Document of The World Bank Report No: ICR00003227 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-52190) ON A CREDIT IN THE AMOUNT OF SDR 6.5 MILLION (US$ 10 MILLION EQUIVALENT) TO THE REPUBLIC OF MOLDOVA FOR AN EMERGENCY AGRICULTURE SUPPORT PROJECT February 20, 2014 Agriculture Global Practice Belarus, Moldova and Ukraine Country Unit Europe and Central Asia Region CURRENCY EQUIVALENTS (Exchange Rate Effective January 20, 2015) Currency Unit = Moldovan Leu 1.00 = US$ 0.058 US$ 1.00 = MDL 17.28 RECIPIENT’S FISCAL YEAR January 1 – December 31 FISCAL YEAR July 1 – June 30 ABBREVIATIONS AND ACRONYMS ACSA Agency for Consultancy and Training in Agriculture AIPA Agency for Interventions and Payments in Agriculture CAPMU Consolidated Agricultural Project Management Unit CPS Country Partnership Strategy DCRMP Disaster and Climate Risk Management Project GPS Global Positioning System ERR Economic Rate of Return EU European Union FM Financial Management FY Fiscal Year GDP Gross Domestic Product IA Impact Assessment ICR Implementation Completion and Results Report IDA International Development Association IFC International Finance Corporation IMS Integrated Management System IRR Internal Rate of Return ISR Implementation Status and Results Report LSCs Local Special Commissions MACP Moldova Agriculture Competitiveness Project MAFI Ministry of Agriculture and Food Industry MDL Moldovan Leu [M]EASP [Moldova] Emergency Agriculture Support Project M&E Monitoring and Evaluation MOF Ministry of Finance MTR Mid-Term Review NBS National Bureau of Statistics NGO Non-governmental Organization OP/BP World Bank Operational Policy/Bank Procedures PAD Project Appraisal Document PDI Project Development Indicator PDO Project Development Objective POM/OM Project Operational Manual RISP Rural Investment and Services Project SDR Special Drawing Right SMEs Small and Medium-Sized Enterprises TA Technical Assistance TORs Terms of Reference TTL Task Team Leader USD United States Dollar Vice President: Laura Tuck Country Director: Qimiao Fan Practice Manager: Dina Umali-Deininger Country Manager: Alexander Kremer Project Team Leader: Anatol Gobjila ICR Primary Author: Jeren Kabayeva MOLDOVA Emergency Agriculture Support Project TABLE OF CONTENTS Data Sheet A. Basic Information........................................................................................................ i  B. Key Dates .................................................................................................................... i  C. Ratings Summary ........................................................................................................ i  D. Sector and Theme Codes ........................................................................................... ii  E. Bank Staff ................................................................................................................... ii  F. Results Framework Analysis ...................................................................................... ii  G. Ratings of Project Performance in ISRs .................................................................... v  H. Restructuring (if any) ................................................................................................. v  I. Disbursement Profile ................................................................................................. vi  1. Project Context, Development Objectives and Design ............................................... 1  2. Key Factors Affecting Implementation and Outcomes .............................................. 4  3. Assessment of Outcomes ............................................................................................ 9  4. Assessment of Risk to Development Outcome......................................................... 14  5. Assessment of Bank and Borrower Performance ..................................................... 14  6. Lessons Learned ....................................................................................................... 16  7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 17  Annex 1. Project Costs and Financing .......................................................................... 18  Annex 2. Outputs by Component ................................................................................. 19  Annex 3. Economic Analysis........................................................................................ 21  Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 24  Annex 5. Beneficiary Survey Results ........................................................................... 25  Annex 6. Stakeholder Workshop Report and Results................................................... 36  Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 38  Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 39  Annex 9. List of Supporting Documents ...................................................................... 40  A. Basic Information Emergency Agriculture Country: Moldova Project Name: Support Project Project ID: P143202 L/C/TF Number(s): IDA-52190 ICR Date: 01/21/2015 ICR Type: Core ICR REPUBLIC OF Lending Instrument: ERL Borrower: MOLDOVA Original Total XDR 6.50M Disbursed Amount: XDR 4.86M Commitment: Revised Amount: XDR 5.00M Environmental Category: C Implementing Agencies: Consolidated Agricultural Project Management Unit Cofinanciers and Other External Partners: B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 12/28/2012 Effectiveness: 04/15/2013 07/30/2013 Appraisal: Restructuring(s): 03/20/2014 Approval: 03/19/2013 Mid-term Review: 05/01/2014 04/05/2014 Closing: 09/01/2014 09/01/2014 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Satisfactory Borrower Performance: Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Moderately Satisfactory Implementing Quality of Supervision: Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Satisfactory Moderately Satisfactory Performance: Performance: i C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry Yes None at any time (Yes/No): (QEA): Problem Project at any Quality of Yes None time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Animal production 1 1 Crops 46 46 Other social services 46 46 Public administration- Agriculture, fishing and forestry 7 7 Theme Code (as % of total Bank financing) Other rural development 52 52 Social safety nets 48 48 E. Bank Staff Positions At ICR At Approval Vice President: Laura Tuck Philippe H. Le Houerou Country Director: Qimiao Fan Qimiao Fan Practice Manager: Dina Umali-Deininger Dina Umali-Deininger Project Team Leader: Anatol Gobjila Anatol Gobjila ICR Team Leader: Anatol Gobjila ICR Primary Author: Jeren Kabayeva F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The Project Development Objective (PDO) was to mitigate the negative effects of the 2012 drought by helping restore corn and wheat production and prevent livestock destocking in the most affected districts. Revised Project Development Objectives (as approved by original approving authority) N/A ii (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Indicator 1 : Percentage change over the 2009-11 average national production of wheat Value quantitative or -39% -20% +33% Qualitative) Date achieved 03/01/2013 09/01/2014 09/01/2014 Comments (incl. % Target exceeded before project completion. achievement) Indicator 2 : Percentage change over the 2009-11 average national production of corn Value quantitative or -61% -20% +6% Qualitative) Date achieved 03/01/2013 09/01/2014 09/01/2014 Comments (incl. % Target exceeded before project completion. achievement) Indicator 3 : Percentage change over the 2009-11 average number of pigs, chicken, and cattle Value Pigs: -34%; Pigs: -31%; Pigs: +60%; quantitative or Chickens: -19%; Chickens: -17%; Chickens: +6%; Qualitative) Cattle: -18% Cattle: -16% Cattle: -14% Date achieved 03/01/2013 09/01/2014 09/01/2014 Comments (incl. % Target exceeded before project completion. achievement) Indicator 4 : Direct project beneficiaries (number), of which female (percentage) Value 22,000 out of 60,085 out of which quantitative or 0 which at least 15% 39% female Qualitative) female Date achieved 03/01/2013 09/01/2014 09/01/2014 Comments (incl. % Target exceeded before project completion. achievement) (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : Area planted with corn in 2013 in 31 selected districts in plots larger than 0.5 ha Value 300,000 ha in 31 districts 80% 183,272 ha (or iii (quantitative (2009-11 average) 76%) or Qualitative) Date achieved 03/01/2013 09/01/2014 09/01/2014 Comments (incl. % Target achieved partially at 76%. achievement) Indicator 2 : Area planted with wheat in 2013 in 15 selected districts in plots larger than 1 ha Value 110,000 ha in 15 districts 132,347 ha (or (quantitative 80% (2009-11 average) 120%) or Qualitative) Date achieved 03/01/2013 09/01/2014 09/01/2014 Comments (incl. % Target exceeded before project completion. achievement) Indicator 3 : Share of small farmers of the total project beneficiaries Value (quantitative 0 70% 98% or Qualitative) Date achieved 03/01/2013 09/01/2014 09/01/2014 Comments (incl. % Target exceeded before project completion. achievement) Indicator 4 : Amount of cash transfers Value US$6.7 million (quantitative 0 US$9 million (due to savings) or Qualitative) Date achieved 03/01/2013 09/01/2014 03/20/2014 09/01/2014 Comments (incl. % Target partially achieved (US$2.3 million was cancelled through restructuring). achievement) Indicator 5 : Number of awareness workshops Value (quantitative 0 830 841 or Qualitative) Date achieved 03/01/2013 09/01/2014 09/01/2014 Comments (incl. % Target exceeded before project completion. achievement) Indicator 6 : Grievance mechanism established and working Value (quantitative 0 1 1 or Qualitative) Date achieved 03/01/2013 09/01/2014 09/01/2014 Comments (incl. % Target achieved before project completion. achievement) Indicator 7 : Days of training provided Value 0 35 35 iv (quantitative or Qualitative) Date achieved 03/01/2013 09/01/2014 09/01/2014 Comments (incl. % Target achieved before project completion. achievement) Indicator 8 : Number of broadcasting events Value (quantitative 0 120 149 or Qualitative) Date achieved 03/01/2013 09/01/2014 09/01/2014 Comments (incl. % Target exceeded before project completion. achievement) Indicator 9 : Completion of the small scale corn silage feasibility study Value (quantitative 0 1 1 or Qualitative) Date achieved 03/01/2013 09/01/2014 09/01/2014 Comments (incl. % Target achieved before project completion. achievement) G. Ratings of Project Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 09/25/2013 Satisfactory Satisfactory 0.00 2 05/31/2014 Moderately Satisfactory Satisfactory 7.25 3 09/01/2014 Satisfactory Satisfactory 7.48 H. Restructuring (if any) ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions 1. To cancel the amount of US$2.3 million equivalent from the IDA Credit on account of savings as requested by the 03/20/2014 S S 7.10 Borrower on Feb 4, 2014; 2. To re-allocate US$177,000 from Category 1 (Cash Grants) to Category 2 (Goods, non- v ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions consulting services, consulting services, training, incremental operation costs), as requested by the Borrower on March 12, 2014. I. Disbursement Profile vi 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal 1. In spite of a strong recovery in 2010 and 2011 from the global economic crisis, Moldova’s economy declined in 2012. Weak external demand and a marked decline in agricultural production in 2012 led to a recession. This was partially due to escalating sovereign debt and banking crises in the Euro zone, but the main cause of the recession was the summer drought of 2012 that severely hit agriculture. As a result, real GDP dropped by 0.8 percent in 2012 compared with a 6.4 percent growth in 2011, and the agricultural value added declined by 23 percent in 20121. 2. Further, continuous political tensions in the country were taking a toll on economic growth and social progress. The President was elected on March 16, 2012. However the country faced a period of political stalemate and uncertainty. There were differing views in society on the appropriate direction, pace and depth of reforms not only between the majority and the opposition, but also within the ruling coalition. Political disagreements, as well as corruption allegations, led to the resignation of the Government after a no-confidence vote in March 2013. In May 2013, the Parliament elected a new Prime Minister who formed a government based on the votes of the ruling coalition. The Agricultural Sector 3. The sector remained important, contributing 12 percent of GDP and representing about 50 percent of total exports (when combined with the agro-food sector)2. Agriculture also provided employment to 28 percent of the population, of which 40 percent were categorized as poor. On the other hand, livestock production, whose population estimated to be over 1.53 million heads3, contributed greatly towards food sufficiency. Besides generating food, exports and employment, agriculture provided raw materials for the industrial sector. Although agriculture remained a mainstay of the economy, agricultural output was volatile and low market competitiveness was a key bottleneck. High volatility in crop output was caused by acute vulnerability to climate hazards like droughts, floods, frosts, and severe storms. Competitiveness, in its turn, was challenged by a number of factors, including distortions and imperfections in agriculture input and output markets, poor access to finance, deteriorated infrastructure, and an underdeveloped land market. The 2012 Drought 4. The country’s agricultural sector faced unprecedented hot weather and a continued lack of precipitation in 2011-12. The drought started in the fall of 2011, and dry weather was observed during the winter of 2011-12. Catastrophic drought conditions continued to prevail in spring and summer of 2012 throughout the country but most severely in the central and, above all, the southern part of Moldova. The precarious weather caused significant damage to the agriculture sector, as its value added declined by 23 percent in 2012, and the corn and grain 1 Moldova Country Program Snapshot, World Bank, April 2013 2 Emergency Project Paper for the EASP, World Bank, Report No: 73722-MD 3 National Bureau of Statistics of Moldova (NBS) 1 harvests more than halved. The most vulnerable crops were corn and wheat due to water and temperature stress. The value of the losses for these crops alone was estimated at around US$78 million, which was 9.5 percent of agricultural GDP. Since pastures are scarce in Moldova, and corn is the main animal feed, there was a particular threat of animal destocking. The experience of the 2007 drought, when corn production dropped by 70 percent and wheat production by 44 percent, showed that the impact on grain fed animals could be so severe that it would take 3-4 years to recover to pre-drought trends4. 5. The Bank promptly responded to the devastating drought situation in Moldova with the Emergency Agriculture Support Project. There was a profound concern that if nothing was done immediately to assist farmers, the livestock sub-sector would be under significant risk for destocking and loss of capital with potential long-term negative consequences (similar to 2007). The project was therefore put in place as a means to avoid a potentially injurious “erosive coping” response by farmers, due to the potentially high impact on people’s food and livelihood security caused by the hazard, especially at times of political uncertainty in the country. The IDA Credit was designed to provide fast disbursing support through extending conditional cash transfers and technical assistance (awareness and training) to farmers in the most affected districts to maintain their ability to plant spring crops, including corn and wheat. The Project was consistent with the World Bank-IFC 2009-2012 Country Partnership Strategy (CPS) for Moldova, which focused on three main pillars: (i) improving economic competitiveness; (ii) minimizing social and environmental risks, building human capital, and promoting social inclusion; and (iii) improving public sector governance. 6. The project was part of an overall national support program of approximately US$13.5 million aiming to address the emergency situation, reduce the risk of escalation, and facilitate recovery from the drought. In December 2012, the EU provided a budget support grant of EUR3.15 million, which was subsequently channeled through the Ministry of Agriculture and Food Industry (MAFI) for cash transfers to affected farmers to incentivize winter wheat planting and for provision of fodder. However, these incentives were only partially covered with the proceeds from the EU grant, and the remaining needs were expected to be financed by the proposed project. The EASP was to contribute US$9 million to support farmers to plant winter wheat and corn, and help maintain household cattle stocks. 1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) 7. The Project Development Objective (PDO) was to mitigate the negative effects of the 2012 drought by helping restore corn and wheat production and prevent livestock destocking in the most affected districts. To achieve the above objective, the project sought to support the Government’s priorities to address the emergency situation, reduce the risk of escalation, and facilitate recovery from the drought. The project contributed cash and technical assistance (awareness and training) to the farmers in the districts that had been mostly affected by the 2012 drought so as to maintain investments to plant corn and wheat. Corn plays a key role as animal fodder, and its scarcity threatened animal destocking. In addition, the project developed a feasibility study on testing new approaches for animal nutrition under conditions of weather stress, 4 In 2007, affected farmers did not receive cash support, and the ensuing declines in animal capital can be attributed to a lack of major support intervention (no-project scenario). 2 i.e. new silage techniques. The short-term emergency objective of the proposed project complemented longer-term objectives of existing operations that are supporting adaptation to climate change in agriculture and disaster preparedness. 8. The PDO was to be achieved by providing a cash compensation and training to affected farmers as an incentive to plant new crops to accelerate recovery from the drought and to reduce the risk of escalation of losses. It was expected that restored production would increase farmers’ capacity to feed their animals and thus reduce the risk of destocking. 9. The project’s key outcome indicators were: (i) recovery of at least 80 percent of the pre- drought corn and wheat production; (ii) prevention of livestock destocking; (iii) provision of support to a significant share of affected farmers (disaggregated by gender). 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 10. The PDO and key indicators were not revised. 1.4 Main Beneficiaries, 11. The primary target group of beneficiaries was farmers in the districts most affected by the 2012 drought who suffered significant losses in 2012, and who invested for wheat and will invest for corn in new crops in the 2013 planting campaign. 12. To ensure balanced fairness (higher compensation for higher losses) and implementation simplicity, project benefits were targeted based on the following criteria: (i) farmers from the most affected districts, i.e. districts where losses of the specific crop were higher than 35 percent; (ii) farmers in those districts would be compensated ex-post on the basis of the area that they actually planted in autumn of 2012 for wheat, and for the area they actually planted for corn in 2013; (iii) eligible beneficiaries should plant a minimum area of 1.0 ha for wheat, and 0.5 ha for corn in contiguous plots; and (iv) eligible beneficiaries should be registered farmers with formal access to arable land, either in the form of ownership or formal lease. The rationale of the 35 percent limit5 was to avoid the use of scarce public resources in areas where the drought impact had been moderate, and hence could be considered as a normal annual fluctuation. 1.5 Original Components (as approved) 13. The project included the following three components: (i) Cash Transfers to Affected Farmers, (ii) Training and Awareness, and (iii) Project Management. 14. Component 1: Cash Transfers to Affected Farmers (US9.0 million). This component aimed to finance cash transfers to corn and wheat farmers in the most affected districts of the country to compensate a share of the losses that farmers suffered during the 2012 season. The cash transfers were to be disbursed only after eligible famers will have planted these two crops so as to provide an incentive for planting. It was expected that the increased production would contribute to mitigating the risk of animal destocking. 5 This limit was lowered to 30 percent through a restructuring on March 20, 2014 following the Government’s request received on February 6, 2014. 3 15. Component 2: Training and Awareness (US$0.35). The objective of this component was to publicly disseminate information on the cash transfer program in order to avoid elite capture and create sufficient incentives for affected farmers to plant crop and wheat. The component also sought to provide for the establishment of a redress grievance mechanism and training on animal feeding, and to carry out a feasibility study on small-scale corn silage production. 16. Component 3: Project Management (US$0.65). This component aimed to support costs associated with project implementation, including operational and costs for fiduciary specialists, component coordination, and monitoring and evaluation (M&E) support to the MAFI, specifically, its Agency for Interventions and Payments in Agriculture (AIPA) and the Consolidated Agriculture Project Management Unit6 (CAPMU). 1.6 Revised Components 17. The components were not revised. 1.7 Other significant changes 18. In March 2014, the project was restructured to: (i) cancel the amount of US$2.3 million equivalent from the IDA Credit No.5219-MD on account of savings, as requested by the Borrower on February 4, 2014; (ii) to reallocate US$177,000 from Category 1 (Cash Grants) to Category 2 (Goods, non-consulting services, consulting services, training, incremental operation costs), as requested by the Borrower on March 12, 2014; and (iii) to amend the project’s provisions on the eligibility of districts for wheat compensations, to allow for the eligibility of districts where losses were more than 30% (compared to the initial eligibility of 35%), as requested by the Borrower on February 6, 2014. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry 19. The preparation of the project was initiated in late December 2012 and it was expediently delivered to the Board, backed by strong support from headquarters and country office management. Due to accelerated procedures for project processing as per OP/BP 8.0, negotiations for the IDA Credit were completed on February 19, 2013 and Board approval was obtained on March 19, 2013. However, the project was prepared during high political uncertainty (see para 2), and faced unfortunate delays in obtaining effectiveness as there was no formal Government in place to sign the Credit Agreement with the Bank in the spring of 2013. In addition, there was a problem (beyond the team’s control) with the opening of the project’s designated account that was caused by an ineligibility of Banca de Economii (the Government’s treasury accounts operator) to provide services to World Bank-financed projects. To the team’s credit, the issue was resolved within two months following the project’s effectiveness. 20. The project primarily focused on supporting corn and wheat production through a cash transfer program for the affected corn and wheat producers. This was due to importance of corn and wheat in household consumption, and most essentially, given the 6 CAPMU was established in 1999 through Government Decision 878and has more than ten years of experience in providing fiduciary support in the implementation of Bank-financed projects in the rural sector in Moldova 4 importance of corn for animal feed (because of country’s scarce pastures), both in the form of grain and silage. Further, the project incorporated most suitable approaches for implementation. The decision was made to compensate the most affected farmers with cash transfers rather than with inputs out of the following considerations: (i) in the past there were negative experiences in procurement and misuse of seeds which turned out to be of poor quality or not suitable for to the specific local conditions; (ii) cash transfers were expected to allow faster implementation by avoiding the need to procure inputs; and (iii) cash transfers would maximize individual choice and ownership while minimizing market distortions. 21. Further, the project design took into account potential poverty implications for the country’s agricultural sector that was associated with households in chronic poverty. A strategic choice was made in establishing its targeting approach; selection criteria focused on groups of population that were particularly vulnerable to the risk of animal destocking. The central and southern regions of Moldova were the most affected by the 2012 drought, and were also the regions in which the less well-off were more likely to be involved in activities that were directly or indirectly affected by corn production. According to the household budget survey that was available at appraisal, 61 percent and 80 percent of the agricultural activity of those in the bottom 3 deciles, in the central and southern regions respectively, were related to livestock (meat, cheese and milk, and other related products). 22. Although the project was designed as a one-year (short-term) operation, it included a few activities to create a more sustainable system to deal with droughts in future. The Bank recognized the importance of technical assistance to farmers to enhance their knowledge about animal nutrition needs and coping strategies for feeding livestock and poultry during years of climatic distress. In addition, the project envisaged preparation of a feasibility study on small- scale silage that, among other things, was expected to look into adaptive research on piloting methodological and technical approaches to small-scale silage in at least two private farms. 23. The assessment of the potential drought affected area provided by the Ministry of Agriculture to the Bank at appraisal was underestimated. Given the unusual circumstances leading to the emergency project, the Bank team was only given a few weeks to design the project. This time was insufficient to perform a thorough analysis of the acreage/hectare affected. The team consulted with the MAFI to assess the impact from the crisis and apprise a potential number of beneficiaries. However, the Ministry itself struggled to produce reliable data on: (i) corn producers, and (ii) ha of land owned/rented by those producers. The Ministry eventually provided figures that were later proven as underestimated. As background, it may be noted that there is a systemic problem of reliable data at the MAFI due to lack of capacity and shortage of staff. 24. The project was prepared in parallel with the similar EU-funded drought relief program developed by the Government. The team made an effort to learn from the program’s experience by including the following in the project design: (i) a target mechanism to reduce elite capture by developing a better list of beneficiaries; (ii) corn, i.e. the crop that suffered the most in 2012 and allowed to reach a greater number of small farmers; (iii) and the information campaign and grievance mechanism to increase transparency and social accountability. 25. Risk Assessment. Overall project risk was rated Substantial at appraisal. In retrospect, while this rating correctly gauged the challenges as related to the volatile political situation, the absence of the Government to sign a Credit Agreement with the Bank to expedite the effectiveness of the project could not have been anticipated at appraisal. Initial mitigation response measures foreseen to deal with the new main counterparts (as a result of political 5 instability) in project design were to engage with all stakeholders, including operational staff of MAFI who were non-political appointees. The risks related to institutional weaknesses, which would lead to delays in disbursement of funds did not materialize during project implementation. 2.2 Implementation 26. Commendably, compensation payments to the first 60,000 beneficiaries were disbursed within a record time, i.e. two weeks, in spite of initial delays. This achievement was due to a management system that AIPA7 developed for the project, which allowed for a rapid targeted disbursement, as well as the highly efficient operation of Posta Moldovei offices. Along with this effort, high levels of awareness about the compensation programs, achieved through a speedy and comprehensive information campaign carried out by ACSA8 (with the support of AIPA and MAFI) played a major role in delivering such good numbers. Cash transfers were defrayed to farmers for the losses incurred in 2012 to 31 (out of 34 rayons) for corn and to 18 rayons (out of 34) for wheat. The former included the three additional rayons of Aneni Noi, Rezina and Taraclia, which were added to the cash transfer program in March 2014 based on additional evidence of sustained losses. 27. Compensations arrived after wheat and corn were planted in the 2013 agricultural season. Due to a substantial delay in the project’s start, compensations for affected farmers arrived in October-November of 2013, i.e. well after the planting period for corn being planted in the spring of 2013. However, thanks to early Government announcements and ACSA’s proactivity in carrying out the communication campaign ahead of project effectiveness (for which it was retroactively compensated), the farmers were aware of the forthcoming compensation program in advance and were able to plan accordingly and make economic decisions on the allocation of resources during the 2013 agricultural season before planting started. 28. The project successfully supported the implementation of a comprehensive grievance redress mechanism. This was a first experience in Moldova with the introduction of a grievance redress mechanism in Government-supported projects which provide monetary compensations. The grievance mechanism was implemented by ACSA, providing a completely impartial perspective on the cases at hand, independent of the MAFI and AIPA. The efficiency of the mass communication campaign events mentioned above can be judged by the small number of grievances received (which is around 500 or 0.8% of the actual beneficiaries). Of these, only 15 complaints warranted a review based on merits of the cases. 29. The project provided compensations to a total of 60,085 farmers, which was three times the initial target of 22,000. While it is admirable that the project covered an impressive number of affected farmers, the significant difference between the initial estimate and final achievements raises the question over the quality of data collected at appraisal. As described in paragraph 23, the preparation time was short, the project team had to rely on the statistics provided by the MAFI (not official statistics) to assess and identify potential damage. Unreliable data affected the Bank’s ability to adequately estimate vulnerable individuals, and hence the number of potential beneficiaries could not be correctly estimated. 7 AIPA is institutionally subordinated to MAFI, and is modeled after payment agencies present in EU countries. It has received significant institutional and human capacity strengthening support under the Bank-financed Moldova Rural Investment and Support Project II. 8 The Rural Development Agency (ACSA) is well established nation-wide NGO network that has extensive experience in providing extension and advisory services to the country’s farmers. 6 30. At the same time, the amount disbursed for compensations was lower than anticipated. Only US$6.7 million were disbursed out US$9 million allocated for cash transfers. As a result an amount equivalent to US$2.3 million was cancelled from the project. The fact that the number of actual beneficiaries was triple the estimate, while the amount of total compensations paid was smaller than anticipated, can be explained by the methodology for calculating compensations, which was done on a per hectare basis and not per beneficiary. It was initially estimated that a total area of 322,000 ha would be planted with corn and eligible for compensation, but the actual area was only 183,272 ha. Despite the Government’s efforts to incentivize planting of corn, a considerable number of farmers opted not to plant it for various economic reasons. MAFI could have increased the amount of compensation per hectare to achieve full disbursement, however, this option was not considered feasible nor desirable. 31. Since priority was given to a quick disbursement of funds, some internal control procedures were implemented with minor shortcomings. Based on the findings of the project’s operational review carried out by the independent consultant, a few minor discrepancies were identified in the implementation of the internal control system. Specifically, no verification of accuracy in beneficiaries’ lists was conducted by both AIPA and Posta Moldovei (full reliance on local commissions for beneficiary lists). In addition, there was an inconsistency between the PAD, Operational Manual (OP) and the MAFI decree which regulated the grants delivery to farmers. According to the OP, AIPA was in charge of “documentary and field controls, additional controls and post-payment checks,” but the MAFI Decree only stated that “AIPA has to collect and submit the consolidated lists to the Central Ministerial Commission.” 32. Despite the above-mentioned shortcomings, AIPA is believed to have emerged as a stronger institution. Realizing that the cash-transfer program was of a large scope to be implemented within the shortest period of time, the project provided significant support through provision of consultants and procurement of IT systems. Among other things, AIPA received 15 Global Positioning System (GPS) devices and computer equipment, which helped the organization establish an efficient online communication and knowledge transfer mechanism for employees of regional offices. In addition, the project provided E-learning consultancy services for the design and adjustment of the AIPA’s Integrated Management System (IMS). The need for this TA was derived from the integration of this IMS with other national databases, including state tax service, land registration, animal register, etc. It also improved management of internal documentation, electronic handling and archiving of documents. 33. The Government (both at national and regional level) and Implementing Agencies performed commendable work with a few deficiencies to be noted for future similar operations. Overall coordination and technical responsibility for the project rested with the MAFI. Implementation was effectively carried out by AIPA and ACSA, and fiduciary functions were flawlessly carried out by CAPMU9. ACSA commenced an extensive awareness campaign prior to the project’s effectiveness using its own funds. This allowed the Government to announce about the compensation program ahead of project’s start. Further, the project was positively affected by involving decentralized governance. Local Special Commissions (LSCs) were formed in every village that comprised a mayor of the locality, secretary of the local council, cadaster engineers, and representative of the local farmer community. While LSCs properly followed 9 CAPMU was established in 1999 through Government Decision 878and has more than ten years of experience in providing fiduciary support in the implementation of Bank-financed projects in the rural sector in Moldova 7 guidelines of consolidating the lists of beneficiaries, these lists were not supported with any confirmation documents whether the land was owned or leased. Further, the LSCs carried out verification in the field, but such verification did not prove the ownership of land. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 34. Design (Moderately Satisfactory): Overall the M&E design was kept simple and focused on measuring project performance indicators as identified in the project’s Results Framework. The only shortcomings were noted in estimating target values for key performance indicators such as “number of direct beneficiaries,” and “area planted with corn in 2013.” As mentioned in para 23, the preparation of the operation did not leave much time to establish more precise baseline indicators, and the M&E efforts were therefore based solely on data sources of the MAFI. In its turn, the MAFI recognized the weakness in maintaining a proper database due to lack of staff and technical resources. Going forward, MAFI is making strides to improve its data recording and farm registry systems in order to enhance its capacity to handle similar crisis situations in future. 35. Implementation (Satisfactory): The project unit was able to track and report regularly the evolution of output indicators. AIPA and ACSA were in charge of data collection and monitoring of results and provided quarterly progress reports to CAPMU on Component 1 and 2 respectively. Progress reports provided by project implementing agencies were reviewed and consolidated by CAPMU in its semi-annual progress reports. The project funded preparation of the Operational Review of the Cash Transfer Program and Impact Assessment. However, both reports were prepared by the independent consulting company and submitted to CAPMU and Bank shortly before the end of the project, not leaving enough time for feedback from stakeholders. 36. Utilization (Unsatisfactory): The project progress reports were comprehensive and provided a good level of detail on the implementation variables of the project. However, the quality of the final Impact Assessment report made it less relevant in informing the debate on the project’s net impact. 2.4 Safeguard and Fiduciary Compliance 37. Safeguards: The project was a Category C project as project activities were not expected to cause any significant environmental and social impacts. But it is still worth mentioning a rigorous grievance mechanism that was established by ACSA. This was the first experience with the introduction of a grievance mechanism in Government-supported programs in the country, which provide monetary compensations. It put in place a “safety valve” for unsatisfied farmers, created a disincentive for potential fraud. It also disciplined local and central authorities in charge of implementation of the program as all involved personnel were aware that there was an alternative mechanism for channeling grievances by farmers. The grievance mechanism was also implemented by ACSA providing an impartial perspective on the cases at hand, independent of MAFI and AIPA. 38. Procurement: On procurement matters, CAPMU, a very experienced PMU, provided very solid support which resulted in quick completion of the project’s packages. The final review of the project confirmed that the Procurement Plan developed during preparation and updated during implementation was adequate. It was also found that the filing of procurement documents was good and allowed procurement to be easily tracked. 8 39. Financial Management: The biggest fiduciary load in the project was related to financial management issues due to a multi-million dollar compensation program for the benefit of thousands of potential beneficiaries. At appraisal, the overall fiduciary risk was assessed as substantial since there was a need to disburse significant amounts in a short period of time that may have led to delays and/or fund mismanagement. Nevertheless, the project was at all times in compliance with legal FM covenants, as attested in a comprehensive FM review carried out by the World Bank in April 2014. The FM arrangements established within CAPMU and AIPA were assessed as satisfactory. The two agencies properly applied internal control procedures, properly kept accounting records in integrated accounting software, and employed qualified accounting staff. The final audit report was qualified as clean. 2.5 Post-completion Operation/Next Phase 40. The severity and frequency of extreme events have increased over time in the country (e.g. droughts of 2007 and 2012 and heavy flooding in 2008 and 2010), and are predicted to continue growing. As climate change exacerbates the stress on natural capital through more frequent and intense extreme weather events, adaptation and capacity building measures have become of a high priority. The project was, in a way, a pilot program to test the Government’s ability and capacity to address the emergency situation, reduce the risk of escalation, and facilitate recovery from the natural disaster. Further, and Additional Financing is currently being processed under the Moldova Agriculture Competiveness Project, and the positive experience of the EASP payment system will be adopted for it. 41. The project pursued a short-term objective to support the drought affected population and avoid erosive coping, through applying emergency mechanisms to ensure the quick distribution of cash transfers for restoring corn and wheat production, and preventing livestock destocking. More sustainable, longer-term recovery mechanisms are currently being established with the support of two ongoing Bank-funded projects, i.e.: (i) the Disaster and Climate Risk Management (DCRM) Project approved on August 5, 2010; and (ii) the Moldova Agriculture Competitiveness (MAC) Project approved on May 1, 2012. The DCRM Project aims to strengthen the country’s ability to forecast, prepare for, and respond to severe weather and natural disasters. The MAC Project aims to enhance the competitiveness of the country’s agro-food sector by, among others, mainstreaming agro-environmental and sustainable land management practices. Such practices are an essential element to help farmers adapt to a changing climate and for the sector to become more resilient to climatic variations. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation: Substantial 42. The project objective and design were consistent with the Bank’s Country Partnership Strategy. The CPS for 2009-2012 had the “Stability in a World of Economic Shocks” and “Climate Change and Eco-Disasters” as main themes. The project was also developed in response to the Government’s request for donor support to enhance production of corn and wheat by delivering critical inputs and advisory services. Based on previous experience of droughts in Moldova (most notably in 2007), there were concerns that if nothing was done immediately to assist the farmers with producing animal feed, the livestock sub-sector would be under risk for destocking and loss of capital, with potential long-term economic and social consequences. In this respect, the project’s design and objectives were relevant. 9 43. The project was also relevant to current Government policies and Bank CPS FY14-17. The National Development Strategy Moldova 2020 prioritizes state interventions to deliver the overarching goal of bringing about qualitative economic development and poverty reduction. It also includes a set of measures to reduce inequality and address key crosscutting themes, such as social inclusion and gender equality, environmental preservation, climate change and disaster events. The project addressed two of three pillars of the current CPS – Enhancing Human Capital and Minimizing Social Risks; and Promoting a Green, Clean and Resilient Moldova. 44. The appraisal was correct in focusing on the needs for getting production of wheat and corn back to normal as quickly as possible. Cash transfers were rightly considered as most important means to address the short-term production problems. The only drawback was that the late start of the project with compensation payments arriving in July-August of 2013, i.e. well after the planting period. In that sense the project had a delayed impact on farm finances. 45. The emergency nature of the project contributed to increased capacity of the Government to cope with the drought situation and reduce the severity of its impact on human welfare. Finally, the design of the project was also relevant, mainly because its simplicity allowed fast implementation as soon as the project became effective. The project supported government-run emergency mechanisms to ensure the short-term and cost-efficient distribution of cash transfers. 3.2 Achievement of Project Development Objectives: Substantial 46. The project was part of a country-wide program to respond to the crisis10 with EU and Government funds covering 54 percent of the country’s planted wheat area, while the remaining planted corn and wheat areas were expected to be covered by the project. To this end, the project was successful as part of the Government’s drought relief and recovery program, and ensured adequate wheat and corn production, which recorded a significantly increased harvest in the agricultural seasons of 2013-2014. In the last two years the country has seen record harvests of wheat, a level of corn production comparable to the pre-drought years, and a fairly vibrant livestock sector. The project objectives were achieved despite delays associated with the effectiveness of the project and designated account. Overall, the program played its role in mitigating the negative effects of the catastrophic drought of 2012 on the production of corn and wheat and prevention of animal destocking. 47. The PDO rating is Satisfactory based on achievement of all 4 outcome indicators (including sub-indicators), indicating a strong efficacy of the project. Only 2 intermediate results indicators (out of nine) were not achieved fully, but their relative importance was small, and targets were overestimated to begin with due to the demand-based nature of the project interventions. 48. The project played a key role in supporting wheat and corn farmers. Thus, cash transfers were defrayed to farmers to: (i) for 31 (out of 34) rayons; and (ii) for wheat – 18 (out of 34) rayons. The former includes the three additional rayons of Anenii Noi, Rezina and Taraclia, which were added to the cash transfer program in March 2014, based on additional evidence of 10 Hence, the focus of the project’s intermediate outcome indicators on national-level output data. 10 sustained losses. The total area for which compensations were paid was 315,619 hectares. In terms of geographical distribution, the South region, as most affected, accessed about 39% of the disbursement, the largest compared to other regions. 49. The final tally indicates that the project provided compensations for planting of wheat and corn in the 2013 agricultural season to 60,085 distinctive farmers (2,285 were paid to companies11, and 57,800 to individuals) in an amount of US$6.5 million. Thirty nine percent of the recipients were women. As for individual beneficiaries (physical entities), 86.1% of total compensations were paid to micro beneficiaries with land planted with wheat/corn of no more than 10 ha. In case of companies, the result was opposite. The large and medium-sized companies accounted for about 80% of disbursed compensations. 50. All other project activities were also successfully completed, i.e.: (i) a vast information and awareness campaign about the cash transfer program; (ii) a grievance mechanism associated with the cash transfer program; (iii) a body of work, including a feasibility study on testing new approaches for animal nutrition under conditions of weather stress, i.e. new silage techniques, and (iv) a body of work related to the strengthening AIPA’s capacity for managing the implementation of large and complex compensation programs. 51. Nevertheless, it is important to acknowledge that the attribution of the results to the project has to be qualified in the context of other exogenous factors which contributed to record harvests of wheat and corn, and to the restocking of pigs, chicken and cattle in 2013-2014. While the project played its role in delivering impressive results, major credit should be attributed to extremely favorable climatic conditions during the 2013-2014 agricultural seasons. A precise attribution model would have required some form of control/treatment comparisons, based on random sampling, which was not feasible in this case (all eligible farmers received support). An attempt to deal with the attribution dilemma is made in the economic analysis through an attempted simulation of “with” and “without” project scenarios based on the impact of a similarly severe drought (2007) on animal destocking. Even minimal (5%) attribution of the estimated benefits to the project indicates a robust rate of return and NPV. 52. A Table 1 summarizes progress against the PDO indicators and intermediate outcome indicators, respectively. In many cases, the project performed above targets. Table 1: Achievement of Key PDO Indicators Indicator Name Unit of Baseline Target Actual Measure PDO Indicators Percentage change over the 2009-11 Percentage -39% -20% +33% average national production of wheat Percentage change over the 2009-11 Percentage -61% -20% +6% average national production of corn Percentage change over the 2009-11 Percentage Pigs -34% Pigs -31% Pigs +60% average number of pigs, chicken and cattle Chickens -19% Chickens - Chickens +6% Cattle -18% 17% Cattle -14% Cattle -16% Direct project beneficiaries (number), of Percentage 22,000 out 60,085 out of 11 SME beneficiaries by size: Small (<120 ha of planted corn/wheat), Medium (120-600 ha of planted corn/wheat), and Large (>600 ha of planted corn/wheat) 11 which female (percentage) of which at which 39% least 15% female female Intermediate Results Indicators Area planted with corn in 2013 in 31 Percentage 300,000 ha in 80% 183,272 ha selected districts in plots larger than 0.5 ha change 31 districts (or 76%) (2009-11 ave) Area planted with wheat in 2013 in 15 Percentage 110,000 ha in 80% 132,347 ha selected districts in lots larger than 1 ha change 15 districts (or 120%) (2009-11 ave) Share of small farmers of the total project Percentage 0 70% 98% beneficiaries Amount of cash transfers Amt (US$) 0 US$9 mln US$6.7 mln Number of awareness workshops Number 0 830 841 Grievance mechanism established and Text 0 1 1 working Day of training provided Number 0 35 35 Number of broadcasting events Number 0 120 149 Completion of the small scale corn silage Text 0 1 1 feasibility study 3.3 Efficiency: Substantial 53. An ex-ante economic analysis has been carried out at the time of preparation of the project, which compared the total cost of the project with the benefits expected from corn and wheat production increases. The analysis assumed that such increased production will generate two benefits: increased availability of food for human consumption and animal fodder/feed (thus contributing to a reduction in the incidence of destocking). The resulting Internal Rate of Return (IRR) was 30% and the Net Present value (NPV) was US$940,981. 54. The ex-post analysis applied the same model to calculate if the project’s rate of return exceeds the opportunity cost of capital. The ex-post calculation reflects a reduction in the project cost (US$7.5 million vs. the original of US$10.0 million), and higher actual benefits derived from the excellent harvests of wheat and corn in 2013 and 2014. The attribution rates of the project’s estimated impact have been kept to a minimum attempting to control for project coverage, weather and other exogenous factors. An attribution rate of 5% results in an Internal Rate of Return (IRR) of 31% and a Net Present value (NPV) is US$500,000. The underlying economic analysis indicates that the project was implemented in an efficient manner, as better than expected benefits were achieved at a smaller cost. 3.4 Justification of Overall Outcome Rating Rating: Satisfactory 55. The overall project outcome is rated Satisfactory. This rating is based on the high relevance of the PDO, the achievement of most of the agreed performance indicators, and explicit evidence of the project’s efficiency. Although the project’s start was unavoidably delayed due to the political situation in the country that could not have been foreseen or controlled for by the project team, immediately after becoming effective, the project demonstrated excellent results, an overall outcome rating of Satisfactory appears to be appropriate. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 12 56. Although the project effectively targeted poor rural households and small-scale producers, increase in their incomes was not the main objective. This was a short-term emergency relief program aimed at recovering wheat and corn production and preventing livestock slaughtering. However, increases in wheat and corn yields and production, as well as recovery of the number of pigs and chicken, assume that more income would be available to producers. According to the Impact Assessment Report, in terms of impact on income, 66% of the interviewed individual beneficiaries mentioned that corn/wheat as one of the main income source for their families, and 35% for livestock as the first revenue line. Women benefited equitably from the project as of the 60,085 beneficiaries, 39% were women. (b) Institutional Change/Strengthening 57. Being of an emergency nature, the project was not designed with the intention of being sustainable. It was part of a program by the international donor community to assist Moldova in a crisis situation following the disastrous 2012 drought. However, according to the independent evaluation conducted after project closing, the project successfully established and operationalized the cash delivery mechanism that can serve as a good platform for similar emergency intervention in future. In general, the project raised the level of awareness and understanding on drought management and mitigation interventions among government agencies, politicians and private sector. It also increased the skills of AIPA in processing grant applications. AIPA is now more aware of the requirements and procedures to put operations on a high speed disbursements track. But more importantly it has increased capacity for implementation of substantial EU support programs, such as the European Neighborhood Program for Agriculture and Rural Development, for which Moldova has become eligible in 2015.Finally, the project provided short-term support to strengthen the agricultural advisory service, and financed the training of communities prone to drought occurrences, to equip them with knowledge and skills for responding to and managing extreme weather shock. (c) Other Unintended Outcomes and Impacts (positive or negative) 58. The project’s schematics, lessons learned and engendered institutional capacity in MAFI and AIPA are presently utilized for the preparation of an Additional Financing to the Moldova Agriculture Competitiveness Project, which is setting out to provide compensatory cash grants to thousands of small and medium horticultural producers, to help them in abating the consequences of a series of trade embargos in a key export market. The experience of the EASP will ensure that these compensations are defrayed quickly and in the most efficient manner to eligible farmers. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 59. The Impact Assessment of the project confirmed that the project achieved its development objectives despite coming short on a few output indicators. Stakeholders and implementing agencies stated that they received a unique experience and obtained more confidence in dealing with possible natural disasters. The report also concluded that although the project compensations did not contribute directly to 2013 planting, the farmers’ expectations to receive some support (following the Government’s announcement to distribute compensations), reassured the farmers in taking a decision to continue planting corn and wheat. 60. Another conclusion was that farmers appreciated the program’s support and that they were not left alone to deal with the repercussions of natural hazards. In this respect, they considered the program as an emergency relief to compensate a partial loss, and these contributions, however modest, encouraged farmers to stay in villages, continue working on their land, and strengthening the country’s rural society. 13 61. More detailed description of findings of the Impact Assessment is provided in Annex 5. 4. Assessment of Risk to Development Outcome Rating: Moderate 62. Risks to development outcome and sustainability of project achievements are assessed against economic/financial, institutional, social, and environmental criteria. Overall, risk to development outcome is evaluated as Moderate. 63. The economic and financial risk to development outcome is rated Moderate. Increased corn and wheat production helped Moldova obtain those cereals at lower prices than if they had been imported. Even so, trade bans on fruits and vegetables recently introduced by Russia impose a growing financial burden for the Government, especially with respect of export of agricultural products. The ongoing Bank’s Agriculture Competitiveness Project presents an opportunity for the country to enhance competitiveness of the agro-food sector by supporting the modernization of the food safety management system, and facilitating market access for farmers. 64. The institutional risk to development outcome is rated Moderate. While capacity building improved the Government’s readiness to deal with emergency food security issues and its capacity to establish a mechanism for quick disbursement of compensation payments, the Government still does not maintain an adequate database of famers, land, etc. 65. The social risk to development outcome is rated Moderate. The project’s interventions contributed significantly to increases in wheat and corn production, which had a positive impact on household food security. These outcomes might be jeopardized by new droughts or surges in food prices on international markets, which would increase the vulnerability of farm households lacking diversified sources of income. Climate change and natural disasters continue to pose risks. The Bank’s ongoing support for disaster and climate risk mitigation activities should help address these risks. 66. The environment risk to development outcome is rated High as the country remains vulnerable to extreme climate events and natural disasters, and their impact on the agricultural sector continue to be significant. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory 67. The project started on a strong footing because its design was well thought and incorporated most suitable approaches for implementation. The process ensured that the project, aside from meeting short-term needs, included a mechanism for more sustainable system to deal with droughts in future. Bank management provided resources to prepare the project adequately. It mobilized a strong team that received high-level support on fiduciary, legal, disbursement, and safeguard concerns. The appraisal was absolutely correct in focusing on the needs for getting agricultural production back to normal as quickly as possible. Since the supply of seeds to farmers was found to be assured by the Government and other donors, cash transfers were rightly considered as most important means to address the short-term production problems. 14 68. The project was prepared in short order in the light of the emergency situation. The Government requested assistance in September, 2012, with the Bank team initiating identification immediately, and a combined preparation and appraisal mission was fielded in late December 2012. Due to accelerated procedures for project processing as per OP 8.50, negotiations for the IDA Credit were completed before February 19, 2013; and Board approval was obtained on March 19, 2013. However the project became effective only on July 30, 2013 due to absence of the Government to sign the Credit Agreement with the Bank. (b) Quality of Supervision Rating: Satisfactory 69. The Bank took a correct position by keeping the project simple, limiting financing to quick disbursing components and giving institutional aspects only secondary consideration. The Bank performed commendably in assuring the quick disbursement of the cash transfer program. Although the project start was delayed due to the Government action to determine a Designated Account, the Bank team made everything possible to resolve this issue in the shortest period of time. 70. During one year of project implementation, three supervisions were carried out by the Bank. The missions provided effective technical support for project implementation and achievement of development objectives. The team also benefited from regular support from a country office-based task team leader (TTL) working together with country office-based and regional experienced financial management, and procurement staff. This ensured good quality documentation and swift processing and approval of the project requests for No Objection. (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory 71. The project was well designed, successfully implemented, and achieved most of the performance targets. Beneficiaries were satisfied with the project’s intentions. The project was able to arrange public awareness campaign to manage delays in project’s start. 5.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory 72. The rating is based on the delayed project effectiveness/implementation that occurred due to institutional coordination problems (leadership rivalry and turnover of government officials) and delay in opening the Designated Account. However, the Government demonstrated more sustained commitment to the PDO, and collaborated effectively once the political situation was resolved. The MAFI provided overall coordination, and effectively performed supervisory functions thorough the project life. The Ministry was able to deliver the critical elements of the program under tight time and resource constraints, especially with respect to setting up all institutional arrangements necessary to implement the project according to the planned design and mechanisms. However, the quality at project entrance with respect of availability of adequate data for the project team showed room for improvement of the MAFI’s capacity. The project revealed that the Ministry suffered from a shortage of staff, skills, and a lack of attention to maintaining relevant statistics on number of farmers, crops planted, land, etc. (b) Implementing Agency or Agencies Performance Rating: Satisfactory 15 73. The main implementing agencies included AIPA and ACSA. AIPA was in charge of Component 1, i.e. delivery of cash payments to beneficiaries, financial management and monitoring of the cash transfer program. Since the Government’s regulation stated that the mechanism of payment execution for farmers who do not hold accounts to be through Posta Moldovei, AIPA sub-contracted Posta Moldovei to administer this small portion of the amount allocated in the compensation budget. ACSA was in charge of the implementation of Component 2, Training and Awareness. The Implementing Agencies effectively cooperated to facilitate quick delivery of cash transfers to the drought affected farmers. ACSA initially used its own funds to carry out training and awareness activities ahead of project effectiveness, for which it was retroactively compensated. The farmers were aware of the coming compensation program well before it actually arrived. ACSA also successfully established a rigorous grievance mechanism. AIPA managed a cash transfer program very efficiently, and covered 60,085 beneficiaries instead of 22,000 envisaged ones. Though it was burdened with an inefficient requirement for submitting heavy paper-based packages to the MAFI to obtain approval for each application. At the same time, as it was pointed out in an independent operational review, the system of internal checks could have been improved by AIPA (see para 32). 74. CAPMU played the major project coordinating role, and managed overall project fiduciary responsibilities. CAPMU has had a vast experience in the implementation of Bank- funded projects, and was staffed with qualified personnel. CAPMU was very efficient and effective in implementing the project; it also performed well with respect to the project’s M&E reporting, financial management and procurement requirements. The project complied satisfactorily with the Bank’s financial management requirements through regular, timely submission of financial reports and annual audits. Reporting was sufficiently timely to allow for corrective actions, for example, cancellation of US$2.3 million before project closing. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory 75. The overall Borrower performance is rated Moderately Satisfactory, taking into account Moderately Satisfactory performance by the Government as described above. 6. Lessons Learned 76. In emergency projects, in order to ensure quick action, it is rather appropriate to work through country office-based TTL, working together with country office-based and regional fiduciary specialists, who can swiftly process and approve No Objections and other clearances. Involvement of the existing implementing agencies such as ACSA, AIPA and CAPMU, which have an impressive track record of implementing Bank-financed projects, was also crucial for the success of this emergency operation. 77. Innovative solutions enable project implementation to continue in a context of political instability. The project had a late start followed by political instability, and could have lost momentum, because cash transfers were not delivered on time for planting wheat and corn. Such circumstances demanded innovative mechanisms to help the project implementation. In that respect, the project’s decision to arrange the public awareness campaign before the project’s start and agree on a retroactive financing to ACSA was appropriate. 78. While the project was designed to respond to a specific drought emergency, both the Bank and Borrower have realized that drought is, and will continue to be, a recurring 16 phenomenon in Moldova. This underlines the importance of more systematic effort at building drought management capacity, clarifying institutional roles and developing a policy framework. Improved macroeconomic management and forecasting and improved sector planning, especially in agriculture which remain vulnerable to periodic drought of varying intensity seem particularly important. This is currently supported by the Bank through Bank’s two ongoing projects, i.e. the Disaster and Climate Risk Management Project and the Agriculture Competitiveness Project. 79. An emergency operation can only be designed on the basis of sound statistics and credible policy. However, the Government did not accord due priority to a sound database and was too slow in putting it in place during project implementation. At the time of emergency, critical economic and agricultural data to enable assessment of the crisis and to provide the basis for the design of this project were either lacking or, if available, poor in quality and inconsistent. Moreover, what data was available was widely dispersed among Government and regional government institutions. This situation distracted from optimal planning, and it needs to be speedily resolved to avoid a repeat in the event of another emergency. 80. Projects of this emergency nature work well if they have clear and well defined internal system procedures. Especially for emergency relief operations, an efficient monitoring and evaluation system (follow-up checks) needs to be developed and implemented in a very short period of time. Developing a single standard manual for all participating parties is recommended for future emergency projects. 81. For emergency recovery loans to be successful there should be no impediments in the institutional arrangements that could slow down disbursements as this could defeat the purpose of the loan. To make the fullest impact, emergency projects have to demonstrate quick wins in the shortest possible time. This entails starting with cash transfer programs, quick disbursements, etc., that gain momentum rapidly and reach their peak during one year. 82. Submission of detailed supporting documents and original receipts is not ideal for emergency operations, or for speedy disbursements. The ardor involved in fulfilling the documentation for withdrawal applications detracted AIPA from the stated intention for rapid disbursements under Component 2. This is recommended for review in order to identify ways to satisfy documentation requirements for withdrawal applications that are rigorous but not arduous. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies 83. The draft ICR was shared with the Government and Implementing Agencies. Feedback on the report received from the Ministry of Agriculture and Food Industry is provided in Annex 7. (b) Cofinanciers N/A (c) Other partners and stakeholders (e.g. NGOs/private sector/civil society) N/A 17 Annex 1. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions) 1. Cash Transfers to Affected 9.00 6.5312 72.6% Farmers 2. Awareness and Training 0.35 0.35 100% 3. Project Management 0.65 0.63 96.9% Total Baseline Cost 10.00 7.51 75.1% Physical Contingencies 0.00 0.00 0.00 Price Contingencies 0.00 0.00 0.00 Total Project Costs 10.00 7.51 Front-end fee PPF 0.00 0.00 .00 Front-end fee IBRD 0.00 0.00 .00 Total Financing Required 0.00 0.00 (b) Financing Appraisal Actual/Latest Type of Estimate Estimate Percentage of Source of Funds Cofinancing (USD (USD Appraisal millions) millions) Borrower 0.00 0.00 .00 International Development 10.00 7.51 .00 Association (IDA) 12 There were a cancellation in the amount of 2.3 mln USD and a reallocation in the amount of 114 298 SDR 18 Annex 2. Outputs by Component Component 1: Cash Transfers to Affected Farmers 1. A total of 60,085 compensations were paid by the project, out of which 2,285 were paid to companies and 57,800 to individuals. 2. During the entire period of the MEASP activity, the total value of the compensations disbursed was MDL 78,730,631 covering a total area of 315,619 ha planted of wheat and corn. 3. In terms of geographical distribution, the South development region, as most affected, accessed about 39% of the disbursement, the largest amount compared to other regions. 4. As for individual beneficiaries (physical entities), 86.1% of the total compensations were paid to micro beneficiaries with land planted with wheat/corn of no more than 10 ha. At the same time, large and medium-sized companies accounted for about 80% of the disbursed compensations. 5. The project did not achieve one of the expected output results, but well exceeded the number of total beneficiaries, as well as attained other output indicators, as shown in the table below: Table 1: Component 1 – Cash Transfers to Affected Farmers. Actual outputs vs. PAD indicators PAD output Project attained output Difference Area planted with corn, ha 300 000 183 272 -116 728 Companies x 117 883 x Individuals x 65 389 x Area planted with wheat, ha 110 000 132 347 22 347 Companies x 113 594 x Individuals x 18 753 x Number of total beneficiaries 22 000 59 741 37 741 x 1 997 x x 57 744 x Share of small farmers of the total 70% 98% 28% beneficiaries, by number of disbursements Companies x 69% x Individuals x 99.8% x Share of small farmers of the total 70% 34% -36% beneficiaries, by size of farmer* Companies x 20% x Individuals x 98.8% x Amount of cash transfer 9 000000 6 697 768 -2 302 232 Number of districts compensated for corn 31 33 2 losses Companies x 27 x Individuals x 33 x 19 Number of districts compensated for wheat 15 16 1 losses Companies x 13 x Individuals x 16 x * The evaluation team has analytically grouped the project’s beneficiaries by size, based on the following criteria: Large farmers (> 600 ha planted area); Medium farmers (40-600 ha); Small farmers (10-40 ha); Micro farmers (< 10 ha). Component 2: Training and Awareness 6. Awareness workshops: During the implementation of this component 783 awareness workshops were organized, among which 1 was at the central level, 751 at the local village level and 31 at the district (rayon level). All the interviewed beneficiaries confirmed that they were aware of the project and its opportunities to compensate their loss. 7. Grievance mechanism. The Grievance mechanism was established and was successfully operational during project implementation. During the period of August 22 – December 10, 2013, the National Agency for Rural Development (ACSA), through the Network of Rural Extension Service Providers, performed the collection of written and verbal claims and mediated their settlement, therefore ensuring an equitable and transparent way to access the compensations offered by the project. 8. As a result of implementation of the Grievance mechanism, ACSA, as implementing agency of the mechanism, received 1,768 claims from beneficiaries willing to participate in the compensation program. About 121 of claims were admitted for examination as plausible eligible and were submitted for examination and final settlement by the Steering Committee of the project. As a result of this process 77 claims had no valid ground, and 44 of them were decided to solve positively. 9. Completion of the small-scale corn silage feasibility study: The narrative section of the Feasibility Study was developed. The practical part of the study, which involves the demonstration sites, was completed in the end of August 2014. Table 2: Component 2: Training and Awareness. Actual output vs. PAD indicators PAD output Project attained Project planned output by output by 30.08.2014 01.06.2014 Number of awareness 830 (one central level, 1 central level 1 central level workshops 31 in districts, plus 798 31 in districts 31 in districts at local level) 751 local level 809 local level Grievance mechanism established and established and established and working working working Days of training provided 35 35 35 Number of broadcasting events 120 149 149 Completion of the small scale developed Theoretical part Theoretical and corn silage feasibility study developed demonstrational part developed 20 Annex 3. Economic Analysis 1. An ex-post project economic analysis has been carried out. For continuity, the analysis used the ex-ante model which was applied at project appraisal which compared the total cost of the project with the benefits expected from stable corn and wheat production. 2. The analysis assumed that stable production will generate two benefits: (i) increased availability of food for human (10 percent of corn and 50 percent of wheat); and (ii) the remaining 90 percent of corn and 50 percent of wheat would be consumed as fodder by animals, thus contributing to reducing the incidence of destocking (i.e. number of animals which would be slaughtered in addition to regular trends due to lack of feed). The benefits for the livestock sector were expected to be multifold: (i) better fed animals would produce more meat, milk, or eggs; (ii) farm gate prices would be less depressed because fewer producers will be forced to slaughter their animals all at the same time; and (iii) the need to import expensive feed would be avoided. The resulting Internal Rate of Return (IRR) at appraisal was 30% and the Net Present value (NPV) was US$940,981. 3. The economic analysis model has focused on the fact that in value, Moldovan agricultural production has remained fairly steady over the past decade (even registering a slight increase), but that the main interruption in the trend was caused by a severe drought in 2007 (Figure 1 below). Figure 1: Moldova – Gross Production Value (constant 2004‐06 million US$)  1200 1000 800 Agriculture 600 Cereals 400 Livestock 200 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: FAO STAT, Jan 2013 4. On the basis of the 2007 experience, the impact of the drought on the livestock sector was assumed to affect three sub-sectors: pigs, chicken, and cattle in order of reducing impact. All were significantly affected in the aftermath of the 2007 drought. No meaningful relief was provided to farmers in 2007, making that situation a good proxy for a “without project” scenario for a likely “de-stocking” effect. Thus the assumptions on destocking were based on the effects of the 2007 drought, since that drought was meaningfully comparable to the one in 2012. The following ratios were used to convert the impact on destocking of the 2007 drought to estimate the impact of the 2012 drought: 21  Corn yield losses in 2012 were 13 percent less acute than in 2007 (corn production losses: 70 percent in 2007 and 61 percent in 2012); and  Wheat yield losses in 2012 were 34 percent less acute than in 2007 (44 percent losses in 2007 and 29 percent in 2012). 5. The calculations of the ex-post analysis use the assumptions/algorithms from above for a “without project” scenario performance of the sector. For calculating benefits, actual numbers for 2013 (and where available for 2014) for production of wheat and corn, as well as beef, chicken and pork meat, eggs and milk 13 were used, and benefits were calculated as “net”, i.e. the difference between actuals (where possible) and the “without project” scenario. Project’s costs reflect an actual cost of US$7.5 million, compared with US$10.0 million at appraisal. Calculations were made in constant prices (2011), thus stripping any inflationary effects for costs and benefits. A discount rate of 10% was used, similar to the ex-ante analysis. The attribution rates for the estimated project impacts have been kept at very conservative levels. An attribution rate of 5% results in an Internal Rate of Return (IRR) of 31% and a Net Present value (NPV) is US$500,000. For sensitivity analysis, the attribution rate for the wheat and corn benefits only was increased to 12% (average cost of cash grant to farmers per hectare) resulting in an IRR of 82% and a NPV of US$1.26 million. Details are presented in the tables below. PROJECT CASH FLOWS Y1 Y2 Y3 Y4 TOTAL Project cost, World Bank US$ Investment $6,800,000 $700,000 $0 $0 TOTAL $6,800,000 $700,000 $0 $0 $7,500,000 Profits corn & wheat human consumption (10% and 50% respectively) $431,527 $184,940 $0 $0 Cattle meat $50,000 $45,000 $2,500 $2,500 Project revenues, Chicken meat $298,900 $269,010 $14,945 $14,945 US$ Cow milk, whole, fresh $1,294,700 $1,165,230 $64,735 $64,735 Hen eggs, in shell $704,664 $634,198 $35,233 $35,233 Pig meat $1,545,000 $1,390,500 $77,250 $77,250 TOTAL $4,324,791 $3,688,878 $194,663 $194,663 $8,402,995  For 2015-2016, project benefits are estimated based on stabilized levels of production in 2013-2014 with 13 only marginal attribution to the project.  22 ESTIMATED IMPACT, BASELINE (5% attribution rate of benefits) Y1 Y2 Y3 Y4 Costs $6,800,000 $700,000 Returns $4,324,791 $3,688,878 $194,663 $194,663 Net flow -$2,475,209 $2,988,878 $194,663 $194,663 IRR 31% NPV $499,167 Discount rate 10% ESTIMATED IMPACT, HIGH SCENARIO (12% for wheat and corn benefits) Y1 Y2 Y3 Y4 Costs $6,800,000 $700,000 Returns $4,928,928 $3,947,794 $194,663 $194,663 Net flow -$1,871,072 $3,247,794 $194,663 $194,663 IRR 82% NPV $1,262,363 Discount rate 10% 23 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Anatol Gobjila Senior Operations Officer GFADR Task Team Leader Agriculture and Rural Maurizio Guadagni Senior Rural Development Specialist GFADR Development Elena Segura Senior Counsel LEGLE Country Lawyer Arcadii Capcelea Senior Environmental Specialist GENDR Safeguards Klavdiya Maksymenko Social Development Specialist GSUUR Safeguards GFADR Agriculture and Rural Armen Mehrabyan Consultant Development Elena Corman Procurement Analyst GGODR Procurement Kashmira Daruwalla Senior Procurement Specialist GGODR Procurement GGODR Financial Oxana Druta Financial Management Specialist Management Asa Margareta G. Hoglund GAGDR Agriculture and Rural Agricultural Specialist Giertz Development ECCMD Project operational Tamara Ursu Program Assistant support Supervision/ICR Anatol Gobjila Senior Operations Officer GFADR Task Team Leader Agriculture and Rural Maurizio Guadagni Senior Rural Development Specialist GFADR Development Elena Segura Senior Counsel LEGLE Country Lawyer Arcadii Capcelea Senior Environmental Specialist GENDR Safeguards Klavdiya Maksymenko Social Development Specialist GSUUR Safeguards Elena Corman Procurement Analyst GGODR Procurement Kashmira Daruwalla Senior Procurement Specialist GGODR Procurement GGODR Financial Oxana Druta Financial Management Specialist Management ECCMD Project operational Tamara Ursu Program Assistant support Jeren Kabayeva Rural Development Specialist GFADR ICR Author (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending (FY13) 8.7 62.83 Total: 8.7 62.83 Supervision/ICR FY14 10.5 15.79 FY15 17.3 46.18 Total: 27.8 61.97 24 Annex 5. Beneficiary Survey Results 1. The Impact Assessment Report was prepared by the consulting company “Alternative Internationale de Dezvoltare” in August 2014. The Beneficiary Survey involved a sample group of 270 beneficiaries as individuals (physical entities) and 160 SME beneficiaries. This sample group was randomly selected according to the following criteria required for the impact assessment:  Beneficiaries as individuals (physical entities): total 9 districts (rayons) and 27 villages, covering north, center, south and Gagauzia region.  160 SME beneficiaries: Geographical Location: North, Central, and South  160 SME beneficiaries by Size: Small (< 120 ha of planted corn/wheat), Medium (120- 600 ha of planted corn/wheat), Large (> 600 ha of planted corn/wheat). 2. The beneficiaries were asked to answer the questionnaire by remembering the situation before and after obtaining the MEASP compensation. The interviewees were asked to provide information on following areas:  Confirmation that they received the compensation, confronting the amount received and area planted;  Outcome of the dissemination of the MEASP, level and the source of their information on MEASP opportunities;  Statistics on the area planted of wheat/corn, before, during and after the project;  Statistics on the owned livestock before, during and after the project;  What was the actual loss as a result of the 2011 draught;  Their source and volume of annual revenues (both households and SMEs);  Perception and level of satisfaction of the MEASP project;  Did the project compensations had any impact on the decisions made beneficiaries in 2012-2013 related to continuing to plant corn and wheat;  Did the project made their decision (both physical and economic entities) on reducing the slaughtering of livestock as a result of project intervention;  The level of farmers’ satisfaction with received compensations and provided awareness about project financial and technical support. 3. The control group was constructed through a semi-experimental approach by asking the beneficiaries:  If they would have planted the wheat/corn if there was no compensation provided by MEASP.  What would happen if such projects as MEASP won’t exists in the future? Would they continue to plant wheat/corn even if losses occur due to climacterically hazard?  Does such compensation, under the MEASP project condition have provided any incentive for planting wheat/corn? 4. Data accuracy: The answers of the SMEs beneficiaries (economic entities) have been crosschecked with their official agricultural reports to the NBS, where they report the total area of wheat/corn plated as well as average yield of cereals. The answers of the SMEs beneficiaries (economic entities) also have been crosschecked with the data submitted to Local Selection Committees and AIPA offices, in order to receive the compensation. 5. The evaluation team assessed several output indicators. Some of them were included in the Results Framework and Monitoring of the Project Paper (official WB appraisal document) 25 defined as the Project Development Indicator (PDIs) and the ones were requested to be assessed by the TORs. Project Development Indicators (PDIs) TORs impact indicators 1 Percentage change over the 2009-2011 Impact the project had on the decisions made by average national production of wheat. farmers (both physical and economic entities) in Baseline -39% / End Target -20%. 2012-2013 related to continuing to plant corn and wheat. Farmers’ decision (both physical and economic entities) on reducing the slaughtering of livestock as a result of project intervention. 2 Percentage change over the 2009-2011 Increase in farmers’ incomes after project average national production of corn. Baseline intervention -61% / End Target -20% 3 Percentage change over the 2009-2011 average number of pigs, chicken, and cattle. Baseline: Pigs - 34%, chickens - 19%, cattle - 18% End Target: Pigs -31%, chicken -17%, cattle - 16% 6. The following impact assessment results were provided by the evaluation team in the report: A. PDI Percentage changes over the 2009-2011 average national production of wheat. Baseline -39% / End Target -20%. 7. The MEASP has compensated losses for the autumn wheat (hereinafter in this Annex referred to Wheat) of the year 2012. 8. Because of this consideration the impact of the MEASP was evaluated based on actual plantation and production of autumn wheat only (thus excluding spring wheat). 9. Looking at the general picture of the national production of wheat Moldova for 2009- 2013, it registered a certain growth trend in annual production. Table1: National production of wheat, 2009-2013, thous. tons Year Wheat, 000 t 2009 729 2010 730 2011 786 2012 488 2013 994 *NBS and Evaluation Team analytical data 26 10. In terms of the MEASP Project Development Indicator 1 the table above, the following results were achieved: Wheat  Average yearly wheat production in 2009-2011: 748 thous. tons  Percentage change for 2013 over the 2009-2011: + 33% (Average yearly wheat production in 2013 was 994 thous. tons) 11. This would lead to the conclusion that the project had a positive impact on general recovery of the wheat production, with a growth pace much greater than predicted at the design stage of the project. 12. The table with National production of wheat, 2009-2013 included production of wheat and corn from three major sources as follows: a) Agricultural Enterprises; b) Individual sector, which includes Peasant Farms and individual citizens; c) Public sector (ownership). 13. For a better and more consistent understanding of the growth trend of wheat production, this PDI was analyzed separately for the first two groups of producers: Agricultural Enterprises and Individual sector. Table 2: National production of wheat, by type of farmers, 2009-2013, thous. tons year Total, 000 t Agricultural Peasant farm/Individual sector Public property companies, 000 t 000 t 000 t 2009 714 477 229 8 2010 730 513 209 8 2011 786 560 219 7 2012 488 372 112 4 2013 994 731 254 9 *NBS and Evaluation Team analytical data 14. Assuming the same exercise in order to asses this MEASP Project Development Indicator 1, it would lead to the following return: Agricultural companies  Average yearly wheat production in 2009-2011: 536 thous. tons  Percentage change for 2013 over the 2009-2011: + 36% Peasant farm/Individual sector  Average yearly wheat production in 2009-2011: 214 thous. tons  Percentage change for 2013 over the 2009-2011: + 19% 27 15. The MEASP level of positive impact on general recovery of the wheat production was difficult to assess, but it eventually could be compared as the area planted of wheat as total in the country in 2012 to the area planted of wheat under the MEASP compensation program. 16. Individual sector/Peasant Farms. The MEAS compensated about 32% of total planted area of wheat in 2012, or 27 865 hectares compensated out of 86 000 ha as total. Figure1: Total area of wheat planted in 2012 vs. compensation provided by MEASP for individual beneficiaries 86 000 27 865 32% Planted wheat  in  2012, 000  Compensated wheat  by  Planted wheat  in  2012, 000 ha ha MEASP, 000  ha Compensated wheat  by MEASP,  000 ha 17. Agricultural companies (excluding peasant farms). The MEAS compensated about 46% of total planted area of wheat in 2012, or 103 248 hectares compensated out of 224 662 ha as total. Figure 2: Total area of wheat planted in 2012 vs. compensation provided by MEASP for agricultural companies  224  662 103  248 46% Planted wheat  in  2012, 000  Compensated wheat  by  Planted wheat  in  2012, 000 ha ha MEASP, 000  ha Compensated wheat  by MEASP,  000 ha 18. As a conclusion the MEASP definitely had a positive impact on general recovery of the wheat production, considering the area of wheat compensated against the total area of wheat planted in the country. 28 B. PDI Percentage changes over the 2009-2011 average national production of corn. Baseline -61% / End Target -20% 19. As for the country corn production in 2009-2011, it registered a certain growth trend in annual production, shown in the following table. Table3: National production of corn, 2009-2013, thous. tons Year Corn, 000 t 2009 1141 2 010 1419 2 011 1468 2 012 572 2 013 1419 *NBS and Evaluation Team analytical data 20. Using the same algorithm and applying the same consequence of analytical tools, as it was in the case for PDI 1, the impact of MEASP on corn production would conclude with the following results shown below. Corn  Average yearly wheat production in 2009-2011: 1343 thous. tons;  Percentage change for 2013 over the 2009-2011: + 6% (Average yearly corn production in 2013 was 1419 thous. tons). 21. For a better understanding of the source of corn production in the country, the evaluation team found appropriate to breakdown production of corn by Agricultural Companies and Peasant farm/Individual sector. Table 4: National production of corn, by type of farmers, 2009-2013, thous. tons year Total, 000 t Agricultural Peasant farm/Individual sector companies, 000 t 000 t 2009 1420 219.6 1025 2010 1468 279.9 1200 2011 572 109.3 1188 2012 1419 496.6 463 2013 1419 219.6 922 22. This would also help to analyze PDI 2 separately for Agricultural Companies and Peasant farm/Individual sector, as follows: Agricultural companies  Average yearly corn production in 2009-2011: 246 thous. tons  Percentage change for 2013 over the 2009-2011: + 99% Peasant farm/Individual sector 29  Average yearly corn production in 2009-2011: 1194 thous. tons  Percentage change for 2013 over the 2009-2011: - 23% 23. Agricultural companies almost doubled their corn production in 2013 compared to average harvest of 2009-2011, having a greater pace of growth, thus the project retain greater impact when compensating Agricultural Companies vs. Peasant farm/Individual sector. 24. Another observation was that the Peasant farm/Individual sector gradually decreased corn production over the years, proved also by the NBS data, and validated in the next figure. Figure 3: Corn production, individual sector, 2004-2013, thous. tons Corn production, individual sector, 000 t 1600 1364 1400 1258 1240 1200 1175 1188 1200 1026 1000 923 800 600 463 400 331 200 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 25. This leads to the conclusion that the project had a positive impact on general recovery of the corn production, with a growth pace greater as predicted at the design stage of the project. Combining 1st and 2nd PDIs impact indicators 26. The evaluation team “blended” the results of both PDO indicators, and received the following results: Wheat + Corn  Average yearly production in 2009-2011: 2202 thous. tons  Percentage change for 2013 over the 2009-2011: + 10% 27. The final conclusion is that the MEASP has definitely and directly contributed in attaining both PDIs, even exceeded the planned values of these indicators. C. PDI Percentage change over the 2009-2011 average numbers of pigs, chicken, and cattle. Baseline: Pigs - 34%, chickens - 19%, cattle -18% 30 End Target: Pigs -31%, chicken -17%, cattle -16% 28. Analyzing the available data, the team succeeded to assess this indicator, which leads to the following result: Table 5: Percentage change over the 2009-2011 average numbers of pigs, chicken, and cattle Average 2009-2011 End Target planned vs. 2013 actual Results compared to average 2009-2011 average 2009-2011 Pigs 380 thous. units 262 thous. units (-34%) 420 thous. units (+60%) Chickens 3252 thous. units 2699 thous. units (-19%) 3475 thous. units (+6%) Cattle 219 thous. units 184 thous. units (-16%) 189 thous. units (-14%) 29. The evaluation team concluded that the project had a positive impact on general recovery of the number of pigs and chicken, with a growth pace much greater as predicted at the design stage of the project. As for the cattle there was a positive recovery, overcoming project planned indicator, but still the number of cattle was less than it was as average in 2009-2011. D. TOR’s Impact the project had on the decisions made by farmers (both physical and economic entities) in 2012-2013 related to continuing to plant corn and wheat. E. TOR’s Farmers’ decision (both physical and economic entities) on reducing the slaughtering of livestock as a result of project intervention 30. The cash compensation program of MEASP was designed specifically to determine beneficiaries’ decision to plant winter wheat and corn during the 2013 campaign so as to prevent the risk of animal destocking. 31. Due a substantial delay in the Project’s start (June 2013, corn being already planted in spring) and, as a consequence, the dissemination of the MEASP compensation program carried in July-August of 2013 i.e. later than the plantation period, the project had rather an indirect effect on the decision of the farmers to plant their land with corn/wheat or preventing the risk of animal destocking. 32. It is evident that compensations themselves didn’t contribute directly to autumn 2013 planting, however, farmers’ expectations to receive some support and later announcement of the Government’s intention to distribute compensations could in a way reassure the farmers (both physical and economic entities) in taking the decision to continue planting corn and wheat, making them to change family’s budgeting priorities and processing fields in time. 33. One of the finding is that all surveyed farmers stated that they would continue to plant wheat/corn even if such compensation programs won’t exists since this is their main source of income. However, they do appreciate the program’s support since it brings them more confidence in standing against eventual disasters and not being left alone in front of new natural hazards. In this sense, such programs should be considered as emergency relief to compensate partial loss, modest contributions being used to encourage farmers to stay in villages, continue working their lands and thus maintain and strengthen the country’s rural society. 34. Below is the set of potential factors, which could explain local farmer’s perception/decision to continue planting wheat and corn no matter what external factors may occur. 31  Crop rotation factor. Crop rotation gives various nutrients to the soil. A traditional element of crop rotation is the replenishment of nitrogen through the use of green manure in sequence with cereals and other crops, especially wheat and corn in Moldova. In this regard, a certain area of wheat/corn would be planted annually despite any climate disasters, which may affect negatively the agricultural sector. Many of the interviewed SMEs mentioned this as one of the main factor, which forms their decision to plant, a certain area of wheat/corn annually.  Workforce shortages. Many agricultural companies face the problem of the absence of the local labor force. The plantation of cereals, including wheat/corn implies little labor force, being mainly mechanized activities. That is why more than 80% of interviewed agricultural companies, stated that they will continue with cereal plantations, and in long run are not willing to shift to a heavy workforce load activities, such as multiannual plantations.  Small amount of compensation. All the interviewed beneficiaries mentioned their gratitude for the received compensation but indicated that amount was too small. Economically speaking the compensation for corn accounted for about 4.5% of the actual loss, thus 94.5% of the loss remained at the expense of the farmer. The same situation was confirmed for wheat, where compensation amounted to approx. 3.2% of the actual loss of the farmer. Even though, the compensation undoubtedly helped the affected farmers, the amount was too small in order influence directly and indisputable on farmer’s decision-making process to continue planting corn and wheat and reduce slaughtering of livestock. F. TORs Increase in farmers’ incomes after project intervention Individual beneficiaries (physical entities) 35. Before detailed analyses of this indicator, the evaluation team filtered the database of the individual beneficiaries who received MEASP compensation. For instance, they did not consider individual beneficiaries with area planted of wheat/corn larger than 10 ha as individual sector. 36. There are beneficiaries who received compensation for areas larger than 100 ha, who should be clearly treated as economic activity, i.e. these beneficiaries should be treated as business units or economic entities and not individuals (physical entities). Table 6: Grouping of MEASP individuals, as beneficiaries with less than 10 ha of wheat/corn planted in 2012 Individuals by size Unit of measure Result Total Individuals compensated by MEASP number 57 744 Total compensation paid to individuals by MEASP mdl 29 776 107 Individuals with >10 ha number 549 Individuals with >10 ha compensation paid, mdl 4 141 683 Individuals with >10 ha share in compensation paid 14% 37. About 14% of total compensated individuals should be considered as business entities. 32 38. The impact analyses focused only on those beneficiaries who planted areas of wheat and corn combined, less than 10 ha. 39. As a result of interviews of the selected individual beneficiaries, the evaluation team found out that these beneficiaries increased their area of wheat by 58% and 8% of corn in 2014, compared to the plantations in 2012. Only 2% of surveyed declared that they reduced their wheat plantations, and about 15% of them reduced corn area plantations, which indicates a positive trend in recovering of these cereals. 40. As regard to the livestock, the survey identified that individual beneficiaries increased their livestock by 53%, years 2013-2014 compared to 2012. Only 7% of surveyed farmers stated that they reduced their livestock. 41. In terms of the income source, 66% of the interviewed sample mentioned corn/wheat as one of the main income source for their families, and 35% for livestock as a revenue line. 42. It was assessed, based on the results of the survey, that the average income per one adult member of the household, considering corn and wheat. Corn generates about 4943 mdl/annually (or 16% as additional income for salary) as income for one adult. Wheat generates about 749 mdl/annually per one adult (or 2% as additional income for salary). 43. Summarizing the MEAP impact, in terms of income generation and its increase, taking into consideration areas of wheat/corn increase, the evaluation team came up to the following outcomes: Table 7: Surveyed beneficiaries: Area of wheat/corn plantation, 2014 vs. 2012 Increased area of wheat 58% Increased area of corn 8% Percentage of surveyed who reduced wheat plantations 2% Percentage of surveyed who reduced corn plantations 15% Table 8: Surveyed beneficiaries: Livestock situation, 2014 vs. 2012 Increased livestock 53% Percentage of surveyed reduced livestock 7% Table 9: Surveyed beneficiaries: Source of income Percentage of surveyed consider corn/wheat as source of income 66% Percentage of surveyed consider livestock as source of income 35% Salaries as source of income 52% mdl/annual Income from corn 4 943 Income from wheat 749 Average salary in rural areas 31 200 Income from corn additional to salaries 16% Income from wheat additional to salaries 2% 33 Agricultural companies (economic entities) 44. The provision of cash to targeted companies within MEASP, can be qualified as emergency relief to compensate some of the loss of the previous harvested year (2012) and can’t be considered as source of finance to buy assets, i.e. means that would generate income in a medium-long run. In other words these compensations hardly can be considered as source of financing of asset generating income. On the other hand, increase in profitability is not the main indicator stipulated in the appraisal document, but as compensations as emergency relief had the objective to recover the area plantation, rather than increase companies’ income. 45. These payments were not used for procurement of production factors either, but rather used for procurement of raw material, i.e. consumables. Financially speaking, the MEASP compensations are to be recognized as part of companies’ analytical Profit and Loss account, at the “Non-operating section”. These are gains from other than primary agricultural activities. 46. On this subject, the evaluation team decided to assess the MEASP compensation as a late source of aid/relief, since the project implementation had a substantial delay of six month, source that was used to offset/compensate some of the current direct/indirect cost in wheat/corn production and not as a source of generating income. 47. All of surveyed agricultural companies stated that they used these cash in business activities, mainly paying post factum the expenses for 2013 autumn plantations costs, since the compensations were wired in November-December 2013. 48. The compensation accounted for a small part of the actual costs, economically speaking having small impact on the general companies’ profitability. As for wheat the compensations averagely reduced the production costs by 3.2%14 and for corn by 4.5%, which eventually will contribute to a higher profit in 2014. Taking into consideration the share of compensation in total consumables, MEASP agricultural companies may account a higher profit by about 5% in 2014. G. The level of farmers’ satisfaction with received compensations and provided awareness about project financial and technical support. 49. Based on the results of the survey, both, individual and agricultural companies declared their satisfaction with the project, but mentioning that the compensation value was too small to cover their basic production cost of cereals. 50. The awareness process succeeded to create equal access to information and MEASP opportunities. Individuals and agricultural companies had different source of information about the project activities. The survey showed the following breakdown: Table 10: Source of information about MEASP Individuals Agricultural companies Primaria 63% 14% 34 AIPA (central+regional offices) 1.50% 47% TV and mass media 24% 32% ACSA local offices 12% 7% 35 Annex 6. Stakeholder Workshop Report and Results The Stakeholder Workshop was held by CAPMU on January 19, 2015. CAPMU made an official presentation on project results during the CAPMU’s Supervisory Board meeting where all project stakeholders were invited. The participants were: Vasile Bumacov Chairman of CAPMU Steering Committee, Minister of Agriculture and Food Industry Gheorghe Gaberi Deputy Minister of Agriculture and Food Industry Veronica Josu Representative of the Ministry of Environment, CAPMU Steering Committee Nadejda Russu Representative of the Ministry of Finance, CAPMU Steering Committee Octavian Calmic Member of CAPMU Steering Committee, Ministry of Economy Emma Tabirta Member of CAPMU Steering Committee, Deputy Governor of the National Bank of Moldova Ion Gumene Representative of the State Chancellery, CAPMU Steering Committee Anatolie Placinta Member of CAPMU Steering Committee, member of the Republican Council of Producers’ Fruit Association Ion Sula Director, National Food Safety Agency Nicolae Ciubuc Deputy Director, Agency for Intervention and Payments for Agriculture Daniela Manole Ministry of Agriculture and Food Industry The event pictures are attached below. 36 37 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR 38 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders N/A 39 Annex 9. List of Supporting Documents Project Paper, Moldova Emergency Agriculture Support Project; Report No.: 73722-MD; Restructuring Project Paper dated March 20, 2014 No.:RES13720; Project Aide Memoirs and ISRs; CAPMU Project Progress Reports; Final Impact Assessment by the NGO “Alternative Internationale de Dezvoltare,” August 2014; Operational Review of the Moldova Emergency Agriculture Support Project by the NGO “Alternative Internationale de Dezvoltare,” August 2014; Country Assistance Strategy (FY14-FY17), World Bank, August 2013; Moldova Country Brief, April 2013; Moldova Public Expenditure Review, May 2013 Joint IDA-IMF Staff Advisory Note on the Poverty Reduction Strategy Paper (National Development Strategy: “Moldova 2020”), August 1, 2013 The Impact of Climate Change on Drylands: With Focus on West Africa by Ton Dietz, R. Ruben, A. Vehagen 2004; When AIDS Meets Poverty by De Waal, 1989 40 MAP 41