Second Agricultural Commercialization and Resilience Enhancement Project

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The Second Agricultural Commercialization and Resilience Enhancement Project (AGCOM2.0) will be a multi-sectorial, country-wideoperation with costs estimated at US$250 million over six years. AGCOM2.0 will bring together agriculture, water, lands, industryand trade, as well as other sectors. Project interventions will cover the entire country, building on the success of AGCOM(1.0)(P158434). The proposed interventions are designed to have short-term effects on sales through inclusive value chains, and medium-to long-term impacts on food system resilience through access to markets and diversification.AGCOM2.0 will target several typesof beneficiaries and narrow the gender gap in the agriculture sector. Direct beneficiaries will include small-scale farmers whojoin (or will join) commercial organizations, such as cooperatives, as well as farmer organizations and entrepreneurs engaged invalue addition. AGCOM2.0 will effectively foster the participation of women and youth, reducing unequal access to productive assetsand cash crops. The proposed interventions are clustered in five components. Component 1: Developing inclusive valuechainsComponent 1 will scale up and upgrade the inclusive value chain approach that has been successfully implemented underAGCOM(1.0), building and strengthening farmer organizations, as well as supporting productive alliances. Building andstrengthening farmer organizations: As in AGCOM(1.0), AGCOM2.0 will reach out to individual smallholder farmers and encourage themto mobilize and work collectively by forming capable organizations. The project will promote the formation of cooperatives.AGCOM2.0 will also continue to develop existing organizations that have been awarded matching grants and satisfactorily carried outproductive alliance subprojects under AGCOM(1.0). The goal is to assist the organizations in becoming viable, sustainablebusinesses that are able to leverage more investments and reach larger markets. Drawing upon the results of the pilot carried outthrough AGCOM(1.0), AGCOM2.0 will continue the demarcation, adjudication and registration of customary land parcels, reaching anestimated 30,000 smallholder farmers that are members of organizations. Supporting productive alliances: AGCOM2.0 will scale upthe matching grants scheme that was established under AGCOM(1.0) to promote commercial partnerships between farmer organizationsand off-takers (buyers such as agri-processors, food manufacturers, and traders). AGCOM(1.0) has supported over 200 productivealliance subprojects and benefited 40,000 smallholder farmers through calls for proposals. AGCOM(1.0) has contributed todiversifying the agricultural sector by promoting sales in 20 value chains, including dairy, soya, rice, tea, and honey. For eachof the new generation of subprojects under AGCOM2.0, the farmers organizations will receive grants and follow through with plannedactivities to meet the off-takers’ demands. The funds will serve to finance capital investments such as machinery and warehouses,technical assistance, environmental and social mitigation measures, and investments to enhance climate resilience, including theadoption of climate-smart agriculture techniques on farm and other risk-management approaches. Leveraging the lessons learned andthe improved implementation capacity within the government, AGCOM2.0 will finance 500 productive alliance subprojects, reaching100,000 farmers. To complement these efforts, AGCOM2.0 will pilot a second round of matching grants to AGCOM(1.0)-supportedorganizations as well as a new type of grants to small and medium-size enterprises that as off-takers seek to procure the produceof farmer organizations under productive alliances. Component 2: Improving public infrastructure AGCOM2.0 will scale up thelast-mile infrastructure approach introduced under AGCOM(1.0) and finance the construction of medium-size to large scale irrigationschemes and the management of their catchment areas. Last-mile infrastructure subprojects: AGCOM2.0 will scale up investments inlast-mile infrastructure, building on AGCOM(1.0)’s bottom-up approach. Investments to be identified by the farmer organizationswill include the rehabilitation of feeder roads, the rehabilitation of small irrigation schemes, the availabilty of water, and thedelivery of electricity. By the end of the project, an estimated 30 last-mile infrastructure subprojects will have been completedand 100 organizations will have benefitted. Medium-size to large scale irrigation schemes and catchment management: AGCOM2.0will also finance the expansion or construction of medium-size to large scale irrigation schemes in the central and northernregions. Three possible irrigation schemes have been identified to provide new irrigation services to approximately 3,000 ha: (i)Bwanje Valley in Dedza district: 1,400 ha through the expansion of an existing weir as headwork; (ii) Lembani in Ntcheu district:1,024 ha through the construction of a weir as headwork; and (iii) Mwenilondo scheme in Karonga district: 575 ha through theconstruction of a dam as headwork. For each scheme, the subproject will finance the infrastructure work and the management of thecatchment areas with a focus on landscape conservation and restoration. In association with the schemes, farmers will be mobilizedto build viable commercial organizations and connect with profitable value chains, as per the approach outlined in Component1.Component 3: Strengthening public service delivery and policy environment Component 3 will include four clusters ofactivities: (i) research, development and innovation subprojects; (ii) the development and upgrade of digital platforms such as thecooperative register; (iii) the construction, rehabilitation and upgrade of strategic public facilities such as the agricultureresidential training centers; and (iv) the preparation and implementation of strategic policy reforms such as the reform forcontract farming.Component 4: Project coordination and management Component 4 will finance the costs of project management andcross-cutting functions, including monitoring and evaluation, finance management, procurement, environmental management, and socialmanagement. This component will cover the costs of the collection, storage, administration and processing of data, and willcontinue to promote the citizen engagement and social accountability mechanism established under AGCOM(1.0). Component 5Contingent emergency response componentIn accordance with OP/BP 10.00, this zero‐budget component establishes a disaster recoverycontingency fund that may be triggered in the event of an eligible natural or human‐induced crisis or emergency.