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«APRIL 2014 This publication was produced for review by the United States Agency for International Development. It was prepared by DAI. CONTENTS ...»

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USAID/LEBANON

LEBANON INDUSTRY

VALUE CHAIN

DEVELOPMENT (LIVCD)

PROJECT

LIVCD QUARTERLY PROGRESS REPORT - YEAR 2, QUARTER 2

JANUARY 1ST TO MARCH 31ST, 2014 – Q2

APRIL 2014

This publication was produced for review by the United States Agency for International

Development. It was prepared by DAI.

CONTENTS

CONTENTS

INTRODUCTION

PROGRAM OVERVIEW AND OBJECTIVES

OVERVIEW OF QUARTERLY REPORT

HIGHLIGHTS AND MAIN RESULTS THIS QUARTER

1.0 TABLE OF WORKPLAN ACTIVITY STATUS UPDATES – IMPLEMENTATION OF

INTERVENTIONS IN THE VALUE CHAINS

GRAPES VALUE CHAIN

OLIVE OIL VALUE CHAIN

POME FRUIT

PROCESSED FOODS

RURAL BASKET: HONEY

RURAL BASKET VALUE CHAIN

RURAL TOURISM

STONE FRUITS: AVOCADOS

STONE FRUITS: CHERRIES

FLORICULTURE

IMPLEMENTATION OF WORK PLAN ACTIVITIES IN CROSS CUTTING

COMPONENTS

ACCESS TO FINANCE

CAPACITY BUILDING

COMMUNICATIONS

MARKETING INTELLIGENCE

MONITORING AND EVALUATION

ENVIRONMENTAL COMPLIANCE AND MANAGEMENT

2.0 PERFORMANCE INDICATOR RESULTS

3.0 RECAP CHART OF CO-INVESTMENTS AND GRANTSERROR! BOOKMARK NOT DEFINED.

4.0 STAFF AND ORGANIZATION

–  –  –

PROGRAM OVERVIEW AND OBJECTIVES

The LIVCD Project aims to increase the competitiveness of eight selected value chains. Activities will expand the number of Micro, Small, and Medium Enterprises (MSMEs) that can compete in selected markets; improve linkages between those firms and other actors throughout the value chain; increase the gross value of products and services in local and export markets, and expand exports. The net effect of these activities will contribute to improved economic stability and food security for Lebanon, especially in rural areas, and decrease migration from rural to urban areas. Building on recent support to the rural sector through agricultural and other related economic development projects, LIVCD partners with local private sector companies to work in eight selected value chains that have the potential to compete in regional and international markets. It is expected that by the end of the project

in September 2017, as a result of project interventions, the following results will be achieved:

A minimum of seven fully functioning, competitive value chains.

 An increase of at least 700 businesses or micro-enterprises benefiting from horizontal and vertical  linkages.

At least 12,000 small and medium commercial growers benefiting from the dissemination of improved  production and post-harvest technologies.

At least 30 new export markets, niche markets, or distribution channels for selected value chain  products.

An annual increase of at least 10 percent in the volume and value of exported agricultural products of  selected value chains for each value chain. If, for some value chains actual and potential export is limited, displacing imports with domestic production may be considered.

OVERVIEW OF QUARTERLY REPORT

This sixth quarterly report documents project activities from January 1st to March 31st, 2014.

Section One provides an overview of the implementation progress in each of the selected value chains and cross-cutting components based on the approved work plan activities for: Floriculture, Grapes, Olive Oil, Pome Fruits, Processed Foods, Rural Basket including Honey, Rural Tourism, and Stone Fruits.

LIVCD also conducted several cross-cutting value chain activities, related to Capacity Building, Access to Finance, Communications, and Market Intelligence.

Section Two provides a progress overview of LIVCD project results for the Performance Indicators reported quarterly, per the approved LIVCD M&E Plan.

Section Three summarizes administrative operations including recruitment and major procurements, as well as key deliverables shared with USAID.

Section Four summarizes grants and co-investments.

HIGHLIGHTS AND MAIN RESULTS THIS QUARTER

LIVCD reached a total of 486 MSMEs this quarter, each of whom benefited from business development services including access to new technologies, training and equipment and other assets to improve productivity, and assistance to improve products in order to reach export markets. These gains were 4 enhanced by linkage facilitation, bringing together value chain actors with high quality products with those who have access to markets. Finally, LIVCD supported access to finance, through co-investments and grants, as well as by introducing financial services from banks and MFIs and assisting farmers and MSMEs in preparing loan applications.

Major highlights and results are noted below, with details of each intervention provided in the detailed status updates in Section 1.0.





Increasing Access to Markets: This quarter, LIVCD focused on developing and disseminating marketing intelligence relevant to value chain actors to help them make investment decisions to reach new markets. For example, in the avocado, apple, and grape value chains, LIVCD identified the varieties demanded in targeted export markets and disseminated this information to producers to assist them in selecting new varieties for upgrading orchards. In the processed foods value chain, LIVCD conducted a comprehensive marketing study of the GCC market for processed foods, which the consultant developed in conjunction with members of SLFI, to ensure the information met food processors’ needs.

In addition, LIVCD supported a study of the domestic market for health and specialty products that value chain actors in the rural basket and honey and pome fruit value chains will use to identify opportunities to sell processed products into this channel.

LIVCD expects that the value chain actors receiving this marketing intelligence will use it to improve their products to better meet market preferences and requirements, and make new linkages to increase their sales and exports. LIVCD is tracking results in terms of increased exports and incremental sales in the domestic market, and will report them in the annual report in October 2014.

Increasing Productivity: LIVCD initiated several training programs this quarter to improve production of value chain products in avocado, cherry, pome fruit, grapes, honey, and rural tourism value chains. The objective of these training courses is to introduce new technologies and management practices to help participants reduce their costs of production or increase quality of production to better meet market demand and in many cases accomplish both goals.

A total of 480 individuals participated in training activities this quarter. LIVCD expects that the participants will apply the new technologies and management practices in their enterprises. Indeed, already six of the avocado farmers who attended the training session on grafting have applied the grafting technique on their own orchards. LIVCD will follow up and verify additional application of new technologies and management practices learned in the different training workshops in the next quarter.

The specific topics of the training programs conducted this quarter are elaborated in the respective value chain updates below.

Increasing Business Linkages: LIVCD supported a total of 73 MSMEs to make new linkages with other actors in the value chain. The majority of these successful linkages were between egg producers, whom LIVCD supported to access new laying chickens and other inputs, and local shops who sold their eggs. This linkage was essential in order for the egg producers to have a marketing outlet for their eggs and increase sales and income from the investment in chickens and other inputs.

Constraints to lending and investment reduced: LIVCD formed 30 Public Private Partnerships (PPPs) this quarter. These PPPs support co-investments in the value chains to reduce constraints to lending, and support investments to increase productivity and access to markets, with the overall 5 objective of creating fully functioning, competitive value chains to increase incomes for the rural

population including MSMEs. New PPPs this quarter include:

Rural Tourism development in Ehmej, with the Association for Ehmej Development;

  Honey production co-investment for hives and honey processing services, with APIS;

 Grapes co-investment in upgrading orchards with new varieties to achieve export quality (two Public Private Alliances approved and signed; each PPA comprises PPPs with a Lebanese grape exporter with existing export markets, and with large farmers to upgrade their orchards and train smaller farmers, for a total of 24 PPPs);

 Demonstration plots for apples and cherries, through Development Agreements with large producers (4 PPPs).

Additionally, LIVCD supported 122 MSMEs to apply for value chain finance. Most of these attended training sessions and workshops at which LIVCD or a financial partner- such as BLC bank - presented the available financial products that are appropriate for each value chain actor.

1.0 TABLE OF WORKPLAN ACTIVITY STATUS UPDATES –

IMPLEMENTATION OF INTERVENTIONS IN THE VALUE CHAINS

The following section provides a status update of the key activities and achievements for each of the selected value chains: Grapes, Olive Oil, Pome Fruits, Stone Fruits, Processed Foods, Rural Basket, Rural Basket- Honey, Rural Tourism, and Floriculture, as well as the four cross-cutting components of Access to Finance, Institutional Capacity Building, Communications, and Market Intelligence.

6

GRAPES VALUE CHAIN

Axis 1 Determine high value target markets, varieties, market requirements, and support farmers and exporters in entering these markets Activity 1.1 Determine appropriate target markets & Activity 1.2 Determine appropriate varieties for the selected target markets that can successfully be grown in Lebanon LIVCD identified the main target markets and the varieties demanded in those markets and applied the relevant marketing intelligence to prepare training materials and design co-investments to increase production of grapes meeting the requirements (See Activity 1.3 “Stimulating Investment in New Variety Grape Orchards Demanded in High Value Markets through a Public Private Alliance.”) Micro-Climate Assessment for Grape Varieties: LIVCD visited 10 grape production regions and identified appropriate microclimates for potential new varieties, including the North Bekaa and Middle Bekaa. These results were used to prepare co-investments described in Activity 1.3 below.

Activity 1.3 Collaborate with the private sector and create PPPs to increase availability of varieties that have demand in high value markets in the appropriate regions Co-Investment “Stimulating Investment in New Variety Grape Orchards Demanded in High Value Markets through a Public Private Alliance”: LIVCD received USAID approval for three co-investments and Public Private Alliances and signed two agreements, one with Middle East Business Company and one with Jaber Trading Company, which are exporters with existing markets for grapes in the targeted export markets. These two PPAs extend to 27 farmers who will co-invest to establish 27 ha of grape orchards with new varieties and practices; the co-investments will enable farmers to access planting material of new varieties, as well as providing posts, wires, irrigation systems, and other equipment. An additional 135 smaller farmers will benefit from production training to improve the quality of current variety grapes and increase potential linkages with aggregators and exporters. LIVCD began implementing these two PPAs this quarter, including procurement and distribution of materials (including wires, trellises, posts, stands, and irrigation pipes) to co-investing farmers. LIVCD will sign the third grant with Medigardens in June 2014. This PPA will reach 18 co-investing farmers to establish18 ha of new grape plantations; an additional 90 smaller farmers will benefit from production training.

Technical Supervision for Co-Investments: LIVCD will support technical supervision to farmers under the co-investment. LIVCD is finalizing the contract with a vendor.

The co-investing farmers will benefit from oversight while they establish new vineyards, training in the field, and seminars on crop management. In addition to the technical supervision for co-investing grape farmers under the three PPAs (including the PPA with Medigardens), the technical supervision company will provide trainings and seminars to over 200 additional farmers to improve production techniques to meet export market quality requirements.

Introductory Seminar and Access to Finance: LIVCD held an introductory seminar to highlight potential investments in grape production including new varieties demanded in export markets, and improved orchard infrastructure to increase grape quality. The seminar also included a presentation by BLC Bank for the “Tree Loan for Farmers.” Many of the farmers co-investing with LIVCD to establish new orchards are interested in the financial products presented. LIVCD facilitated contact between three farmers and BLC bank.



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