Achieving competitiveness requires cooperation and incentives for cooperation among value chain actors from the top to bottom of the chain because of the systemic nature of value chains. To illustrate, exporters at the top of the chain cannot be competitive without sufficient product volume and quality, which - in most instances - must be sourced from smallholders at the bottom of the chain. Moreover, benefits to one part of the chain are linked to improvements all along the chain. Based on this, AGP II support to markets and agribusiness will be largely implemented at the national, regional and business level along the selected commodity value chains, with the objectives to strengthen the key selected value chains.
The activities are expected to result in an increase in the value and volume of (domestic or export) sales of the key (selected) value chain commodities targeted by the AGP II. The main objective of this sub-component is to increase small scale farmer market access, market efficiency, and value adding products and services along selected VCs. Overall, the sub-component will employ a market-led approach; i.e., a “value chain” methodology designed to identify and address the constraints and market opportunities of the key value chains and stakeholders. Moreover it stimulates market-led agro-enterprise and cooperative linkages with domestic, regional and international markets.
It is expected that most the activities under the sub component will be implemented by MoT , MoA and MoI, in collaboration with the regional subordinate institutions at regional and woreda level through a parallel financing mechanism funded by USAID. The final list of VC will be detailed in the PIM together with the description of the mechanisms and modalities for the implementation of the activities financed through the parallel mechanism funded by USAID. An indicative long list of possible VCs has been developed using similar criteria as that of AGP I listed below:-
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Importance of potential marketable production and nutritional benefits;
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Number of farmers (women, men) involved in producing this commodity;
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Capacity to increase household profitability (increased value addition potential and revenue growth);
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Potential to increase productivity/production in a sustainable manner (i.e., including involvement of or potential for private sector) and reduce production risk;
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Potential for labor absorption in the value chain;
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Potential for direct and indirect positive effects in neighboring woredas.
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Selection of nutrient dense crops and crops for local consumption as well as export.
The selection have also considered the following issues: a balance between commodities (e.g., a mix of rain fed and irrigated commodities, crops and livestock, nutritional benefits and cash commodities, or a mix of durable and perishable commodities); availability of input supply for the commodity; gender implications; ownership and commitment of the value chain actors’ (particularly private sector) to allocate time and resources. Thus, VC commodities selected for AGP II intervention are indicated in the following table.
Table : Selected Value chain Products
Product
Category
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Value chains
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Cereals
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Teff, Wheat, Maize, Barley and Sorghum
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Pulses
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Chickpea and Fava Bean
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Oil crops
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Sesame
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Stimulants
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Coffee
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Vegetables
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Tomato, Potato and Onion
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Fruits
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Banana and Mango
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Livestock
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Dairy, Poultry, Live animals, Cattle Meat, Shoats Meat, Hides and Skins, and Honey
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1.1.29Support to the Coordination of Value Chain Actors
To realize the broader agribusiness development objective, the AGP II would focus on strengthening the VC actors, which would result in an increase of value and volume of selected VC commodities. To this effect, many VC actors need to work together through the technical, financial and facilitation support of the program. To implement this activity, VC actors will be identified, common challenges, problems and their current capacity assessed. Thus based on the result of the assessment multiple stakeholders plat form including women VC actors will be established and strengthened at Federal level and regional level.
These MSPs will be supported nationally and regionally as well as be sectoral in nature. The number of MSPs to be organized will be determined in accordance to the selected VC commodities. The MSP will aim to propose solutions to the challenges of marketing, value addition, facilitation and coordination. The basic objective of organizing MSP being sharing experiences and proposing solutions to the marketing and value addition issues, awareness creation, implementation, facilitation and coordination among VC actors. Activities to be conducted would include the following:
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Identification and selection of MSP actors
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Collection of basic data about MSP actors
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Preparation of the MSP programming, regulations and plan of work,
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Establishment of national and regional MSP and facilitating committee
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Implementation of the MSP meeting decisions related to contractual, delivery of quality product and market information issues,
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Follow up on decision of the MSP, and
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Technical and managerial assistance to the committee
The lead implementers of the intervention will be MoT and FCA, and also involves other VC actors as collaborators.
1.1.30Technical Support to Strengthen Competitive Agribusiness Actors
Agribusiness actors, which are competitive in the commodities identified, are to be supported in different value addition, market linkage, capacity building, trade shows & fair trade and other business management and financial linkage to different macro and micro finance institutions. One of the approaches to support the agribusiness actors is to support agri-business actors and association representing the VC in consideration. Based on this AGP II will support the following intervention areas to strengthen the agribusiness actors:-
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Facilitate Linkages Among Agribusiness Associations, Farmers, Cooperatives and Small Business Groups
Agribusiness associations are expected to improve its outreach and service by supporting the establishment of farmers and cooperatives at lower levels in different parts of the country, providing training of trainers with proper recognition using a standard manual and curriculum, and providing coaching and backstopping service to producers. To this end, the AGP II will support these associations through provision of technical support with concrete deliverables. Equal opportunities will be created for men and women producers, processors, traders and exporters in agribusiness with specially emphasis to women entrepreneurs through capacity building on developing viable business ideas and plans; and linking them to financial institutions. Specific activities include but are not limited to:
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facilitating harmonized sharing of responsibilities and internalization among agribusiness associations, and
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Facilitate linkages among agribusiness associations, male and female farmers, cooperatives and small business groups, women entrepreneurs including CIGs
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providing support and follow up with respect to joint planning and implementation for addressing critical sector issues
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Promote and strengthen existing women agribusiness association (women agribusiness cooperatives, women entrepreneurs etc)
The above mentioned activities will be implemented by MoT, FCA, and ATA in collaboration with RBoT, RCP institution.
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Support Quality, Traceability and Certification of Crops and Livestock
Absence of a well-defined and institutionalized product traceability and certification system is among the major systemic bottlenecks in the agricultural markets. On the other hand, traceability and product certification have become common requirement in the international markets and if fulfilled guides farmers to produce products that meet agreed environmental, labor, and developmental standards and also helps them to get premium prices in local and international markets.
In view of these facts, the AGP II aims to support establishment of a certification system that applies both for crop and livestock commodities that will help small scale farmers receive premium prices for their products, access local, regional and international markets and protect natural resources, support local economies. The support will mainly be directed to national and regional level certification center facilitation initially with strategic crops and livestock that will be scaled out later in the life of the AGP II.
Specific activities include
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Provide technical support to value chain actors on implementing GAP, HACCP, ISO, and other food safety and quality standards
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Support establishment of national and/or regional centers for information and capacity-building on certification including premium certifications, e.g. organic, fair trade
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Provide technical support for identification of potential national/regional centers and the setting of standards, bench marks and operational guidelines that will serve the intended purpose
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Provide support for the facilitation of the centers to make them fully operational (equipping the facilities with necessary hard and soft ware)
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Support training for Skill development of the staff for the centers on quality, traceability and certification and international operational standards
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Provide support in identifying required certificates, establish standards procedures and regulations.
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Create Public awareness on economic and social benefits of commodity traceability and certification both in the local and international markets.
The Animal Health and Plant Health Directorates of the MoA are responsible for handling the execution of the various activities.
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Support Through Innovation Competitive Grant and Demonstration Fund
The Innovation and Demonstration Funds are designed to unleash innovation and investment. Through these grant mechanisms, value chain intervention will have the flexibility to invest in opportunities as they arise and value chain actors best placed to address key value chain and other constraints. A key function of the funds will be to buy down the risks for value chain actors to innovate. Grants need to be invested to develop not distort markets and as such all recipients will be required to provide significant cost-sharing or matching funds prior to any sub-award.
Innovation competitive grant: The focus of the innovation fund is to support enterprises (e.g., cooperatives, processors, traders, etc) in the selected value chains to improve the productivity and competitiveness of their enterprises through innovation, i.e., through additional (e.g., diversification of production, value adding activities, etc) and innovative activities taken by the enterprises. The support will focus primarily on technology acquisition and transfer, identification of new markets and their segments, and associated business support and services, as described below. Support, primarily on a cost-sharing basis, will be provided to private sector on a demand-driven basis, on the following broad categories:
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Technology acquisition and transfer, including agricultural, processing, and marketing equipment, productivity techniques, plant/animal improvements
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Support on identification of new markets and market segments, through improved access to information, research and studies
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Capacity building through BDS such as business management and development, best business practices, product promotion, and acquisition of technical and market information
Demonstration Fund: The focus of the demonstration fund is to support direct procurement of proven productivity enhancing technology/ies or prototypes of broad public value, with potential to address gaps in the value chains. ‘Demonstration” refers to a display of improved or new technologies or prototypes in production, transporting, storage and processing to stakeholders all along the value chain such as farmers, processors, traders and consumers. Such technologies may be identified by any private and public stakeholders, can be imported or locally produced, and demonstrated through public fora, such as farmer field days or trade fairs, or directly through a private entrepreneur (e.g., farmer, agribusiness). In cases where private entrepreneur is a beneficiary of the Demonstration Fund, they should provide two forms of contribution: (i) cost sharing; and (ii) written agreement that their premises may be used under AGP as a demonstration and training venue for the technology. The Fund may finance the following types of activities:
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Identification of technology
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Demonstration of technology
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Promotion
The above mentioned activities will be implemented by MoT, FCA, MoA, and ATA in collaboration with RBoT, RCP institution through the USAID Parallel fund.
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Support Domestic Trade Fairs and Participation in International Trade Fairs and Promotional Campaigns
The focus of this activity will be cooperatives because they lack the necessary exposure to marketing requirements of local as well as international buyers. In addition, specific activities will be carried out to ensure visibility and facilitate necessary market linkages. These activities will include: (i) support to Domestic trade fair, and (ii) support to International trade fair and exhibition.
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