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ARIAS SOCIETYWorld Bank aided

Assam Agricultural Competitiveness Project (AACP)

COMMUNITY PROCUREMENT

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Background

• Assam has an abundance of rainfall in monsoon season and the land is fertile, yet farmers were unable to maximize income from their fields as they lacked access to water during dry winter months

– they lack capital to invest in Shallow Tube Wells (STW) to tap the high water table/abundant groundwater

• Most of the state’s cultivation, including about 70% of its rice crop, takes place during the monsoon season.

– Without access to water in dry winter months, farmers were unable to increase their yields, improve their cropping intensity, or diversify away from growing rice

• Irrigation was therefore the core intervention of World Bank aided AACP, which was managed and coordinated by Assam Rural Infrastructure and Agricultural Services Society (ARIASS), an Autonomous body of the Government of Assam

– project started in February 2005, was closed successfully on March 2015, after an additional financing tenure of three years

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• The Project aimed to provide groups of 3-5 small-scale farmers (called Agro Service Groups or ASGs) with a 50% grant to purchase a shared STW for irrigation

• Initially, focus was on centralized procurement of bulk quantity of pumpset, so that a large number of STWs were quickly delivered to ASGs at lower costs. This, however, proved to be difficult.

• Assam being a remotely located north-eastern state, fewer qualified reputed manufacturers were willing to bid.

– Moreover, to ensure that pumps were of good quality, only manufacturers who had the requisite turnover and capacity were allowed to bid (as per World Bank norms), reducing number of bidders even further.

• Result- while STW pumps procured were cheap, farmers were unfamiliar with the brands on offer and the uptake of pumps was slow.

– Moreover, farmers raised questions- when they are paying 50% of the cost, why should the project solely decide which brand/model of pumpset they should acquire.

– This called for a new approach – Community Procurement

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• This model addresses farmers’ the needs of the farmers and is based on three basic principles

– Farmer groups are able to choose the pumpsets themselves, from a pre-selected list of products, drawn up through a Nation-wide competitive selection process, after analysis of the technical specification of the products and credentials of the manufacturers.

– Preselected suppliers commit to offer lower prices for the farmers with better competitive after-sales service, taking the potential size of the market opportunity into consideration.

– Physical asset-audit process to verify that pumps are delivered, installed, and used by intended farmer groups.

Community Procurement

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The Process• Awareness Campaign through NGOs/Media

• To assist ASGs in ensuring that pumpsets they procure meet an acceptable technical standards and at a reasonable prices, AACP carried out the following exercise as a facilitation service to community

– Technical standards were set by project. Manufacturers and suppliers were then invited to submit - through an open competitive process called ‘Floating of Enquiry’ (FOE) —prices of their models that met the standards

– Project publish FOE every year that sought willingness of manufacturers to sell pumpsets to farmers at predetermined competitive prices, against laid-down technical specifications and after-sales service.

– After evaluation, shortlist of brands & models of approved manufactures, along with names of local outlets/ authorized dealers is published, which is called as the ‘Rate Bank’

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– Farmers groups procure pumps of their choice from this Rate Bank at a time of their own choosing.

– Farmers groups contribute 50 percent of the full cost of the pumpset, including the boring cost. They pay their share in cash to the manufacturer’s authorized dealer, less the pre-determined boring cost with materials.

• Farmers are also allowed to select pumps from other manufacturers, provided they receive prior concurrence from Directorate of Agriculture, provided that the cost of alternative pumpset is not more than 10 % higher than the average price of the shortlisted models

– Project pay the remaining 50% of the cost. Project’s share is released to the supplier, once the bill was submitted, along with the necessary endorsements by the concerned agriculture engineer, the leader of the farmers’ group and notified NGO

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Flow Chart

A Combination of Change in Grant & Empowering Communities Accelerated the Implementation Pace of STW

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

123 992

3948

13625 1302015900 12392 15000 15000

10000

Pre-CP Post-Community Procurement (CP)

MTR AF

20% Grant with 50% Mandatory

Comm. Bank Loan

20% Grant changed to 50% and Comm. Bank loan made optional

Operational Guidelines (OG) of Original Credit Modified OG

Pre-fixed Grant Ceiling for ASGs Grant based on Actual Cost by ASGs

Original Credit: 60,000 STWs in 7 yearsAF: 40,000 STWs in 3

yearsRESULT

STWs in Nos.

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• In usual public procurement process.– Public servants control procurement/contracting process by

hiring supplier to provide Goods to the communities– Thus, suppliers become accountable to Public servants

rather than to communities, even though communities are responsible for owning & managing the goods/assets provided

• Decentralization of decision-making and empowering the farmers allow effective implementation of community development initiatives, instill ownership of the assets by the community and to ensure sustainability of the interventions

• Projects are more sustainable and give higher returns when communities are empowered and involved

• In Community Procurement external Auditors helps in fiduciary assurance in respect of sample physical verification of assets, continued use of such assets, its maintenance, and diversion of the assets for other use etc.

Lessons Learnt

Leveraging the Innovative Practices• The unique community procurement process not only enhanced

community role in procurement decision making, but also brought in the economies of scale;

• The Community Procurement model have been adopted by the Agriculture Department of Assam in RKVY, NFSM, etc.

• Enhanced audit scope for physical verification of community assets, not only gave fiduciary assurance but also certain additional qualitative information;

• Water Quality of all the STWs were collected and tested for the presence of hazardous elements like Arsenic, Fluoride, Iron and Hydrocarbon etc.

• All STWs physical location have been mapped with GPS - Geo tagged along with water quality parameters;

• Piloted program of using solar-power for running irrigation pumps;

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PDO Level Results Indicators Unit Base-line

End-of-Project Target

End-of-Project Achievement

% increase over

target

Increase in Crop Productivity

Boro Paddy t/ha 1.5 5.0 5.5 10%Mustard t/ha 0.6 0.8 1.1 38%Cabbage t/ha 7.0 8.5 10.6 25%Cauliflower t/ha 7.0 8.5 9.8 15%

Increase in Fish Productivity

Ponds t/ha 0.49 2.75 3.5 27%Tanks t/ha 0.88 2.25 2.3 2%Beels t/ha 0.48 0.75 1.57 109%

Increase in Cropping Intensity % 130 195 200 3%Increase in Crop Diversification

Area under cereals % 83 80 65 -19%Area under high value crops

% 17 20 35 75%

Increase in marketed surplus

Mustard % 17 45 64.5 43%Vegetables % 28 65 99.5 53%

Project Beneficiaries (cumulative) Million NR 0.4 0.6 50%

Major Outcome of AACP

• Significant diversification into high value crops (share of high value crops increased from 17% to 35%);

• Project created an additional assured irrigation potential of about 2.88 lakh ha (about 32% of state’s assured irrigation potential);

Recognition &

Rewards ..

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Reward…

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“Improving Lives through Community Procurement of

pumpsets for Irrigation”

• Project got an award from the Procurement Innovation Challenge platform of the World Bank and its allies the Innovative Community Procurement Model out of 60 accepted Global innovations

• AACP presented the Case History in the 1st Global Open Contracting Event at Johannesburg,

South Africa (2012)

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Newsletter....• AACP’s performance has always

been rated consistently as Satisfactory by the World Bank

• AACP’s achievements was show-cased by the World Bank in their Newsletter of March 2011

• The topic “Tapping the vast agricultural potential of Assam for a new Green Revolution ” became very popular and inter alia a team from Indonesia visited AACP.

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(May be perused in the web site of World Bank)

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• AACP’s Community Procurement Model was documented as “Innovations in Development” and jointly published by the World Bank & Ministry of Finance, Govt. of India.

• The document was circulated by the Govt. of India (DEA) to all the States of India for adoption as appropriate

Recognition....

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Ministry of Finance, Department of Economic Affairs

The World Bank

(May be perused in the web site of World Bank)

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• Irrigation is the anchor intervention of AACP.

• Of the 15 interventions, irrigation is the one from which majority of benefits flow.

• AACP’s achievement under Irrigation component through Community Procurement was published by the IFC in the “Smart Lessons”

– (International Finance Corporation (IFC), a wing of the World Bank group)

Recognition....

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Thank You

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Backup Slides

Total Geographical Area 78.44 lakh hectare

Total Cultivable Area 30.16 lakh hectare

Gross cropped Area 41.60 lakh hectare

Net Cropped Area 28.11 lakh hectare (36% of Geographical Area)

Cropping Intensity 148%

Chronically Flood Prone Area 4.93 lakh hectare

Chronically Draught Prone Area 0.94 lakh hectare

Area under assured Irrigation 8.43 lakh hectare (30% of Net Cropped Area)

Availability of Farm Power 1.02 HP per hectare

Total Farm Families 27.50 lakh (2005 Agriculture census)

Small & Marginal farmer 23.44 lakh (85.3% of total farm families)

Major Crops grown Rice (61%), Mustard (6%), Vegetables (6%) , Pulses (3%), Fruits (3%), etc.,

Assam Agriculture – A Snapshot

19Source: Department of Agriculture- http://www.agriassam.in/

AACP: Project Developmental Objectives (PDO)

Implementing Partners

Animal Husbandry

AAU

Agriculture

Dairy

Fisheries

Forest

Public Works

ARIAS Society

NGOs

Focusing on small & marginal farmers

Production end of the Value Chain

Transparent and

targeted selection of beneficiaries

Community Empowerment/ Procurement

Decentralized Extension

Key Design Principles Objectives (PDO)

Increase marketable surplus of farmers

Enhance market access of farmers

Stimulate growth of Agrarian economy of Assam

Increase yields of crops, fish & livestock products

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Centralized Funds Management

District Wise Breakup of STWs & LLPs

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Sl District STW LLP Sl District STW LLP1 Baksa 2270 38 14 Kamrup 9431 10082 Barpeta 8063 486 15 K-Anglong 596 14043 Bongaigaon 8523 397 16 Karimganj 0 10604 Cachar 0 1147 17 Kokrajhar 1270 3755 Chirang 1637 34 18 Lakhimpur 1428 4396 Darrang 4843 270 19 Morigaon 4380 1187 Dhemaji 406 838 20 N.C. Hills 0 5658 Dhubri 13885 1719 21 Nagaon 16577 4499 Dibrugarh 949 330 22 Nalbari 3408 201

10 Goalpara 11774 358 23 Sivasagar 399 32711 Golaghat 682 880 24 Sonitpur 6197 60912 Hailakandi 10 1021 25 Tinsukia 805 53713 Jorhat 1146 510 26 Udalguri 1321 100

Total 100000 15220

• Total project funding for STWs & LLPs was Rs. 173.09 crore and total Beneficiary contribution was Rs.179.84 crore

• Initially funding pattern was 30% project grant, 50% mandatory loan from Commercial Banks and 20% Beneficiary’s own contribution. • However, due to difficulty faced by farmer groups in obtaining loan from

Commercial Banks resulting in very low absorption of pumpsets, funding pattern was changed to 50% project grant and 50% Beneficiary contribution

Key Output of AACP

AACP has successfully -

increased farm productivity (through investments in irrigation, farm mechanization, community drainage & technology transfer);

upgraded infrastructure and improved physical access to market (through investments in rural road access and rural markets);

improved sustainable natural resource management and community access to common resources (through facilitating farmers involvement in planning and implementation of project activities, and economic access of communities to forests and open water bodies);

facilitated several policy reforms and institutional development, and supported capacity building initiatives.

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Project development objectives has been fully achieved

• Average paddy (boro) yield increased 3.7 times (from 1.5 t/ha to 5.5 t/ha);

• Cropping intensity increased by 54% (from 130 % to 200 %);

• Marketed surplus increased by 45% for paddy (boro) and by 35% for vegetables;

• Significant diversification into high value crops (share of high value crops increased from 18% to 35%);

• Project created an additional assured irrigation potential of about 2.88 lakh ha (about 32% of state’s assured irrigation potential);

• Project reached and benefitted the disadvantages section of the state

– 6.38 lakhs direct beneficiaries of the project

– 5.65 lakhs beneficiaries of investment grant – heavily skewed towards the disadvantages sections of the state;

– Small and marginal farmers constituted more that 96% of the beneficiaries of investment grant;

– About 50% belong to ST, SC and OBC ;– 15% of women beneficiaries;

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15% of the total Direct Beneficiaries were Female.

95% of the total Direct Beneficiaries were Small (31%), Marginal (47%) & Landless (17%) farmers.

Small farmers :1-2 ha of land, Marginal Farmers : 0.5-1 ha, Landless: 0-0.5 ha,

Beneficiaries profile

1,77,905 33%

2,66,090 49%

96,09518%

Land Holding Profile of direct beneficiaries

Small (1-2ha)

Marginal (0.5-1ha)

Land Less (0-0.5ha)

73544; 13%

102636; 18%

107558; 19%

282006; 50%

Demographic Profile of direct beneficiaries

SC

ST

OBC

GEN

Project mobilized 0.6 million direct beneficiaries and also indirectly benefited 1.9 million beneficiaries across agriculture, fishery, livestock, dairy, forestry, Rural Roads, ATMA, etc.