Ex-Ante Evaluation (for Japanese ODA Loan)
South Asia Division 1, South Asia Department
Japan International Cooperation Agency
1. Name of the ProjectCountry: India
Project: Uttarakhand Integrated Horticulture Development Project
Loan Agreement: March 31, 2022
2. Background and Necessity of the Project(1)

Current State and Issues of the Agricultural Sector Development in India /the state of Uttarakhand

India has experienced stable economic development in recent years. However,as of 2019, approximately 140 million people, equivalent to 10.7% of the total
population, still live in poverty, which is defined as living on less than US$1.90 per
day (Asian Development Bank Poverty Data: India 2019). The average monthly
income of farmers is estimated to be 8,931 rupees (about 14,000 Yen), less than
30% of the non-farm income level (NLI Research Institute, 2020). Given thissituation, the National Institution for Transforming India (NITI Aayog) formulated
a strategy document in the agricultural and allied sector, Doubling Farmer's
Income (2017). Aiming to double the farm household income from FY2015 to
FY2022, the strategy cites productivity improvement and promotion ofdiversification of livelihood means through reinforcement of cultivation ofvalue-added crops such as vegetables and fruits, development of irrigation
infrastructures, improvement of seeds and fertilizers etc. The strategy sets as its
goal income, not output, with its policy focused on efforts to improve farmers'
income and the economic and social development of rural areas.
The state of Uttarakhand (hereinafter referred to as "UK state") is located in the
Himalayan foothills of northern India and has a population of approximately 10
million (according to the Census 2011). About 20% of the state's land area is
occupied by plains with a tropical climate, and about 80% by hills and mountains
with a temperate climate. In UK state, 39% of the total population and 55% of therural population are engaged in the primary sector of industry, including
agriculture, and about 90% of farmer households are smallholder farmers with 2
ha or less of cultivated land (UK State Human Development Report 2018). It also
focuses on horticulture development that takes advantage of the cool climatecharacteristic of mountainous regions, and horticulture sector is a major industry
in UK state, which is responsible for about 30% of the gross domestic product1

(GDP) accounted by agriculture (Horticulture & Floriculture Sector Profile 2019).
In addition, UK state emphasizes the cultivation of profitable crops such as fruit
trees, vegetables and spices. In terms of fruit trees, temperate fruit such asapples, pears, and peaches are grown in the highlands, while tropical fruit trees
such as mangoes are grown in the lowlands where temperatures are relatively
high. In India, there are limited number of states in which temperate fruit treesthat require relatively cool growing conditions can be produced. UK state has ahigh potential for horticulture development, including apples (3rd highest in the
country in terms of production), pears (1 st in the country), and peaches (1st in
the country). The major areas of production of these fruits are the four districts forwhich the Uttarakhand Integrated Horticulture Development Project (hereinafterreferred to as “the Project”) was designed, including Uttarkashi district, Tehri
Garhwal district, Pithoragarh district, and Nainital district, and it is expected tohave a ripple effect as a model project for other districts (Horticulture &Floriculture Sector Profile 2019). As for vegetables, the mountainous areas aremajor producers of peas and potatoes by making use of the elevation differencesof the mountainous region. They are also a major producer of turmeric, ginger
and other spice crops.
Horticulture sector in UK state covers a wide variety of products. Considering
this fact, if UK state can enhance the added value especially of temperate fruit
trees and vegetables, for which they have a comparative advantage, and perform
highly profitable transactions in the local markets in the same state as well as inlarge consumption markets such as Delhi, thorticulture sector has the potential to
become an leading industry that drives the state's economy and increases
farmers' incomes. In addition, in this country where demand for fruits andvegetables is increasing mainly due to the growing urban middle class, if a supply
chain for horticultural crops can be established through the Project, it could be agood example for other mountain states in India and other similarly
disadvantaged areas. On the other hand, they are not currently able to fully utilize
their potential. There are three reasons for this.
First, productivity of high value-added crops such as vegetables and fruit trees
is low, which prevents farmers from stably supplying such crops. For example,
UK state ranks 22nd out of 28 Indian states in the productivity of tomatoes, which
are cited as a case example of local vegetables of the state. And the productivityof apples, cited as a case example of the state's fruit tree, is 3rd among the 28
Indian states (about 2.3 ton/ha), far below the top-ranking Jammu and Kashmir
2states (about 11.4 ton/ha) (Horticulture Statistics, Department of Agriculture &Farmers Welfare, 2017-18). There are multiple factors behind this. In particular,
the fact that farmers are not sufficiently versed in horticultural production
technologies, and farming extension services, such as technical guidance byextension officers, are not thoroughly provided. In addition, production
infrastructures including drip irrigation have not yet been developed, and accessto agricultural inputs is limited. Their productivity is still low, which fails to allow
farmers to realize enough production to satisfy the market distribution in major
consumption areas such as Delhi.
Second, the impact of climate change has degraded the quality of horticultural
crops in UK state. Among other things, it has been confirmed that global warming
are causing changes in suitable cultivation areas for fruit cultivation, quality
degradation such as poor coloration, and crop failure. Unlike annual crops suchas rice and vegetables, once fruit trees are planted, they remain in production forseveral decades, making it difficult to carry out short-term measures such as
adjusting the seeding timing or changing varieties. Therefore, fruit tree cultivationis understood to be more susceptible to climate change than other agricultural
products. Hence, it is necessary to evaluate the impacts of climate change andtake measures at an early date to cope with it including development of an
appropriate technology or variety improvement.
Third, a horticulture supply chain that can maintain the quality of horticultural
crops and allow delivery to the market has not yet been sufficiently developed.
Specifically, there is a lack of sufficient infrastructure to maintain freshness, suchas warehouses and primary processing facilities, and distribution infrastructure,such as storage facilities and food processing and treatment facilities.
Furthermore, the technology for post-harvest management by farmers to prevent
quality loss of products before reaching the market is insufficient.
In addition to the above, it is necessary to further realize farming rationalization
including negotiation and setting of crop prices and to establish a system to
implement marketing strategies that will increase profitability. To be specific,
since many farmers do not belong to organizations such as Farmers Producers
Organizations (hereinafter referred to as “FPOs”) and are small-scale farmers,
they cannot stably produce their agricultural products in quantities sufficient torealize wholesaling to the market on their own and therefore fail to enjoy thebenefits of scale of economy. As a result, farmers' bargaining power towards
market participants remains poor. In addition, even though farmers have3

organized their own FPOs, they have not yet come up with effective brandstrategies to enhance the attractiveness of crops. Therefore, even if the above
three issues are resolved, it is likely that farmers will not be able to earn sufficient
income through sales of horticulture produce to the market. It is therefore
necessary to organize FPOs, strengthen the capacity of such association
member farmers, organize the implementing organizations that support such
farmers, enhance the capacity of such organizations, and develop marketingstrategies that will contribute to improving their bargaining power.
The Project is to promote profitable horticulture and improve farmer’s income
by infrastructure development and capacity development for production,
processing and marketing of horticultural crops. In this sense, the Project istherefore positioned as an important scheme in the agricultural sector of India.
(2)
Japan and JICA's Agriculture Sector/Policy and the Positioning of the
Project
The Country Assistance Policy for India (March 2016) formulated by theGovernment of Japanstates “supporting sustainable and inclusive growth” as apriority area Also, the JICA Country Analysis Paper for India (March 2018)states “Inclusive Growth in rural area” as an issue, which mentions the increaseof farmer’s income through the enhancement of agricultural productivity.
Accordingly, the Project is consistent with these policies and analyses.
Furthermore, the Project will contribute to the achievement of Goal 1 (NoPoverty), Goal 2 (Zero Hunger), Goal 8 (Decent Work and Economic Growth),
and Goal 13 (Climate Action) of the SDGs.
(3)
Other Donors' Activities
The World Bank financed the Uttarakhand Decentralized Watershed
Development II Project (2014-2021) in the UK state to increase the productivity ofrainfed agriculture for food grains and vegetables. The International Fund for
Agricultural Development (IFAD) has financed the Integrated Livelihood Support
Project (ILSP) (2013-2021), which provides livelihood support to farmers, andplans to promote marketing by small-scale farmers through a new loan project,
Rural Enterprise Acceleration Project (REAP). While it is confirmed that there isno overlap with the Project in any of these project schemes, there are various
synergistic effects in marketing promotion and others, and so we intend to consult,coordinate and collaborate with them to take advantage of such effects.
3. Project Description(1)

Project Objective
4

The project aims to promote profitable horticulture and improve farmer’s
income by infrastructure development and capacity development for production,
processing and marketing of horticulture crops, thereby contributing to economic
and social development in Uttarakhand state(2)
Project Site/Target Area
Uttarakashi district (Population: approx. 330,000 (2011)), Tehri Garhwal district(Population: approx. 620,000 (2011)), Pithoragarh district (Population: approx.
480,000 (2011)), Nainital district (Population: approx. 960,000 (2011)),
Uttarakhand state, northern India(3)
Project Components
1)

Support for production of horticultural crops (development of small-scale
irrigation facilities (approx. 2,090 ha); formulation and implementation ofclimate change adaptation measures including assessment of climatechange impacts and implementation of measures, development ofappropriate technologies and variety improvement; strengthening of
farmers' production systems including training for farm management
planning; implementation of activities to livelihood improvement activities
including provision of equipment and training in mushroom cultivation;
etc.)

2)

3)

Support for building supply chains (support for establishment andcapacity enhancement of FPOs including support for business planningby experts, support for building a joint shipping system, etc.;
development of collection, storage, and processing facilities,
development of sales facilities, and promotion of private sector
partnerships including implementation of pilot projects for matchingprivate sector companies and FPOs; etc.)
Strengthening of the organizational structure of the state government(strengthening of the function of the Project Management Unit ("PMU")
including provision of training and equipment; strengthening of the farmmanagement expansion system including training; formulation andimplementation of marketing strategies including support by experts inthe development of such strategies; etc.)

4)Consulting services (detailed design support; bidding assistance;
construction supervision; support for organizational structureenhancement; implementation of various surveys such as market
research; support for promotion of private-sector collaboration including
5

support for implementation of pilot projects; support for environmental
and social considerations; etc.)
The subprojects to be implemented under components 1) through 3)
above will be selected according to the following criteria: whether they
contribute to the project objectives (Promote profitable horticulture
and improve farmer’s income), whether or not they overlap support
from the Government of India or other donors, and whether anoperation and maintenance management system will be established.
(4)

Estimated Project Cost

8,048 million Yen (Japanese ODA loan: 6,401 million Yen)
(5)
Schedule
March 2022 to December 2028 (82 months in total). The Project shall becompleted with the completion of all activities (December 2028).
(6)
1)
2)
3)

Project Implementation Structure
Borrower: The President of India
Guarantor: None
Executing Agency: Department of Horticulture and Food
Processing(DHFP), Government of Uttarakhand

4)
Operation and Maintenance System: Same as above(7)
Collaboration and Sharing of Roles with Other Donors
1) Japan's Activity:[1] In the neighboring state of Himachal Pradesh, ODA Loan Project"Himachal Pradesh Crop Diversification Promotion Project" (Loan
Agreement signed in FY2011) created a model for shifting from grain tovegetable cultivation. “Himachal Pradesh Crop Diversification Promotion
Project (Phase 2)” is currently being implemented (Loan Agreement
signed in FY2020), and the good practices and lessons learned from theabove projects will be utilized in the Project through the participation of the
Project's Executing Agency in the workshops to be held as part of the
Project in Himachal Pradesh.
[2] An ODA Loan Project “Uttarakhand Forest Resource Management
Project” (Loan Agreement signed in FY2014) provides support for thecultivation and sale of horticultural crops for livelihood improvement.
Lessons learned in farmer organizations and marketing support from thisproject will be used in the Project.
6[3] Aiming to improve farmers' income through the formulation ofmarket-oriented farming and marketing plans and the reinforcement offarmers' ownership of farming operations, the above project plans to
introduce the Smallholder Horticulture Empowerment & Promotion (SHEP)
approach (an initiative aimed at improving farmers' horticultural income bychanging the attitudes of farmers from "make crops and sell them" to"make crops to sell them" and improving their farming and cultivation skills)
by fostering the executing agency staff through SHEP training.
2) Other Donors' Activity: None in particular

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(8)

Environmental and Social Consideration/Cross-Sectoral Issues/Gender

Category
1)
Environmental and Social Consideration[1] Category: FI[2] Reason for Categorization: Sub-projects cannot be specified prior to
JICA's approval for financing, and they may have environmental impacts
under the JICA Guidelines for Environmental and Social Considerations(April, 2010).
[3] Other/Monitoring: Under the Project, the executing agency, with theassistance of a yen loan consultant hired under the yen loan, will categorize
the subprojects based on India's domestic legal system and the JICA
Guidelines for Environmental and Social Considerations , and necessary
measures will be taken for the relevant category. Note that subprojects do notinclude Category A projects.
2)

Cross-Sectoral Issues[1] Climate Change: The Project will contribute to climate change adaptation
measures because it is expected to reduce the risk of negative impacts due
to climate change by mainly promoting water-saving agriculture through theintroduction of drip irrigation facilities, developing and disseminating
appropriate technologies for the impacts of fruit tree cultivation, developing
and disseminating adapted varieties, and diversifying to other crops.
[2] Poverty Measures/Poverty Considerations: The Project targets mainly
small and marginal farmers including the poor. Specific effects on poverty
reduction will be confirmed through baseline and impact surveys to be
conducted after the start of the Project.
[3] Prevention of AIDS/HIV and Other Infectious Diseases: As part of theeffort to prevent the spread of the novel coronavirus infection, a list ofmeasures (36 in total) to be implemented by the executing agency during theformation and implementation of the project was agreed upon at the time ofappraisal. This agreement has clarified relevant activities including
development of epidemic prevention materials and equipment, improvementof the working environment including the code of conduct, work supervision,and awareness raising. Appropriate monitoring with a constant focus on theimpact of the novel coronavirus will be made by receiving quarterly reports on
the status of implementation of these items from the executing agency inorder to allow the executing agency to take flexible and suitable actions. In
8addition, HIV/AIDS measures for construction workers will be implemented
by construction contractors during the construction phase.
3) Gender Category■ Gender Informed (Significant) (Gender activity integration project)[Details of Activities/Reason for Categorization] Based on the results of
information collection and issue analysis on gender, which will be conducted aspart of the baseline survey during the project implementation phase, the Projectplans to establish self-help groups led by women to improve the social status of
women so as to allow easy incorporation of women's opinions into the plan.
The Project also plans to increase the added value of horticultural crops
through processing and other activities to improve livelihoods.
(9)
Other Important Issues: None in particular
4. Target Outcomes(1) Quantitative Effects
Outcomes (Operational and Effect Indicators)
Baseline(Actual value in
2021)

Indicator

Target (2033)[5 years after
project
completion] (Note1)

Farm income in the Project area

(Note 2)

(Note 3)

Newly irrigated area (ha)(Note 2)

2,090

N/A

3,200

Yield per planted area (apple) (ton/ha)

2.0

8.2

Yield per planted area (peach) (ton/ha)

9.6

14.4

Yield per planted area (pea) (ton/ha)

7.1

12.0

Yield per planted area (potato) (ton/ha)

15.2

22.3

Yield per planted area (tomato) (ton/ha)

8.5

25.0

(Note 2)

(Note 3)

No. of target farm households belonging
to FPOs

Horticultural crop sales results(Note 1) The fruit trees require a certain amount of time from sowing toharvesting. Therefore, the target year is set at five years after Projectcompletion, and an ex-post evaluation will be conducted in that same
year.
(Note 2) The baseline values will be based on the results of a baseline study to9

be conducted after the project starts.
(Note 3) Target values will be set and reviewed through detailed activity plans
and baseline studies conducted by the PMU in the early phases of the
Project.
(2) Qualitative Effects
Adaptation to climate change, diversification of livelihoods, improvement of
women's social and economic status, transportation efficiency of horticultural
crops, etc.
(3) Internal Rate of Return
Based on the following assumptions, the economic internal rate of return(EIRR) for the Project is 10.5%. Since the Project does not aim to generatebusiness income, the financial internal rate of return (FIRR) is not calculated.
[EIRR]
Cost: Project costs, operation and maintenance costs (both excluding taxes)
Benefit: Benefits from the promotion of horticultural crops (difference in revenue
between the case of implementation and no implementation of the project)
Project Life: 30 years
5. External Factors and Risk Control(1)

Preconditions: N/A(2)

External Factors: No extreme deterioration of the security in the projecttarget area

6. Lessons Learned from Past Projects
The lessons learned from the agricultural sector projects in ODA Loan Projects
to India are that in some cases, due to limited staffing for agricultural expansion,
the target farmers were not given sufficient extension services.
This Project plans to use extension officers under the management of the
DHFP to provide technical guidance on the production of horticultural crops tofarmers. It is already agreed with the UK state government through the appraisalthat a sufficient number of extension officers be made available and that they beappropriately deployed. In addition, the status of farming guidance will bemonitored at the project implementation stage. Furthermore, in order tosupplement extensionactivities in the areas expected to be covered by the
Project, the Project will provide opportunities for training to share techniques
and knowledge among farmers. The Project will also plan to utilize farming
guidance services provided by instructors hired at private agritech companies
under contract farming.
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7. Evaluation Results
Consistent with India's development issues and policies as well as thecooperation policy and analysis of Japan and JICA, the Project will contribute toto promote profitable horticulture and improve farmer’s income by infrastructuredevelopment and capacity development for production, processing andmarketing of horticultural crops in the four target districts assumed to be coveredby the Project. In addition, the Project is considered to contribute to achievementof Goal 1 (No Poverty), Goal 2 (Zero Hunger), Goal 8 (Decent Work andEconomic Growth), and Goal 13 (Climate Action) of the SDGs. Considering thesebenefits of the Project, there is a strong need to support the implementation of the
Project.
8. Plan for Future Evaluation(1) Indicators to be Used
As described in 4.
(2) Future Evaluation Schedule
Ex-post evaluation: five years after project completionEnd11