Kerala Climate Resilient Agri- Value Chain Modernization (KERA) Project

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The project aims to address the main challenges hindering Kerala’s agriculture food system transition as part of the State's continued structural transformation. It will focus on addressing three main themes: (i) promoting resilience to climate change and contributing to India's mitigation targets; (ii) enhancing smallholder commercialization for value addition; and (iii) strengthening the private sector's role within the food system, especially MSMEs. Project interventions in these three main areas will focus on: (i) supporting resilience and adaptation through strengthening the extension system to promote an improved package of practices of climate smart agricultural technologies relevant to specific agroecological conditions (including integrated pest management to respond to changing disease vectors), and delivering climate change mitigation results by focusing on reducing emissions in paddy production, primarily through the adoption of alternative wet and dry (AWD) production techniques, as well as measures to improve fertilizer efficiency and other opportunities to promote the decarbonization of value chains including energy efficient storage facilities; (ii) facilitating productive alliances between small-holder farmers (individually or more likely via farmer producer companies [FPCs] to promote value addition and diversification into higher-value crop production, providing on-farm or community-level value chain infrastructure such as storage facilities and equipment to promote value addition, and support to farmer organizations, etc; and (iii) providing training and partial grants to existing MSMEs as part of a coherent and targeted hand-holding service, support to relevant agri-tech start-ups, and support to food/ agri-parks of various sizes to facilitate the clustering of competitive agro-processing.Project activities entail a mix of technical assistance type of support in the form of promotion and demonstration of new technologies including high-yield varieties and diversification into high-value commodities, as well as small-scale irrigation practices to enhance access to water and efficient use. It may support the provision of input packages directly such as seeds and will provide technical assistance to link farmers with input markets. The project will work with established FPCs to help them increase their capacity for aggregation, value addition and business management. Project activities may entail physical upgrades/ improvements to localized and small-scale irrigation systems, facilities for hygiene and waste management, and existing aggregation facilities (local farmer markets), including potential construction of warehouses and cold storage depending on the need and feasibility, and without requiring land acquisition. The project will also promote productivity in smallholder agriculture, which is expected to intensify farming activity, which would increase water usage and may result in an increased (albeit more efficient) use of fertilizers and pesticides by farmers. However, the project will not finance the purchase of inputs such as these. The project will provide technical assistance to existing agriculture and food sector MSMEs and small-scale agri parks, and also support an initial feasibility study for a new large-scale agri-park. Technical assistance to small-scale agri parks may also entail small-scale and localized physical upgrades/ improvements and construction on existing agri-park parcels. The project will also leverage commercial financing for plantations and smallholders, through the establishment of a Partial Risk Guarantee. The project will also support the ongoing reconfiguration of the DoA’s institutional structure and help strengthen coordination among key program and service delivery agencies with a goal of delivering agriculture support services effectively and efficiently. Project activities will primarily entail capacity building including procurement and use of digital technologies for advisory information dissemination as well as equipment and goods to facilitate mobility of extension workers to reach remote areas. Additionally, the project will also support development of new mechanisms for land consolidation through increased collective decision-making supported by policy and institutional measures to support land leasing.