious illness, most people go to private clinics for treatment.

183. There are no ethnic minorities in the commune.

Environmental Impact Assessment

184. The IEE was prepared following the ADB Safeguard Policy Statement (SPS) (2009), the 2003 ADB Environmental Assessment Guidelines, the ADB Environmental Guidelines for Selected Irrigation and Drainage Development Projects and relevant environmental policies and guidelines of the government. The project is classified under ADB guidelines/rules as a Category B project. Such projects are judged to have some adverse environmental impacts, most of which is occurring during construction phase, but of lesser degree and/or significance than those for category A projects. An IEE is required to determine whether or not significant environmental impact warranting an environmental impact assessment (EIA) are likely. If an EIA is not needed, the IEE is regarded as the final environmental assessment report.

185. During pre-construction. The issues related to project location encompass the installation of a drip irrigation system and the sinking of a borehole for irrigation water supply. During construction: The major issue during construction concern compliance with the EMP regarding on farm water management initiatives, ensuring site cleanliness, careful treatment of spoil any trenches and sinking the borehole with the protection of existing water quality and vegetation. For post construction, the main concern is the maintenance of the subproject which requires a systematic approach to maintenance and management and the efficient and safe use of inputs for mango production. The level of fertilizer and pesticide residues would increase within more intensive cropping regimes. However, the use of drip irrigation will contribute to CSA practices with a more rationale and efficient use of inputs, particularly soluble fertilizers used within the drip irrigation system itself. The impacts would be mitigated further through improving local capacity building and training on proper uses of fertilizer and pesticides effectively and this will be carried out using private sector trainers, through service provision contracts

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186. Irrigation water demand will increase from the use of ponds which dry up, adaptation to predicted future increases in irrigation water demand in the subproject will be important and will be included in the TOR as a responsibility of the international climate change and environmental specialist to complete for the specific subproject location.

187. Rapid Environmental Assessment (REA). The initial REA for the project identified a medium climate risk, however the AWARE classification is that of high risk. This PPTA has therefore completed a climate change assessment. In addition, there is a need to undertake a climate risk and vulnerability assessment for this subproject including construction and operational (post construction) periods. This work has again been included in the TOR for the international climate change and environmental specialist to complete during implementation, and to be site specific.

188. The environmental impacts will be measured to mitigate through good design of infrastructure. Mitigation of construction-phase impacts relies heavily on the responsibility of works contractors. In this case the drip irrigation installer will follow specification clauses specifically designed to minimize noise nuisance, road accident, pollution of air and water and soil erosion, illegal solid waste disposal and waste water discharge, conflict between upstream and downstream water users, worker safety and sanitation. This mitigation will in turn rely on enforcement by the PMU environmental and social management officer and also by construction supervision consultants. Post construction mitigation will benefit from capacity building and training under the project to use fertilizers and pesticides efficiently and responsibly, and capacity building to not only farmers but to PDA staff.

189. The IEE includes an EMP which will be implemented by a contractor to avoid or minimize negative environmental effects by following the IEE documents. To ensure that drip installers are able to implement the mitigation measures effectively, the PMU will put in place the following arrangements: (i) environmental specifications will be included in the bidding documents to contractors; (ii) an appropriate environment section describing standards and responsibilities will be included in the terms of reference for bidders; and (iii) clauses referencing the EMP mitigation provisions and monitoring plans will be written into the construction contracts. Following the award of installation and capacity building contracts, the successful contractor will prepare a Site Environmental Management and Supervision Manual, including an emergency preparedness and response plan for construction emergencies and site environmental health and safety plan, for approval by the PMU. The contractor will prepare quarterly report on environmental management to the PMU. The PMU's safeguard officer will be active in site supervision, management and appraisal, particularly during construction, so as to identify problems and solve them timely.

VII. CRITICAL RISKS

190. Risk: The price of mango is distressed and returns are not sufficient for growers to stay in mango production. Assumption. With CSA production systems and the increase in productivity and efficient use of resources, gross margins will be sufficient to withstand the market downturn. More efficient flower manipulation with irrigation “stressing” will help growers supply fruit in the off season where less product is available on the market and prices are firmer. In conjunction with CSA, drip irrigation will improve fruit quality and in a glut market quality will sell over poorer quality fruit. With CAMGAP and CSA there are ever increasing export outlets, providing SPS protocols are met.

191. Risk: The excessive use of agrochemicals which includes growth regulators for flower manipulation. Assumption: Precise irrigation scheduling will reduce the amount of growth

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regulators to be used and CSA will also rationalize pesticide use. The proposed training will use the irrigation system to apply nutrients which is a very efficient means of precision fertilizer application.

192. Small numbers of workers will be present at the start of the subproject during installation of the drip irrigation system, however the risk of increasing the local population's exposure to communicable diseases is rated as very low.

Annex 1 39

DESIGN AND MONITORING FRAMEWORK

Subproject Results Chain

Performance with Targets and Baselines

Data Sources and Reporting

Risks

Impact: increased productivity, quality and safety, value addition and rural household incomes through the development of climate friendly agribusiness value chains

30% increase in mango yields to 19 tons per ha (base: 13 tons) Increase in percentage of Grade A export quality fruit to 60% (base – 20%) 10% increase in rural households incomes (base – KR1.6 million ($290)

MAFF Agriculture Census and production & marketing statistics MAFF Marketing reports Project generated reports and impact studies

Government commitment to becoming export market SPS compliance Sustainability through commercialization not fully implemented

Outcome: Climate friendly value chains for inclusive and environmentally sustainable economic growth

Mango producer and buyers group formed or cluster develop (base – no group exists) 50%of all those trained are women (base - 20%)

Project generated reports and impact studies, including M&E and project completion reports Business registration

Resistance or obstruction to group formation and strengthened farmer associations by middlemen

Output 1: Critical agribusiness value chain infrastructure improved and made climate resilient

Efficient use of inputs using CSA production practices Water resource efficiency of drip system over flood or furrow irrigation (40% more efficient)

Cost of production studies Department of Agricultural Engineering assessments Project performance management systems report Project generated reports and impact studies

Catastrophic climatic conditions overcome resilience infrastructure and water resources

Output 2: Climate smart agriculture and agribusiness promoted

CAMGAP for tropical fruit elaborated (base - CAMGAP for vegetables is in the training program) CSA training methodology developed and used to demonstrate its benefits in Mango production. More efficient use of agricultural inputs and natural resources Two PDA staff members have the capacity to O&M drip irrigation systems and undertake technology transfer

Project performance management systems report Project generated reports and impact studies PDA reports

Participating provincial institutions not fully committed to the subproject to take on capacity building role.

Activities and Milestones Output 1: The installation and operation of a drip irrigation demonstration system: A 2.5-hectare site that is commercially viable and can demonstrate the benefits of drip irrigation in mango production.

Inputs Sinking of tube well Installation of 2.5-hectare drip irrigation system Inputs for field demonstrations

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Subproject Results Chain

Performance with Targets and Baselines

Data Sources and Reporting

Risks

Output 2 & 3: Associated initiatives and activities to enhance the subproject investment At least two field days annually to demonstrate the system Farmer and PDA staff have the capability to operate and manage the drip system Beneficiaries understand CSA and the farm is CAMGAP compliant

Private sector capacity building service provision for the first 2 years after installation

Annex 2 41

SOCIO ECONOMIC SURVEY

1. Takeo province is located in the southwest part of the country and borders the provinces of Kampot to the west, Kampong Speu to the northwest and Kandal to the north and east. Its southern boundary is the international border with Viet Nam. Takeo consists of 10 Districts: Daunt Keon City, Tram Kaka, Kirivong District, Angkor Borei, Prey Kabas, Sam Rong, Bati District, Triang, Koh Andet and Borei Chulsar.

2. To reach Takeo it is a 1.5 hour drive from the capital, Phnom Penh, and 2.5 hour drive to Sihanoukville, which has the country’s deepest international seaport, and a 45 minute drive from Phnom Den, the international border crossing with Viet Nam. The province land area is small compared to other provinces; Takeo has a total area of 3,563 km2. The province is famous for being the rice bowl of Cambodia. Good soil conditions and well developed irrigation systems have enabled increases in the production volume of agricultural products in the province; not only rice but also cash crops such as mango and vegetables. The well developed transportation infrastructure increases business opportunities for the private sector for both domestic and international markets. The table below provides an overview of the province

Table A.2.1: Takeo Province Geopolitical Data

Provincial Capital Takeo

Provincial area 3,562.70 km2

Landscape Flood plains and mountainous area

Total Population 999,842 persons

Population Density 271 persons/km2

Population age over 18 years

Male - 297,123 Females – 327,092

Temperature 21.1 oC - 37.6 oC

An average rainfall 1,076.17 mm/year

Administrative Boundary Number of cities: 1 Number of communes: 97 Number of districts: 10 Number of villages: 1,118 Number of sangkats: 3

Provincial Border East: Kandal Province and Viet Nam West: Kampong Speu and Kampot Provinces North: Kandal Province South: Viet Nam

3. The total population of Takeo in 2014 was 999,842, and the number of females was 515,492 which is equivalent to 51.57%. The number of males under 18 years was 187,227; the number of females under 18 years was 188,400; males over 18 years numbered 297,123 and females over 18 years were 327,092, as detailed in the table below.

42 Annex 2

Table A.2.2: Population Profiles in Takeo province

Province Male>18

years

Female>18

years

Male<18

years

Female <

18 years

Total

male

Total

female Total

Takeo 187,227 188,400 297,123 327,092 484,35 515,492 999,842

Source: RGC Ministry of Planning, Cambodia Socio-Economic Survey 2014

4. The total number of households was 210,150 of which 18.8% were female headed households. The location of the demonstration drip irrigation scheme is in Trapang Kra Nhuong commune, Tram Kak District in Takeo province. There are three villages within Trapang Kranhoung commune and it has the largest area under mango production in Takeo province.

5. The source of livelihood: The number of people in Takeo that have work associated with agriculture is 387,335 or 77.4% of the population. The complement of the PDA is 51 staff members. There are no economic land concessions in Takeo province.

6. The development vision of Takeo province is to achieve sustainable economic development with improved public services through the promotion of agricultural productivity, small and medium industries and tourism sectors. To achieve this vision, the province has to improve the good governance and human resources while protecting its environmental and natural resource base. The development objectives are multifaceted covering economic and social development areas. It includes (i) the strengthening of food security, agricultural and income diversification, (ii) the promotion of small to medium industries with particular attention given to trade expansion capacity and management, (iii) the promotion of tourism for creation of rural employment opportunities, (iv) the development of public infrastructure, and (vi) the development of human resources to contribute for better public sector management services of Takeo province.

7. The natural resource sector development is a priority through a 5-year provincial development plan. Key elements of relevance to the subproject include (i) the development of water resources through irrigation development, (ii) the strengthening of farmer cooperatives to enhance their business capacity in agribusiness value chain and access to technical support services and good quality of inputs, (iii), to improve food safety in the province, (iv) the enhancement of road maintenance and the rehabilitation of communications throughout the province, (v) to extend the rural road network to the more remote locations and (vi) adopt improved land management practices to ensure sustainability of the resources for the future. The objectives of the subproject are consistent with the provincial development objectives and national development priorities.

8. Takeo province is one of 8 provinces along the Cambodia-Viet Nam border and both governments plan to build 13 new border gates to help boost trade that has already been growing between the two countries. For the border gate connectivity plans are being developed to connect the central highlands of Cambodia with the Mekong Delta region of Viet Nam. The new border gates plan will improve provincial trade with Viet Nam. Cambodia's total exports to Viet Nam rose 4% to $504 million in 2013, while during the same period Viet Nam's exports to Cambodia reached to $2.93 billion. Trade between Cambodia and Viet Nam has been rising fast in recent years, reaching $3.3 billion in 2012, up from $2.8 billion 2011 and $1.8 billion in 2010. The two countries plan to increase trade volume to $5 billion by 2015-2016.

9. There are five national roads (no. 2, no.3, no.21, no.31 and no.41) passing through the province, and a railroad connecting Phnom Penh and Sihanoukville that stops in the province. Water transportation routes connecting to Viet Nam via the Takeo River have also been developed. The existence of the 79 ha Duong Chhiv Special Economic Zone and an abundant

Annex 2 43

electricity power supply are also expected to contribute to further industrial development at the border in Phnom Den between Cambodia and Viet Nam.

10. The provincial government is committed to improving all related sectors to attract more investors and further support existing entrepreneurs and business. The provincial government needs to strengthen the investment environment and considers agribusiness as the cornerstone of that strategy. The provincial government has already set up a one stop service to reduce the time and costs establishing businesses. A provincial investment sub-committee and provincial investment secretariat has also been established.

11. The total number of households in the subproject area is 1034 household (both mango farmer households and non mango farm households), of which 154 are female-headed households. The total population is 4,527 persons of whom 2,128 are females. There are 55 ID-Poor 1 households and 201 ID-Poor 2 households. ID-Poor households are characterized by having very little land, or are landless. There are no ethnic minorities in the area. The total area of available land for farming is 4,229 ha for rice and 4,304 ha for other crop production, indicating that there is a relatively larger area of land available for the community to farm. Average farm size is 1.5 ha. 421 persons have out migrated from the commune of whom 244 are female. Out migration of adults has led to labor shortages for farming. The community is characterized by substantial numbers of older women who are taking care of their grandchildren, and receiving remittances from their adult children working in urban areas.





16. Poverty, household debt and migration in subproject area: Most mango farmers in the area have either used revenue from rice production or borrowed money from the bank or used remittances from their children in order to plant their mango orchards. Mango cultivation is very costly for farmers and because they do not have sufficient capital, labor or knowledge of mango cultivation, it is a common practice for farmers to lease their orchards to private contractors.

17. It was reported that approximately 15% of the total number of households in the commune have lost their lands because of distress sales due to debt caused by either medical emergencies

44 Annex 2

or crop failure due to extreme weather. In Prek Taloy village alone, 33 households out of 209 households have lost their land because of debt.

Annex 3 45

ENGINEERING DESIGN

46 Annex 3

Annex 4 47

ASSOCIATED INITIATIVES

1. The most important associated initiatives are the capacity building activities which include a range of formal and field training activities.

2. The training will include production and post-harvest technology that relates to climate smart agriculture to help agriculture undergo significant transformation to meet the climate change challenges and the training of good agricultural practices for tropical fruit using a CAMGAP standard that will be developed using project resources.

3. CSA includes (i) soil and nutrient management which includes increasing the use of organic fertilizers; (ii) improved water harvesting and retention; (iii) understanding the changing distribution and pest control management; (iv) encouraging resilient ecosystems which includes variety climatic adaptation; and (v) improving efficiencies in post-harvest management practices to reduce losses. Drip Irrigation is a good example of CSA, as it uses water more efficiently, by providing exactly what the crop requires and provides a means of applying soluble fertilizers where it is required.

4. CAMGAP for mangoes will include the control criteria that is related to site selection, the proper storage and use of inputs, irrigation and water management, integrated pest management, harvest and post-harvest practices. The formal training will include record keeping for traceability and compliance purposes noting the type of inputs used and when, when the crop was harvested and the field in which it was harvested.

5. If groups are not formed the farmers that have benefitted from the drip demonstration will be given capacity training in basic bookkeeping and agribusiness, to encourage farmers to become commercially oriented.

48 Annex 5

INVESTMENT COST ESTIMATES

1. The total cost of the subject includes both engineering investment cost and capacity building for operation and maintenance for the farmers owner cost. The summary of the estimated cost of the different cost categories is presented in the table below:

Table A.5.1: Summary of estimated cost for Drip Irrigation Subproject (for Mango farm)

NO. Items Estimated Cost (USD)

1 Supply and installation of a completed set of drip irrigation system

3,875.00

2 Supply and installation of a complete set of solar pump

9,000.00

3 Construction of a tube well of 0.15 diameter, and 80m to 100m depth

3,500.00

4 Capacity building for farm own in O&M of the system

500.00

Total 16,875.00 NB: this does not include $922 allocated to the subproject for project management.

Annex 6 49

LAND ACQUISITION AND INDIGENOUS PEOPLES/ETHNIC GROUPS

The following checklists were used in the identification and selection of SPS for Mango Drip Irrigation implementation. The objective of the checklists is to ensure that only Category C subprojects are selected according to project selection criteria. Involuntary Resettlement Impact Categorization Checklist

Involuntary Resettlement Effects Yes No Not

Known

Remarks

1. Will the activity require permanent or temporary land

acquisition?

X Land acquired temporarily for

installation of drip system

2. Is the site and land needed for acquisition known? X Selected according to criteria

and HH application.

3. Is the ownership status and current usage of land to be

acquired known?

X Commercial mango production.

Land owned by owner operator HH.

4. Is the area of land required from each affected HH

known?

X Drip network layout proposed

5. Will land be acquired involuntarily? X

6. Will land be acquired voluntarily? X Private land belonging to the AHH.

All land handed back to HH upon

completion of installation. HH was

selected following application to

receive the intervention

7. Will easement be utilized within an existing Right of

Way (ROW)?

X

8. 1 Was any facility constructed recently on new land in

anticipation of obtaining further assistance for the

facility from this ADB project?

X

9. Was the land acquired legally under RGoC Law?

(unknown = No)

X

10. Are there any outstanding complaints about the land

used or acquired for the existing facilities?

X

11. Will the activity require permanent or temporary

relocation or displacement of any people (titled or non-

titled)?

X

12. Are there any non-titled people (squatters) who live at

the site or within the COI / Right of Way / public land?

X

50 Annex 6

Involuntary Resettlement Effects Yes No Not

Known

Remarks

13. Will there be any loss of housing or accommodation or

other residential structures?

X

14. Will there be any loss of residential land? X

15. Will there be any loss of vegetable gardens or

agricultural plots?

X

16. Will there be any losses of crops, fruit trees or private

structures?

X

17. Will there be loss of income sources and means of

livelihoods due to land acquisition?

X

18. Will any small or informal businesses have to be

moved or closed temporarily or permanently?

X

19. Will there be temporary or permanent loss of

employment as a result of the closure of any

businesses resulting from the renovation?

X

Involuntary restrictions on land use or on access to legally designated parks and protected areas

20. Will people lose access to natural resources, communal facilities and services?

X

21. If land use is changed, will it have an adverse impact on social and economic activities?

X

22. Will access to land and resources owned communally or by the state be restricted?

X

Information on Displaced Persons:

23. Any estimate of the likely number of persons that will be displaced by the Project? [ ] No [X ] Yes

If yes, approximately how many? _______None_______________

24. Are any of them poor, female-heads of households, or vulnerable to poverty risks? [X ] No [ ] Yes

25. Are any displaced persons from indigenous or ethnic minority groups? [ X ] No [ ] Yes

Annex 6 51

Voluntary Contribution checklist

B. Project Data

Country/Project No./Project Title

: PPTA 8897 – CAM/LAO/MYA: Climate-friendly Agribusiness Value Chains Sector Project

Department/ Division : Southeast Asia Department/ Environment, Natural Resources and Agriculture Division (SERD)

Processing Stage : Final

Modality :

[ ] Project Loan [ ] Program Loan [ ] Financial Intermediary [ ] General Corporate Finance [ X ] Sector Loan [ ] MFF [ ] Emergency Assistance [ ] Grant [ ] Other financing modalities:

C. Involuntary Resettlement Category

[ ] New [ ] Recategorization ― Previous Category [ X ]

Category A Category B Category C Cat egory FI

D. Comments

Voluntary Resettlement Effects Yes No Remarks

1. Was the subproject site selected in full consultation with landowners and any nontitled affected people

X Meetings held, participatory field inspections conducted, selection based on application by HHs.

2. Do Voluntary donations severely affect the living standards of affected people and the amount of agricultural or other

productive land to be acquired from each AH does not exceed 5% of the total productive landholdings of the household;

X Installation of drip system adds value to property, improves water efficiency, reduces pumping costs, improved yields.

3. Voluntary donations are linked directly to benefits for the AH; X Benefits include better and more reliable water supply, better water distribution, reduced pumping costs, higher yields.

4. All voluntary donations will be confirmed through written record and verified by an independent third party such as the external

monitoring organization;

X Donation forms signed by AHHs and witnessed.

5. Is there is an adequate grievance process X Confidential “Grievance Hotline” to PPTA team provided. No grievances presented. Formal grievance procedure also provided.

6. No AH will be displaced from housing and/or severely affected; X No displacement

7. No AH is vulnerable. X No vulnerable HH

X

52 Annex 6

Project Team Comments: The approach to the limited land acquisition is voluntary contribution. The subproject will be implemented on private land belonging to one owner operator HH. All land is handed back to the AHH following installation of the drip system. The HH has applied for the intervention and was selected according to criteria. The AHH receives a functioning drip irrigation system that will increase property value, reduce pumping costs and improve water use efficiency and increase yields. There is no involuntary land acquisition or economic displacement.

SDES Comments:

E. Approval

Proposed by:

Reviewed by:

Project Team Leader, {Department/Division} Social Safeguard Specialist, SDES

The Indigenous Peoples and Ethnic Groups Checklist - Drip Irrigation in Tram Kak Subproject

. Screening Form for Impacts on Ethnic Groups

Key concerns (Please provide elaborations on the remarks column) Yes No Not Known Remarks

A Indigenous People Identification

1 Are there socio-cultural groups present in or use the project area who may be considered as “tribes” (hill tribes, schedules tribes, tribal peoples), “minorities”

(ethnic or national minorities), or “indigenous communities” in the project area?

X

2 Are there national or local laws or policies as well as anthropological researches/studies that consider these groups present in or using the project

area as belonging to “ethnic minorities”, schedules tribes, tribal peoples, national minorities, or cultural communities?

X N/A No IP or EG in subproject area

3 Do such groups self-identify as being part of a distinct social and cultural group?


4 Do such groups maintain collective attachments to distinct habitats or ancestral territories and/or to the natural resources in these habitats and territories?


5 Do such groups maintain cultural, economic, social and political institutions distinct from the dominant society and culture?


6 Do such groups speak a distinct language or dialect? X No IP or EG in subproject area

7 Has such groups been historically, socially and economically marginalized, disempowered, excluded, and/or discriminated against?


8 Are such groups represented as “Indigenous peoples” or as “ethnic minorities” in any formal decision-making bodies at the national or local levels?


B Identification of Potential Impacts

9 Will the project directly or indirectly benefit or target indigenous peoples? X

10 Will the project directly or indirectly affect indigenous peoples’ traditional socio-cultural and belief practices? (e.g. child-rearing, health, education, arts, and

governance)

X

Annex 6 53

11 Will the project affect the livelihood systems of indigenous peoples? (e.g. food production, system, natural resource management, crafts and trade,

employment status)

X

12 Will the project be in an area (land or territory) occupied, owned, or used by indigenous peoples, and/or claimed as ancestral domain?

X

C Identification of Special Requirements Will the project activities include:

13 Commercial development of the cultural resources and knowledge of indigenous peoples?

X

14 Physical displacement from traditional or customary lands? X

15 Commercial development of natural resources (such as minerals, hydrocarbons, forests, water, hunting or fishing grounds) within customary

lands under use that would impact the livelihoods or the cultural, ceremonial, spiritual uses that define the identity and community of indigenous peoples?

X

16 Establishing legal recognition of rights to lands and territories that are traditionally owned or customarily used, occupied or claimed by indigenous

peoples?

X

17 Acquisition of lands that are traditionally owned or customarily used, occupied or claimed by indigenous peoples?

X

Anticipated project impacts on Indigenous Peoples Anticipated positive effect Anticipated negative effect

Subproject activity

1 N/A No IP or EG in subproject area

b. B. Project Data

c. Country/Project No./Project Title

d. : Cambodia - Climate-friendly Agribusiness Value Chain Sector Project

e.

f. Department/ Division g. Southeast Asia Department/ Environment, Natural Resources and Agriculture Division (SERD)

h. Processing Stage i. : Final

j. Modality k.

[ ] Project Loan [ ] Program Loan [ ] Financial Intermediary [ ] General Corporate Finance [ x ] Sector Loan [ ] MFF [ ] Emergency Assistance [ ] Grant [ ] Other

C. Indigenous Peoples Category

[ X ] New [ ] Re-categorization ― Previous Category [ ]

[ ] Category A [ ] Category B [ X ] Category C { ] Category FI

D. Project requires the broad community support of affected Indigenous Peoples communities.

[ ] Yes [ X ] No

E. Comments

54 Annex 6

There are no IP or EG households living in the Prey Kdouch village or Trapang Kranhoung commune. No further action is needed for IP/EGs under this subproject.

SDES Comments:

F. Approval

Proposed by:

Reviewed by:

Project Team Leader, {Department/Division}

Social Safeguard Specialist, SDES

Date: Date: Endorsed by:

Social Development Specialist, {Department/Division}

Director, SDES

Date: Date:

Approved by: Highly Complex and Sensitive Project

Director, {Division} Chief Compliance

Officer

Date: Date:

Annex 7 55

INITIAL ENVIRONMENTAL EXAMINATION

See separate document.

56 Annex 8

SOCIAL AND GENDER IMPACT ASSESSMENT AND GENDER ACTION PLAN

Summary of main findings

1. Out migration of adults has led to labor shortages for agricultural production. The community is characterized by substantial numbers of older women who are taking care of their grandchildren, and receiving remittances from their adult children working in urban areas. Remittances are frequently inadequate for covering household expenditure, and so grandmothers seek work as day laborers.

2. Regarding the proposed subproject, there were several recommendations made regarding the selection criteria for demonstration farmers. Ideally, the local mango farmers themselves should sit and decide who the demonstration farmer should be. It was recommended that the farmer selected be a local farmer and should have a land title from the Commune.

3. In addition to the drip irrigation demonstration, the community members said that a priority need in their locality was the repair of an irrigation canal that could feasibly be rehabilitated and would allow them to irrigate both mango and paddy land.

Gender Analysis

4. Women and men differ in their roles and in their economic, educational, and health status. Women are exclusively responsible for managing household budgets and taking responsibility for identifying local sources of credit for the household. It is mostly men who do the heavy work in mango farming. About 50% of men also share responsibility for housework and men are responsible for looking after large animals such as cattle. Some men also help women take care of small children.

5. The health status of rural women is likely to be poorer than men’s and their workload is traditionally greater. There is joint access and control to productive resources such as land between husband and wife. The land title or social land concession that the household possesses is in both husband and wife’s names and joint agreement is necessary before land can be sold. There is joint access to and control over capital. For accessing a loan, both signatures are required on the bank loan agreement.

6. The access to information, knowledge and education is still limited for both men and women. Women are less likely to be functionally literate. Approximately 20% of the adult community is illiterate and the majority of those illiterate are elderly women. Women are only allowed to participate in organized training events when the husband is absent and he has given his permission – by telephone if he has out migrated. Some women in this locality are able to drive small tractors, and some women expressed their wish to learn how to drive tractors and agricultural machinery.

7. Women are aware of their technical shortcomings but express an eagerness to learn new techniques, and they are aware that they have had fewer opportunities than their husbands to receive agricultural training. They are eager to learn about income-generating activities and how to increase household income. This is driven by the fact that household debt is a constant worry. There is equal access of men and women to markets. Both husband and wife jointly agree when, where and to whom to sell their paddy crop, but it is the wife who contacts the local (usually female) rice collector. There is a low level of knowledge of market information amongst households and the price for paddy is set by the local rice collector.

Annex 8 57

8. A Gender Action Plan has been elaborated for the subproject and is detailed below.

Introduction

9. From mixed gender discussions, women’s focus group discussions, and group interviews with commune council members and commune Council women and children focal point, an assessment of social conditions in the subproject target area has been elaborated.

Local mango farming

10. Most mango farmers in the area of influence have either used revenue from rice production, borrowed money from the bank or used remittances from their children in order to plant their mango orchards which are can be as small as 1 ha and up to 7 ha. Mango cultivation is very costly for farmers and because they do not have sufficient capital, labor or knowledge of mango cultivation, it is a common practice for farmers to lease their orchards to private contractors – usually Cambodian companies after the crop is 3 - 4 years old when the trees are established and beginning to bear fruit.

11. The cost of a mango sapling is approximately $0.5 - 1. The labor cost for harvesting mangoes is KR50,000 per day. Irrigation water for the orchard is usually from a pond a few farmers have boreholes. Depending on negotiations with contractors, farmers might receive $5-10 for leasing one tree. A typical rent for a 7-ha mango orchard with 4 year old trees is $6,000 - 7,000 per year. The contractor then managed the orchard; weeding, fertilizing and applying insecticide to make sure the mango trees produce fruit. The orchard owner has no further responsibility or claim to the orchard. All the revenue from mango sales is through traders to dispatch to Viet Nam or the product is sent to Phnom Penh for consolidation and some will be dispatched to Thai markets. The trader who can be the person that manages the orchard or he or she will sell onto the trader.

12. Contractors also provide training to farmers 0n how to correctly plant mango trees. Local agricultural suppliers frequently implement demonstrations of the recommended agricultural products to use for mango cultivation such as pesticides and fertilizers. They provide a 5-day training program for farmers and trainees, all are exclusively male. In the sub-project area there are many absentee mango farmers.

Poverty, household debt and migration

13. It was reported that approximately 15 % of the total number of households in the commune have lost their lands because of distress sales due to debt caused by either medical emergencies or crop failure due to extreme weather. In Prek Taloy village alone, 33 households out of 209 households have lost their land because of debt.

14. In order to access capital, farming households usually borrow money from AMK (Microcredit Institution). Some households borrow money from private businessmen. For a $50 loan for example, the daily interest rate is $2. In this case, livestock or motorbikes are given as security and not the land title or dwelling. The loan is usually arranged and organized by the wife who is then responsible for paying it back.

15. Young adults have migrated out of the area to urban areas to look for work, leaving their children with their parents. They return home for holidays such as Khmer New Year and other

58 Annex 8

national public holidays. Some children send money home – approximately $80 - $100 per month. But about 20% of migrants are unable to send home any remittances.

16. The community is now characterized mainly by people aged 40 years and above.

17. Approximately 20% of the adult community is illiterate and the majority of those illiterate are elderly women.

Vulnerability and inclusion

18. The service provided by the local health center is considered inadequate and is not equipped with an ambulance or any transport. For this reason, it is only accessed for dealing with minor ailments. In the case of serious illness, most people go to private clinics for treatment.

19. There are no ethnic minorities in the commune.

Climate change, biodigester use

20. The majority of male group discussion members were unclear about the advantages of bio-digester units, whereas women were more interested because they had heard that the units meant that they could save money.

21. The main access to and control over productive resources in the community is as follows:

(i) There is joint access to and control over productive resources such as land, as the land title they possess is in both their names;

(ii) There is joint access to and control over capital, i.e. money. The revenue from mango cultivation is controlled jointly by men and women even though production is mainly men’s responsibility;

(iii) There is joint access to markets although in practice in those farms that do not rent out mango trees to contractors, it is farm women who negotiate with fruit wholesalers about the price;

(iv) The access to information, knowledge and education is limited and inadequate for both men and women although more so for women who say they have never been invited to attend any agricultural training. They recommend that they be formally invited to a training event otherwise they always miss out. When there is a training event in the commune it is usually the men who are invited to attend as heads of household. Women may attend after receiving permission from their husbands when they are absent. So far, they have received technical information about rice and vegetable production but not about mango production; and

(v) Women recommend that training should incorporate visual aids and practical demonstrations.

Work profiles

22. It is mostly men who do the heavy work in mango farming. About 50% men also share responsibility for housework and men are responsible for looking after large animals such as cattle. Some men also help women take care of small children.

Annex 8 59

23. For female-headed households where adult children have migrated and left grandchildren in their care, the workload is very substantial. In addition to looking after the grandchildren, these women are the caretakers of livestock, and manage and undertake both paddy and crop cultivation including hiring day laborers. Some women are also directly involved in mango cultivation. Hired labor is necessary because of family labor shortages as a consequence of migration, and migrants’ remittances are used to pay day laborers.

24. There is a water users group in the commune but it is only involved in water management of rice production.

Agricultural labor / construction work / employment in construction work / using machinery

25. In this area there is equal pay for equal work in the agriculture sector. Wage rates are as follows:

(i) Rice transplantation: Labor fee: $5 per day for both men and women; (ii) Paddy harvesting: $1.5 for 1 bunch of rice; (iii) KR 300 for digging and planting 1 mango tree; and (iv) Mango harvesting: $5 per day.

26. Some women in this locality are able to drive small tractors, and some women expressed their wish to learn how to drive tractors and agricultural machinery.

Mango contractors and Harvesting

27. When interviewed, a local mango contractor explained that he pays $5-10 per tree for one year and he is able to sell a kilo of mango fruit for KR3,500 to the local mango collector. He said he was able to meet his running costs without having to borrow any money.

28. The local mango collector explained that in order to purchase mangoes, he borrows money interest free from his client in Viet Nam and the approximate amount borrowed is $10,000 dollars in order to purchase mangoes from his regular contractors. The Vietnamese client subsequently sells the mangoes to his client in China. In this instance, the collector does not act as a local moneylender, as neither local farmers nor contractors have ever approached him for advance payments or loans.

Property rights, inheritance, divorce

29. The discussion group members explained that land titles are issued in both the husband’s and wife’s names.

30. Regarding inheritance, both sons and daughters inherit equally but the youngest daughter usually inherits the house and homestead land in the expectation that she will look after the elderly parents. This cultural practice may sometimes cause family conflict.

31. In the case of a divorce, there is equal division of property between husband and wife.

60 Annex 8

Discussion and feedback about the proposed subproject

32. The mango farmers said they were keenly interested in learning about mango production techniques, particularly the care of mango trees; how to improve the quality of the soil and how to properly harvest and collect mango fruit. One lady mango farmer said that when the sub-project is implemented, and farmers have had a chance to learn improved production techniques, she will terminate the leasing arrangements she currently has with contractors, and will operate the mango farm herself.

33. There were several recommendations made regarding the selection criteria for demonstration farmers. Ideally, the local mango farmers themselves should sit and decide who the demonstration farmer should be. It was recommended that the farmer selected be a local farmer and should have a land title from the commune. The mango farm should also be operational and one farming household from each village in the commune should be the demonstration farm 50% of demonstration farmers should be women.

34. There was a recommendation that the project should also make credit available at low interest, and supply fertilizer for farmers.

35. In addition to the drip irrigation demonstration, the community members said that a priority need in their locality was the repair of an irrigation canal that could feasibly be rehabilitated and would allow them to irrigate both mango and paddy land.

Table A.8.1: Drip Irrigation Subproject Gender Action Plan Project Outputs Actions and Targets

Output 1: Critical Agribusiness value chain infrastructure improved and made climate resilient

• At least 50% of demonstration farmers selected for drip irrigation demonstrations are women farmers

• Project provides technical assistance and legal assistance to (male and female) demonstration farmers for obtaining security of tenure / land titles to mango farm

• At least 50% of all trainee farmers for drip irrigation techniques are women

• Study tours to successful mango farmers using drip irrigation techniques to include 50% women farmer participants

• Training activities in drip irrigation comprise visual aids, and training materials contain illustrations to facilitate understanding

• Local commune women and children focal point is involved in project implementing, capacity building and monitoring women’s participation in demonstrations and training

• At least 50% of trainees at Provincial Agricultural Development Centers and Provincial Agricultural Engineering Workshops are women, for the creation of resource and training centers for service provision, agribusinesses and farmer value chain linkages.

Output 2: Climate smart agriculture and agribusiness promoted for key value chains

• Women are to represent at least 50% of farmers trained and compliant in CAMGAP for tropical fruit with downstream value chain linkages

• Local commune gender focal point is involved in monitoring capacity building activities. All women in target areas have access to information on improving climate resilience and resource efficiency

• Women are to be included as members of effective producer group / cooperative management boards which are fulfilling legal, management and accounting obligations and operating profitable agribusiness / trading ventures

Annex 8 61

• Women are trained to operate a range of agricultural machinery and represent 50% of increased labor pool over the baseline

• Commune women and children focal points are invited to participate in all trainings provided by the project to develop their capacity and for ensuring they are capable of monitoring the performance of women farmers.

• Women are 50% of trainees at all training workshops organized for government staff and farmers’ groups on project management, agronomic resource efficiency, climate resilience in value chains and agribusiness

• Gender equality and equity training in climate-friendly agribusiness value chains sector is provided to commune councils and women and children focal points, village chiefs, assistants to village chiefs and male and female farmers as project beneficiaries.

Design Features of Drip Irrigation Subproject of Gender Action Plan

36. The design of the subproject will ensure that gender issues and analysis informs all the subproject foundation studies such as socioeconomic baseline survey, value chain assessment and market studies. 37. Training materials will be produced on safe migration and life skills including gender issues in migration, gender dimensions of risk, vulnerability and protection – and will be prepared in consultation with commune women and children focal point, community women and other interested stakeholders to ensure gender and ethnic minority sensitivity and easy understanding. 38. All agriculture training materials will be prepared in prior consultation with commune women and children focal point, community women and other interested stakeholders, to ensure that they will be easily understood, and that they are sensitive to gender and ethnicity.

39. All drip irrigation training and demonstration activities will be conducted at times convenient for women farmers and child care provisions will be available to ensure the full participation of women farmers. 40. Any business development / accountancy / financial management training which is related to mango production will be conducted in locations which are convenient for local women farmers. Rural men will also receive awareness raising in gender so that they understand the importance of women’s participation in project activities, and to avoid household conflict.

Implementation Arrangements of Drip Irrigation Subproject Gender Action Plan

41. Overall responsibility for the implementation of the subproject gender action plan will rest with the PMU. An international social development and gender specialist and a national social development and gender specialist will provide technical assistance to the PMU and subsequently the PDA. Regular gender sensitization training will be provided to all agency staff. All subproject progress reports will report progress against the subproject GAP. Gender and Social Specialists will be responsible for reporting and monitoring the progress of the subproject GAP to ensure it is on-track.

62 Annex 8

Meeting to discuss social, gender and economic issues relating to mango production – 26 June 2016

Annex 8 63

64 Annex 9

ECONOMIC AND FINANCIAL ANALYSIS

A. Present and Future Scenarios

1. This subproject is a demonstration pilot for the introduction of drip irrigation in mango orchards. Mangoes are considered drought resistant, but with extended drought periods and more erratic rainfall patterns, the trees can suffer stress and fruit quantity and quality suffer. The aim of drip irrigation is to ensure that the mango trees have adequate moisture throughout the year and are not subject to excessive drought stress. Irrigation for mangoes increases yields, improves the overall quality of fruit produced and enhances the provision of floral manipulation.

2. The mango orchard for the pilot is located in Prey Kdouch village, Trapang Kranhoung commune and Tram Kak district of Takeo province. It is about 52 Km on road No 130A form Takeo provincial town. The orchard is 2.5 ha in area, is in its fifth season and has produced fruit in the last 2 years. The farm is owned and managed by a local farmer who lives in the community where the farm is located. He is willing to let the project equip his farm with an irrigation system, and has volunteered to let the project use it as a demonstration site during the project implementation.

3. So far, the farmer has used a small pond for supplementary irrigation, but the water is not sufficient to result in a higher percentage of grade A fruit and to allow control of floral manipulation to produce fruit out of season. The variety grown is Keo Romeat which lends itself to floral manipulation. The orchard started to produce fruit 3 years after planting with a single crop yield of 1.5 tons per ha.

4. With only a single crop per year, orchard production is likely to increase to about 7 tons per ha from the sixth or seventh year after planting. Floral manipulation results in the trees producing two crops of mangoes per year, almost doubling output. However, this is easier to manage successfully in orchards with irrigation which, if properly managed, will give higher yields for both crops. Installing drip irrigation will allow proper amounts of water to be delivered to the trees when they need it and yields for both crops will be an estimated 30% higher than without irrigation.

5. Furthermore, with the ability to manage the supply of water to the trees that drip irrigation provides, the average quality of fruit harvested will be higher and the proportion of higher Grades A and B fruit will be higher than without irrigation. This is a major benefit of the irrigation system. The impact of the drip irrigation on orchard production is summarized in the following table.

6. The subproject is a pilot drip irrigation demonstration. Once the demonstration is established, farmer field days and related activities will encourage other farmers to adopt the new technology, combining drip irrigation with floral manipulation. This will make the industry more efficient and enable famers to respond to market demands by scheduling cropping. At present there is no mango producers association and the coming together at the demonstrations may encourage greater dialog among like-minded farmers to group together to exchange ideas and market their produce. The adoption of this technology by farmers will also encourage buyers to have closer linkages with producers who will have a higher proportion of export quality grade A fruit to offer.

Annex 9 65

Table A.9.1: Mango Yields and Grades

Item Single Crop

Floral Manipulation % change with

irrigation Without

irrigation With irrigation

First crop (main crop) 7.0 7.0 9.1 30%

Second crop - 6.0 7.8 30%

Grade A 20% 30% 60% -

Grade B 30% 30% 25% -

Grade C 50% 40% 15% - Source: Mango farmers & traders

7. While the investment cost of drip irrigation is relatively high, it provides a high level of capability precisely to manage the supply of water to trees together with efficient use of water resources. The system proposed for the subproject includes providing a ground water source and a climate friendly solar powered pump system which will have minimal operating costs.

B. Demand for Outputs

8. Mangoes grown in Cambodia supply both domestic and international markets and growers in Takeo province can benefit from good road access to and the proximity of the market for mangoes in southern Viet Nam. The demand for this popular fruit is strong but prices received by growers, especially during the main mango season, are driven by seasonal factors and the size of the crops in Thailand and Viet Nam, which are important markets for Cambodian mangoes, as well as in Cambodia. Prices may therefore vary significantly from year to year. The annual production of mangoes in Cambodia was estimated at 255,000 tons in 2014.

9. There has been a drive to plant more mangoes as an investment strategy in recent years, boosted by buoyant prices in the last two seasons. It is estimated that there are now more than 7,000 ha in Tram Kak district of Takeo province, bordering Kampong Speu, which is the main mango producing province. However, technical support for mango farmers to enable them to improve the overall quality of their production to take advantage of the demand and higher prices for the best fruit is still limited and needs to be made more readily available. The subproject addresses this issue through the provision of technical information and training from drip irrigation suppliers and the contractors who apply most of the floral manipulation treatments and who will be contracted to provide the training and run the demonstrations with the farmer owner’s assistance.

10. Demand for Cambodian mangoes in markets further afield is also growing. The government is actively looking for new international markets for fresh mangoes, particularly the richer Asian countries of Japan and Republic of Korea. An MOU related to a Mango SPS Protocol with the Government of Korea was signed on 9 December 2015. This will enable export to Korea, but Cambodia mangoes still need to satisfy Republic of Korea's quality standards in order to enter the market.

11. The subproject itself will not add significantly to the local output of mangoes but widespread adoption of the technology by growers has the potential to increase output and improve quality, which will facilitate increased volume of Cambodia mangoes in international markets.

66 Annex 9

Beneficiaries

12. The direct beneficiaries of the subproject are the orchard owner and his or her household. Workers employed on the orchard may also benefit as more labor inputs are likely to be required, in particular for harvesting. Such an increase in labor requirements will not, however, be large.

C. Economic Assessment

Prices

13. The financial prices used in the analysis are valid for 3rd quarter 2016 and are based on information supplied by owners of mango orchards, orchard managers, buyers and others active in the production and marketing of mangoes. Prices for the components of the drip irrigation and solar pump systems are current market prices from local suppliers. Input prices used in the analysis are given in Table A.9.5 below.

14. The farm gate sale prices for mangoes are based on estimated average prices for grade A, B and C fruit for 2011 to 2016 supplied by mango traders. The price used in the analysis for each grade is a time weighted composite of average buying prices during each peak season (March – April) and during the remainder of each year. The prices used are an average of the respective annual averages. This procedure was used to smooth annual price fluctuations. The prices used for Grade A, B and C fruit and $600, $340 and $200 per ton, respectively. These prices are applied to all fruit of the respective grades, regardless of the time of year of production.

Subproject Costs

15. Investment costs for the subproject are the costs of the drip irrigation system, the solar powered pump and related equipment and the drilling of the tube well as well as the cost of training the farmer to operate and maintain the system. In addition, the pump and emitters will need to be replaced every five years at a cost of $2,000 and O&M costs for the irrigation system are estimated at $40 per ha per year. The costs are given in the following table.

16. The costs in table 2 are for a 2.5 ha orchard. For larger orchard areas, the only increase in total cost would be for the increased area to be covered by the drip irrigation system. The tube well, solar pump and training costs would be unchanged. The larger the orchard, the lower the per hectare investment cost will be.

Table A.9.2: Subproject Costs ($)

Item Base Cost Economic Cost

Solar pump 1,000 1,010

Inverter 1,000 889

4.5 kW array PV panels 4,000 4,040

Control box, cables, etc. for solar system 2,000 2,000

Drip irrigation system 3,875 3,444

Tube well (dia. 0.15m, depth 80 - 100m) 3,500 3,535

Training for farmer 500 500

Project management 922 902

Total Investment cost 17,797 17,320 Notes: For economic costs, estimated taxes are removed and imported components are adjusted with the SERF.

Annex 9 67

17. The project plans to introduce drip irrigation to 10 pilot orchards in the project provinces. Most of these pilots are expected to be larger than the 2.5 ha orchard selected for this assessment. Since the fixed costs of the drip irrigation system, for tubewell, pump, solar panels and inverter are the same for any orchard up to at least 5 ha. The irrigation cost per ha is lower for larger orchards, which will increase the financial returns to owners.

Subproject Benefits

18. Subproject benefits have been estimated with a crop budget for mangoes that compares production with floral manipulation and without and with irrigation. The crop budget includes orchard establishment costs of $1,905 per ha with the first, small crop in the third year. Full production is from year 6.

Table A.9.3: Benefits of Mango Irrigation (financial prices)

Item Without project With project

Benefit Increment

year 4 year 6 on year 4 year 6 on

Grade A 1.2 3.9 3.1 10.1 6.2

Grade B 1.2 3.9 1.3 4.2 0.3

Grade C 1.6 5.2 0.8 2.6 -2.6

Total production (tons) 4.0 13.0 5.2 16.9 5.9

Total revenue ($) 1,448 4,706 5.2 8,028 3,322 Notes: With project, irrigation is installed in year 3. Full production is from year 6 onwards.

Economic Assessment and Sensitivity Analysis

19. The results of the economic assessment and sensitivity analysis are given in Table A.9.4. The EIRR for the subproject is 25.4%, reflecting the significant benefits that drip irrigation provide to both the quantity and quality of mangoes produced. The EIRR remains above the acceptance level of 12% for reasonable variations in key variables.

Table A.9.4: Economic Result

Item EIRR

(%)

NPV

($)

Switching

Value

Base 25.4 13,035 -

With project yields +10% 33.3 22,098 -14% With project yields -10% 16.5 3,971

Capital costs +10% 23.3 11,802 +104% Capital costs -10% 27.8 14,267

Input costs without project -10% 20.5 8,562 -

Input costs with project +10% 19.5 7,516 -

Grade A % with project 40% 12.5 441 Grade A

39% Grade A % with project 50% 19.3 6,738

Grade A % with project 70% 30.9 19,331

68 Annex 9

Mango prices +10% 28.7 16,762 -35% Mango prices -10% 21.9 9,307

Prices -10%, with project yields -10% 13.4 1,150 -

Capital costs +10%, with project yields -

10% 14.9 2,738 -

Note: The base case for Grade A fruit with the project is 60%. Changes in Grade A percentage is equally distributed between Grades B and C.

20. A failure to achieve with project yields or an unexpectedly low proportion of Grade A fruit would most likely to lead to an EIRR below 12%, but the effects of properly managed irrigation for mango production are well established so these must be regarded as unlikely outcomes. Volatility in mango prices might also have a negative impact on subproject outcome if they fell significantly and remained low for an extended period. But this also seems an unlikely scenario given the high demand for quality mangoes in domestic and international markets.

21. The impact of the SERF on the result is limited. If the SERF is 1.05 (SCF = 0.95) the EIRR would be 26.2% and if it is 1.18 (SCF = 0.85) the EIRR would be 24.5%. Neither are significant differences. The inputs of unskilled labor in this subproject are very low and changes in the SWRF have no impact on the EIRR.

Financial impacts

22. Introducing drip irrigation into a mango orchard leads to higher yields and better quality, with an increase, in particular, in Grade A fruit. The result is higher income for the orchard owner. For the subproject orchard owner, the incremental income arising from the installation of the drip irrigation system, over and above what his income from the orchard would be without irrigation, is estimated at $6,269 per year once full production is reached, say two years after completion of the system. Labor requirements on the orchard may also increase slightly, so there may be a small benefit for workers employed.

23. This level of incremental income is for an orchard of 2.5 ha. For the owners of the other proposed pilot sites, benefits will be in proportion to the size of their orchard. For other farmers who adopt the technology on their orchards after seeing any of these pilot demonstrations, the incremental income benefits will be less since they will have to pay the investment costs themselves. For a 2.5 ha orchard, with amortization of the pump and inverter over 5 years and the of all other parts of the system over 20 years, incremental income would be about $1,000 less per year than for the pilots (i.e. about $400 per ha). Since the increase in capital costs for larger orchards is only the cost of the additional irrigation network, the annual amortization costs would be proportionately less.

Distribution and poverty analysis

24. Because this subproject involves one orchard and one household, with possibly some small benefits for employed labor, no distribution analysis has been carried out.

25. If, over time and as a result of the project demonstration pilots, drip irrigation is widely adopted to support floral manipulation in mango orchards the benefits will accrue primarily to the owners and operators of the orchards. Apart from possible employment impacts for orchard workers, the direct benefits for the poor will be limited.

Annex 9 69

Table A.1.5: Prices Used

USD

unit Financial Economic

Outputs

Mangoes - grade A ton 600 600

Mangoes - grade B ton 340 340

Mangoes - grade C ton 200 200

Inputs

Pesticides (mangoes) ha 100 101.00

Floral manipulation ha 1050 1,007

Tractor hire - miscellaneous use day / job 40 36.36

Tractor Hire / field preparation ha 37.50 34.09

Nitrogen (urea) kg 0.45 0.32

Di-ammonium phosphate (DAP) kg 0.30 0.48

Potassium chloride (KCl) kg 0.54 0.36

Manure ton 5.00 5.00

Labour day 5.00 4.50

Table A.9.6: Derivation of Mango Selling Prices

2011 2012 2013 2014 2015 2016 KR/kg $/ton

used 1)

off-peak

Grade A 2000 2500 1500 2500 3500 3500 2,378 600

Grade B 1500 1500 1000 1200 1500 2000 1,333 330

Grade C 800 1000 500 800 1000 1000 792 200

peak season

Grade A 1200 1200 1200 1500 1500 1500

Grade B 500 500 500 1000 1000 1000

Grade C 500 500 500 500 500 500

Source: Mango traders

Notes: 1) Rounded to nearest $10.

2) Weighted average for each estimated using 2 x peak season price + 10 x off peak price. All

years weighted equally for the overall average.

Annex 9 70

Table A.9.7: Economic Analysis and Crop Budgets

Mango Orchard - drip irrigation (1ha) (economic prices)

Unit Unit Cost 1 2 3 4 5 6 -20

Without Project:

Production - without irrigation (per ha)

Outputs

Mango production - Grade A ton 600 30% 0 0 270 720 1,620 2,340

Mango production - Grade B ton 340 30% 0 0 153 408 918 1,326

Mango production - other grades ton 200 40% 0 0 120 320 720 1,040

Production - first crop ton 0 0 1.5 4.0 5.0 7.0

Production - second crop ton 0 0 0.0 0.0 4.0 6.0

Total revenue $ 0 0 543 1,448 3,258 4,706

Inputs

Orchard establishment ha 1,905

Urea kg 0.32 0 50 150 210 420 420

DAP kg 0.48 0 30 150 145 290 290

MOP kg 0.36 0 30 120 150 300 300

Floral manipulation ha 1,007 0 0 0 0 1 1

Pesticides ha 101.00 0 1 1 1 1 1

Labour days 4.50 0 80 120 220 300 340

Other costs lump sum 150 1 1 1 1 1 1

Total costs 2,055 652 954 1,432 2,990 3,170

Net revenue -2,055 -652 -411 16 268 1,536

Net revenue for 2.5 ha -5,138 -1,630 -1,028 40 670 3,840

Notes: 1) Drip irrigation installed in 3 year old plantations - i.e. first year of production

2) Floral manipulation from 3rd year of irrigation - i.e. when trees are 5 years old. From this year there are two crops per year. 3) From year 3, fertiliser delivered through drip system; cost is 20% premium over cost for non-irrigated orchard. 4) Most of this cost is related to the floral manipulation processes; mechanical spraying includes labour, 5) Two workers are employed full time for 7 months of the year but labor for harvesting is supplied by the buyers.

Annex 9 71

Table A.9.7, cont’d

Unit Unit Cost 1 2 3 4 5 6 -20

With Project

Drip irrigation - costs (2.5 ha. orchard)

Solar pump 1,010

Inverter 889

4.5 kW array PV panels 4,040

Installation, control box, cables, etc. for solar system 3,000

Supply & installation of drip irrigation system 3,444

Tube well (dia. 0.15m, depth 80 - 100m) 3,535

Training in O&M for farmer 500

Irrigation system costs for 2.5 ha. Unit 0 0 16,418 0 0 0

Production - with drip irrigation (per ha)

Outputs

Mango production - Grade A ton 600 60% 540 1,872 4,212 6,084

Mango production - Grade B ton 340 25% 128 442 995 1,437

Mango production - other grades ton 200 15% 45 156 351 507

Production - first crop ton 0 0 1.5 5.2 6.5 9.1

Production - second crop ton 0 0 0.0 0.0 5.2 7.8

Total revenue $ 0 0 713 2,470 5,558 8,028

Inputs

Establishment costs ha 1,905

Fertiliser 3) $ 1 0 110 420 606 1,212 1,212

Floral manipulation 4) ha 1,007 0 0 0 0 1 1

Pesticides ha 101 0 1 1 1 1 1

Labour day 4.5 0 80 120 220 300 340

Other costs lumpsum 150 1 1 1 1 1 1

Total input costs 2,055 721 1,211 1,847 3,820 4,000

Net revenue per ha -2,055 -721 -499 623 1,737 4,027

Drip irrigation operating costs ha 40 0 0 0 2.5 2.5 2.5

Net revenue for 2.5 ha -5,138 -1,803 -16,665 1,555 4,340 10,065

Incremental net revenue for 2.5 ha 0 -172 -15,636 1,515 3,670 6,225

EIRR 26.6% NPV 13,676