IRRIGATED AGRICULTURE - WATER-TO-MARKET

Implementing entities

During the meeting of MCA-Armenia Governing Council, conducted on October 31, 2006 on the basis of tender results the consortium of "ACDI/VOCA" (USA), "ARCADIS Euroconsult" (Holland) and "VISTAA Plus" (Consultant) was approved for the implementation of Water to Market component of the Irrigated Agriculture Project. The assignment implementation cost is USD 18,477.455 million which will be implemented by the Consultant during 56 months.

The objective of Water-to-Market (WTM) activity is to accelerate the transition to more profitable agricultural production in the areas of irrigation rehabilitation by introducing and encouraging best practices in irrigated agriculture, fostering the adoption of improved water management techniques, the shift and/or expansion to higher value crops and livestock, strengthening the post-harvest and processing enterprises linking producers to their markets, both domestic and international, and strengthening the capacity of credit providers to fund viable proposals in production and post-harvest activities.

Under the WTM activity 60,000 rural farmers will receive training and observe demonstrations in on-farm water management, some 30,000 of them will benefit from training and demonstrations in higher-value farming activities introduced under the Project and 300 farmer groups and small and medium enterprises (SMEs) (15,000 farmers indirectly) will be more effective in assembling, processing and marketing agricultural production by virtue of the training, technical assistance and capital they receive under the Project, leading to significant job creation. The direct impact of WTM activity will be employment generation and increased incomes among farms and rural businesses and the synergy between rural infrastructure development and agribusiness development will result in a significant, sustainable reduction in rural poverty. The final targets (to be completed by Compact-end) for the WTM Activity are the critical deliverables of this contract and are summarized below.

Summary of Training and Adoption Targets

On-farm water management training	60,000 farmers
Higher value agriculture training	30,000 farmers
Post-harvest enterprises technical assistance	300 enterprises
Bank loans provided to project beneficiaries and related businesses	USD 8.5 million
Adoption of improved farm water management	38,350 farmers
Hectares converted to high value agriculture	7,845 hectares
Increase in real income from agriculture	5%

Scope of Work

Implementing Entity Agreement with "Rural Finance Facility Project Implementation Unit" State Institution

On October 16, 2007 an Implementing Entity Agreement with "Rural Finance Facility Project Implementation Unit" State Institution (SI) was signed to facilitate the implementation and monitoring of the Water-to-Market activity credit program. "Rural Finance Facility Project Implementation Unit" SI was established by the Government of Armenia to implement credit programs directed to development of agriculture and rural credits. The main objective of credit program is provision of credit resources to beneficiaries of Water-to-Market activity of the program to enlarge agricultural production and introduce effective technologies.

According to agreement, "Rural Finance Facility Project Implementation Unit" SI should carry out:

- Monitoring of selection criteria of credit organizations and banks participants to assure their continuous participation in the program,
- Monitoring of adequacy to objectives and requirements of credit program of the bids, provided by credit organizations and banks participants,
- Submission of recommendations to the MCA-Armenia on providing credit resources to banks and credit organizations,
- Continuous monitoring of credits provided,
- Registration and accounting of resources, provided within the frames of the program.

The agreement is signed for one year, but the MCA-Armenia has an opportunity to extend it three times with one year duration. During the first year it is planned to pay 37,772.400 RA drams to "Rural Finance Facility Project Implementation Unit" SI and 24,386.400 RA drams per each year will be paid during coming years.