Document Type: Progress Reports

The purpose of AgroInvest is to provide technical assistance to accelerate and broaden economic recovery in Ukraine and increase the country’s contribution to global food security efforts. AgroInvest is achieving this objective by supporting a stable, market-oriented agricultural policy environment, stimulating access to financial services for small and medium producers (SMPs), and facilitating a more effective market infrastructure for SMPs.

The scope of work identifies three main components, refined into six tasks, as follows:

• Component 1: Support a Stable, Market-Oriented Environment
  Task 1-a: Accelerate Market Oriented Reforms
  Task 1-b: Strengthen Industry Associations
  Task 1-c: Provide Public Education for Land Rights
• Component 2: Stimulate Access to Finance
  Task 2-a: Sustainable Access to Financial Services for SMPs Provided
• Component 3: Facilitate Market Infrastructure for Small and Medium Producers
  Task 3-a: Producer Organization Development
  Task 3-b: Develop Wholesale Markets and Other Market Infrastructure

AgroInvest is a five-year project, extending to an estimated completion date of January 24, 2016. The scope of this Project encompasses the following U.S. Foreign Assistance Framework Program Areas: 4.2 Trade and Investment, 4.5 Agriculture, 4.6 Private Sector Competitiveness, and 4.7 Economic Opportunity.

In November of this reporting period, protests began in central Kyiv in response to the GoU’s last minute decision not to sign the European Union Deep and Comprehensive Free Trade Zone Agreement (DCFTA). Thousands of protesters have taken to the streets and been demonstrating 24 hours, seven days a week, blocking Kyiv’s main downtown road. On November 25, and then again on December 11, police attempted to use force to disburse the protesters using tear gas and violence. This use of violence merely heightened the political and social instability. As of December 31, the demonstrations and protests are continuing in central Kyiv.

This situation has resulted in multiple disruptions to AgroInvest and its partners’ activities this quarter. Those most worthy of note include:

• On Monday, December 2nd, the Director of the Department of Foreign Economic Relations within the Ministry of Agrarian Policy and Food of Ukraine, resigned citing political differences of opinion with Ministry staff. This individual was AgroInvest’s main point of contact within the Ministry. At this time it remains unclear as to what affect this will have on AgroInvest activities as it is not known when a replacement will be named and confirmed.
• The fact that the Parliament of Ukraine has been functioning in a limited capacity since late November is impacting progress related to AgroInvest’s partners’ policy activities.
• Numerous meetings and Project events were cancelled or postponed by either AgroInvest directly or its partners as a result of safety and security concerns, as well as difficulty moving around the city and accessing certain buildings, including the Ministry of Justice of Ukraine.
• On several occasions during the month of December, the AgroInvest Project invoked flexible scheduling, meaning that those staff members faced with difficulty getting to the office or that felt it was unsafe to do so were allowed to telecommute/work at home. This decision was made based on ensuring staff safety, the closing of several metro stations, and worsened traffic conditions due to police check-points set to limit vehicles entering the center of the city.

QUARTERLY HIGHLIGHTS

In October-December 2013, the AgroInvest project team continued technical implementation activities despite the political and social situation unfolding in Ukraine. Key activities and accomplishments during this period included the following:

• Jointly with partner industry associations, assisted with preparation of an international investment forum of Kirovograd oblast (Elisavetgrad Investment Day) which served as a national level platform for discussion of agricultural land related issues with participation from the President of Ukraine and other key government officials;
• Prepared comments to the 2015-2020 Strategy for the Agrarian Sector Development and presented and discussed them with members of a working group set up by the Ministry of Agricultural Policy and Food of Ukraine (MAPF) to draft a new detailed Sector Program for the period until 2020;
• Analyzed the estimated impact of potential trade restrictions on the export of Ukrainian dairy products by Ukraine’s largest importer of these products – the Russian Federation;
• Provided support to two national level conferences organized by agricultural industry associations: Fourth Ukrainian Grain Congress organized by the Ukrainian Grain Association on October 23-24th and the Fifth National Conference “Agribusiness in Ukraine-2014” organized by the Ukrainian Agribusiness Club on December 5th;
• Commenced implementation of the capacity building programs with three agricultural industry associations selected through a competitive process for grant awards to build their capacity in advocacy and agricultural policy analysis: the Ukrainian Agricultural Confederation, the Ukrainian Grain Association and the Ukrainian Agribusiness Club;
• Continued implementing a large-scale training campaign for state registrars and notaries on new registration procedures in cooperation with the Ministry of Justice and State Registration Service; conducted training events in nine regions with a total of 3009 participants, thus covering 57% of the total number of state registrars in Ukraine and approximately 2 public notaries per rural raion;
• Conducted three training seminars entitled “Basics of effective communications with borrowers from among agriculture producers” for credit union officers and members of the Agrilending Task Force. The seminars were particularly useful for rural credit officers who served SMPs on a regular basis but did not have access to such training in the past;
• Conducted three internal audits/on-site monitoring in Agrilending Task Force member credit unions;
• Conducted four practical agrotechnological training sessions combined with lending offer promotion to farmers (customers of AgroInvest partner credit unions) covering innovations in horticulture, modern approaches in rabbit breeding, production technologies of cucumbers and tomatoes in greenhouses, and drought-tolerant crops for the Southern region.
• Finalized the economic feasibility study for the modification and amendments to the Tax Code of Ukraine regarding VAT taxation on agricultural produce sold by agricultural service cooperatives. The proposed changes will improve the legal and economic framework of agriculture servicing cooperatives’ operations and encourage small producer associations to unite efforts in processing and marketing their produce;
• Prepared a feasibility study for the “Green Markets” National Program and the Draft Law of Ukraine “On amending the Law of Ukraine ‘On Wholesale Agriculture Markets'”. This work was carried out at the request of the MAPF and the State Agency for Investments and National Project Management. It is a component of the National Action Plan for 2013 with regard to implementing the Economic Reform Program for 2010-2014 titled “Prosperous Society, Competitive Economy, Efficient State” as approved by Presidential Decree #128/2013 dated March 12, 2013;
• Selected six new agriculture service cooperatives for grant awards to build their capacity and demonstrate the benefits from added value chain development when processing agriculture produce;
• The Model Internal Regulations of an Agriculture Servicing Cooperatives, which had been developed with technical assistance from AgroInvest, were approved by MAPF Order #643 dated October 30, 2013;
• Completed market studies and feasibility studies for the development of two wholesale-and-retail markets in the Crimea (Krasnogvardeyske and Kukushkino) and wholesale livestock market Charodiy (Cherkasy oblast). The said documents will enable the construction of the market infrastructure facilities to begin according to international standards.

The purpose of AgroInvest is to provide technical assistance to accelerate and broaden economic recovery in Ukraine and increase the country’s contribution to global food security efforts. AgroInvest is achieving this objective by supporting a stable, market-oriented agricultural policy environment, stimulating access to financial services for small and medium producers (SMPs), and facilitating a more effective market infrastructure for SMPs.

The scope of work identifies three main components, refined into six tasks, as follows:

• Component 1: Support a Stable, Market-Oriented Environment
  Task 1-a: Accelerate Market Oriented Reforms
  Task 1-b: Strengthen Industry Associations
  Task 1-c: Provide Public Education for Land Rights
• Component 2: Stimulate Access to Finance
  Task 2-a: Sustainable Access to Financial Services for SMPs Provided
• Component 3: Facilitate Market Infrastructure for Small and Medium Producers
  Task 3-a: Producer Organization Development
  Task 3-b: Develop Wholesale Markets and Other Market Infrastructure

AgroInvest is a five-year project, extending to an estimated completion date of January 24, 2016. The scope of this Project encompasses the following U.S. Foreign Assistance Framework Program Areas: 4.2 Trade and Investment, 4.5 Agriculture, 4.6 Private Sector Competitiveness, and 4.7 Economic Opportunity.

In April-June 2014 Ukraine continued to experience significant political, social and economic instability which continues to impact AgroInvest’s technical and administrative activities. While the political situation has shown signs of stabilizing this quarter, the eastern territories of Ukraine, primarily Donetsk and Lugansk oblasts, continue to be volatile areas and the Autonomous Republic of Crimea remained a self-declared independent territory. In May, Presidential elections were held and Petro Poroschenko was elected as Ukraine’s new President and early parliamentary elections may take place as early as fall of this year. The impact of the ongoing situation in Ukraine on the Project’s activities is discussed throughout this quarterly report.

QUARTERLY HIGHLIGHTS

Despite the ongoing political instability in Ukraine in April-June 2014, the AgroInvest Project team continued technical implementation. Key activities and accomplishments during this period include the following:

• Analyzed laws and regulations that govern activities of the State Agricultural Inspection Agency and developed proposals, including a draft law to change and streamline the functions of the Agency;
• Finalized the analysis of agricultural land lease agreements, developed proposals and recommendations for the Government and land owners and shared them with stakeholders;
• Executed the Project’s annual policy priority needs assessment;
• Developed a draft Law “On Amendments to the Law of Ukraine “On Farming” and a draft Law “On Amendments to the tax Code of Ukraine (in stimulating the development of family farms)’ aimed at creating conditions for transforming subsidiary household farms into commercial family farms;
• Marked a successful completion of AgroInvest and its partners’ efforts to see a passage of a law that liquidated the State Land Bank of Ukraine;
• The Rada passed several laws that create a better environment for farmers and producers, specifically: mandatory certification of grain silos and grain quality certification have been abolished; obligatory technical inspection of agricultural machinery have been abolished; regional stocks of agricultural commodities have been abolished. Passage of these laws became possible due to the persistent lobbying efforts of AgroInvest and its industry association partners;
• Conducted final three training seminars focused on various crop cultivation techniques and best practices for financial specialists of two partner banks and three credit unions entitled “Agrotechnologies for Financial Analysts”;
• Initiated the introduction of the Development Credit Authority (DCA) loan guarantee instrument to Ukrainian credit unions, including the selection of six candidates for the DCA program, preparation of the draft term sheet for the loan guarantee application and agreement with the DCA Group, as well as the discussion with all candidates on the basic terms of the mechanism;
• Developed recommendations on improving legislation for credit unions in compliance with the EU legislation through engagement of a specialist from Poland;
• Developed and implemented an innovative loan product for agricultural inputs purchase based on promissory notes for partner value-chain actors (VCA);
• Conducted four practical agro-technological training sessions combined with lending offer promotions for farmers (customers of AgroInvest partner credit unions) covering innovations in production technologies of cucumbers and other vegetables;
• Ended grants and activities with agriculture service cooperative (ASC) “Khayal-2009”, ASC “Umyut”, ASC “Frukty Krymu”, ASC “Dzhylek”, ASC “Start-M”, and ASC “Golden Bee” due to the USAID directive to cease activities in the Autonomous Republic of Crimea (ARC) ”;
• Because of the situation in Crimea, AgroInvest and the management of ASC “Golden Bee” agreed to relocate to Ivano-Frankivsk oblast where they are now registered as ASC “Small Golden Bee”;
• Signed a new producer organization grant agreement with the agricultural service cooperative “Molochni Riky” to improve the organization’s capacity to produce animal feed;
• Finalized and started distributing the methodological recommendations for SMPs on post-harvest treatment and storage of agricultural produce.

This report explores and analyzes the activities performed following capacity building trainings of the Georgian leasing industry for relevant government officials. These capacity building exercises focused on applying the recently adopted Georgian leasing laws to achieve sustainable capital formation and facilitate access to financing while promoting Georgian foreign investment. These activities highlighted knowledge acquisition and applied skills development for private sector corporations and government officials.

The consultant provides the following recommendations in this report:

• EPI should provide a continuous support to the Georgian leasing companies, which will facilitate growth of the Georgian Leasing Association (GLA). The GLA will then undertake a self-regulatory process to prevent systemic and regulatory risk derived from potential practices by non-reliable players and ensure compliance to the best practices of the leasing industry.
• EPI must encourage the creation of new Georgian leasing companies and their integration into the current system.
• Furthermore, leasing companies must align their risk management policies and procedures with international best practices to ensure a continuous flow of funding and investments from international markets. EPI should support the industry’s progress towards the best practices and ensure that the leasing portfolios are well structured and sound.
• In addition, EPI must host continuous educational workshops for all banks operating in Georgia to discuss leasing and their revenue generating capacity for the Georgian economy. These trainings should be made available to other potential institutional investors such as insurance companies and pension fund managers among others.
• The consultant highly recommends that EPI should facilitate the creation of a funding institution for the leasing companies. EPI’s next steps should be to define the institutional syndication structures of leases, vet their legal and economic feasibility, and support a funding institution’s fundraising efforts.
• EPI should support a continuous dialogue between the stakeholders to effectively evaluate the long-term impacts of the new legislative reforms on economic development. These impacts may include: a. the marginal effect of leasing growth on tax revenue collection due to the growth in economic activity through the acquisition of additional capital goods (generating VAT revenues); b. the increase of revenues for small and medium sized business (taxable through income tax); c. the number of businesses receiving financing would increase availability of financing sources for SMEs; d. the equipment types (whether these are motor vehicle, technology equipment, agricultural machinery or other types); and e. an estimation of jobs created due to increased financing to the leasing industry, which normally is measured not only by the jobs created by the lessee, but also for the effect that the acquisition of capital goods produces in driving work to suppliers, transportation entrepreneurs, customs agents, and sales persons among others.

As a means to support the broad and deep development of the transport and logistics sector in Georgia and to introduce state-of-the-art training, knowledge, technology and best practices from around the world, the USAID Economic Prosperity Initiative is supporting the establishment of the very first Supply Chain Council (SCC) regional chapter in Georgia for the Caucasus and Central Asia. Chapter establishment will be transformational in the development of the transport and logistics sector in Georgia, while embracing the goals of the Government of Georgia to turn Georgia into a regional logistics hub. As a result Georgia will become more connected into regional supply chains that span from Central Asia to the Middle East and Europe.

Background

The Economic Prosperity Initiative is supporting the competitiveness of agricultural, manufacturing and service value chains in part by supporting cross-cutting areas that can have a real and immediate impact on the competitiveness of Georgia’s private sector. One such area is the Georgian transportation and logistics sector. The objective of this consultancy was to initiate the establishment of a Supply Chain Council (SCC) Chapter in Georgia for the Caucasus and Central Asia which will deliver access to the SCC’s global network of members in addition to state-of-the-art training and transfer of knowledge, technology and best practices from around the world. The result can be near immediate improvements in efficiencies that will enable those Georgian companies that adopt these practices and techniques to demonstrate more competence and reliability to potential international buyers, investors, and partners.

This report is presented in six main sections below. The first section provides a background on the current transportation and logistics situation in Georgia laying the basis for the need to establish a Chapter of the SCC. This is followed by the methodology used to prepare this report. The next sections present the findings including the transportation and logistics support structure in Georgia and detailed discussion on establishing the Caucasus Chapter of the SCC. A report on the Istanbul Logitrans Exhibition is included, which the EPI team visited, and finally the recommended next steps in establishing the Chapter and further strengthening the transport and logistics sector in Georgia, making the country a key link in
the development of the Caucasus Trade Corridor.

Georgia’s growing transportation and logistics sector has been developing despite the challenging economic conditions in the region and across the globe. Continued growth for Georgian companies will require interaction with global players along with further development and strengthening of the foundations within the logistics structures in Georgia. Policies and approaches that directly target improved international transit and logistic connections and the international flow of goods into and out of Georgia can contribute significantly to enhancing the international ‘connectedness’ of Georgian supply chains leading to hastened economic growth.

Establishing the Supply Chain Council (SCC) presence in Georgia, closely followed by the introduction of the Supply Chain Operations Reference (SCOR) will be transformational in the development of supply chains through Georgia, while providing a platform from which to connect to international supply chains and markets for Georgian producers, transporters and logistics service providers. The SCC is the world’s leading trade group focusing on transforming and advancing state-of-the-art supply chain management systems and practices. The global reach of its membership, many of them major corporations, institutes and key government agencies makes the SCC an ideal partner in supporting Georgia’s aspirations of becoming a vital regional logistics hub and corridor. The SCC is recognized by the US Government as a leader in advancing best practices in supply chain and logistics management around the world and the U.S. Department of Defense claims tens of billions in savings from partnering with the SCC in introducing the concepts of the SCOR approach.

The present Semi-Annual Progress Report summarizes implementation of the FY14 annual work plan and the project´s performance against its FY14 targets established in the Performance Monitoring Plan (PMP), which it has met or exceeded in all cases. This is the final progress report since the project ends on June 14th and complements the weekly bullets and monthly newsletters that are submitted to the Contracting Officer’s Representative (COR) as well as information presented in the regular planning and coordination meetings that the COR participates in. Key to the project´s ability to complete the FY14 work plan activities and meet its goals is the MAE´s ownership of project technical assistance, which is also an integral part of its internal work plans and goals.

As in past years, in the FY14 the Project´s implementation strategy focused on reducing the following four main threats to biodiversity conservation in four priority sites along the coast of Ecuador: (1) Loss and/or alteration of critical habitats, (2) Climate change, (3) Lack of economic alternatives, and (4) Insufficient institutional capacity for biodiversity conservation. To this end, the project continued to build local capacity to manage Protected Areas, implement climate change adaptation measures, and manage integrated farms. In addition, the project provided tools for managing protected areas nationwide. It also promoted market access for products that support conservation (such as red crab, which depend on protecting mangroves; tagua, which depends on forest conservation; organic cacao produced using environmentally safe practices; and ecotourism). To improve livelihoods it also continued to help people invest their cash-for-conservation payments received for protecting natural forests under the Ministry of Environment´s (MAE) Socio Bosque Program in income generating activities. Lastly, the project continued to work in close partnership with the MAE and provide technical inputs for managing protected forests and for developing related policies.

To date, the Project has trained 4,838 people, promoted 22 new commercial linkages, and helped communities and families access over $11.6M in cash-for conservation payments for protecting 51,978 hectares ($1.9 million of which were paid out during the life of the project). As a result of project technical assistance, over 16,225 people are benefiting economically and over 744,000 hectares of critical habitats are under improved management. Parallel to this, the Project is strengthening five conservation coalitions that serve as platforms for coordinating natural resource management with local public and private sector, and has leveraged over $17.9 million. For a more detailed summary of results to date please see Section 1.

Especially noteworthy achievements this reporting period include:

1. Upon invitation from the Uruguayan Ministry of Housing, Territorial Management and Environment, USAID Sustainable Forests and Coasts Protected Area Expert, Richard Vaca, participated in the VI National Protected Area Conference in Montevideo where he shared the project’s experiences developing operational plans for 12 protected areas throughout Ecuador. The conference highlighted the project’s  innovative and practical methodology, which bases planning on the area´s conservation objectives and threats and establishes clear strategies for obtaining and measuring results.
2. Supported developing the Annual Operational Plan for the Protected Area Unit of the Ministry of Environment´s National Biodiversity Office, as well as proposals for a new institutional structure, a plan how to adapt their current structure, and a protocol for planning, monitoring, and evaluation within their unit.
3. Based on the Manual for Protected Area Operational Management, developed 13 more operational plans (Cayambe Coca, Llanganates, Chimborazo, Cotacachi Cayapas, El Morro, Limoncocha, Pululahua, Los Illinizas, Cotopaxi, Manglares Churute, El Salado, El Pambilar, and Puntilla Santa Elena) for a total of 25.
4. Assisted the Churute Mangrove Reserve hold a three day training curse to form a team of community fire fighters that are prepared to prevent and fight forest fires.
5. Trained MAE staff on monitoring PA POA implementation.
6. Held a series of technical workshop to gather input on Protected Forest Management with stakeholders from the various regions (Cuenca, Puyo, and Ibarra). Based on the workshops, developed a proposal for improving the related environmental regulations (TULAS – Textos Unificado de Legislación Ambiental Segundario).
7. Supported the National Fishery Institute (INP) in initiating a research plan for new equipment that the project is purchasing for them.
8. Supported the INP in preparing a series of technical reports on research results.
9. Shared experiences and lessons learned with the Socio Bosque Director.
10. Produced videos on project activities in the Esmeraldas province and on good agricultural practices implemented in Chongon Colonche, which will be available on youtube and displayed during the final event.
11. Held in-country observational study tour to share experiences and impacts in the Dos Mangas community with other communities in the Chongon Colonche Protected Forest. Leaders from the Dos Mangas community shared results rated to good agricultural practices for caña guadua, tagua, and paja toquilla as well as their experiences and successes resulting from their integrated management plan, which streamlines legal mechanisms for managing non-timber forest products. Th Loma Alta, Sinchal, Dos Mangas, Las Núñez and La Entrada communities participated.
12. Held event in Guayaquil to share the achievements with crabbers and mangrove conservation as well as with women that extract crab meat.
13. Began preparations for final event, which will be on May 12th in Guayaquil.
14. Upon USAID´s request and award of additional funding, expanded procurement and technical assistance to build on achievements to date. To this end, a team of biologists began working with crabbing organizations in the Golf of Guayaquil to develop management plans for applying for six new mangrove concessions. The project also began procurement to provide forest guards and crabbers with materials and equipment for monitoring forest and mangrove conservation and to support income-generating initiatives, such as crab pulp processing, eco-tourism, ivory nut and cap straw.

This semester the project was also audited by the Regional Inspector General, which required the project to prepare documentation requested, host a day-long event to present project activities, plan site visits, and participate in a series of interviews.

The present Semi-Annual Progress Report summarizes implementation of the FY13 annual work plan and how the project met or exceeded its FY13 targets established in the updated Performance Monitoring Plan (PMP) approved on August 9, 2013. This report complements the weekly bullets and monthly newsletters that are submitted to the Contracting Officer´s Representative (COR) as well as information presented in the regular planning and coordination meetings that the COR participates in. Key to the project´s ability to complete the FY13 work plan activities and meet its goals is the MAE´s ownership of project technical assistance, which is also an integral part of its internal work plans and goals.

As in past years, in the FY13 the Project´s implementation strategy focused on reducing the following four main threats to biodiversity conservation in six priority sites along the coast of Ecuador: (1) Loss and/or alteration of critical habitats, (2) Climate change, (3) Lack of economic alternatives, and (4) Insufficient institutional capacity for biodiversity conservation. To this end, the project continued to build local capacity to manage Protected Areas, implement climate change adaptation measures, and manage integrated farms. In addition, the project provided tools for communities and local governments to mitigate and respond to climate risks. It also promoted market access for products that support conservation (such as red crab, which depend on protecting mangroves; tagua, which depends on forest conservation; organic cacao produced using environmentally safe practices; and ecotourism). To improve livelihoods it also continued to help people invest their cash-for-conservation payments received for protecting natural forests under the Ministry of Environment´s (MAE) Socio Bosque Program in income generating activities. Lastly, the project continued to work in close partnership with the MAE and provide technical inputs for forestry policy development and to improve protected area management.

To date, the Project has trained 4,435 people, promoted 20 new commercial linkages, and helped communities and families access over $11.6M in cash-for conservation payments for protecting 51,978 hectares. As a result of project technical assistance, over 16,225 people are benefiting economically and over 744,000 hectares of critical habitats are under improved management. Parallel to this, the Project is strengthening six conservation coalitions that serve as platforms for coordinating natural resource management with local public and private sector, and has leveraged over $16.8 million. For a more detailed summary of results to date please see Section 1. Key to the project´s ability to complete the FY13 work plan activities and meet its goals is the MAE´s ownership of project technical assistance, which is also an integral part of its internal work plans and goals.

Especially noteworthy achievements this reporting period include:

1. Published pamphlets as training materials for promoting good agricultural practices, forestry management, sustainable tagua management, and organic fertilizer.
2. Strengthened community eco-tourism in Dos Mangas, helping the community develop two commercial linkages with tour operators, and helping the community leverage funding from the local government to improve services, develop promotional materials, and improve trails.
3. Developed two new commercial linkages for live crab and expanding commercial linkages to increase volume of red crab pulp and also include sales for “jaiba” and crab shells.
4. Based on the Manual for Protected Area Operational Management and three pilot operational plans prepared for Protected Areas last period, developed nine more operational plans (Reserva Ecológica Mache Chindul, Refugio de Vida Silvestre Manglares Estuario del Rio Muisne, Reserva Ecológica Manglares Cayapas Mataje, Reserva Marina Galera San Francisco, Refugio de Vida Silvestre Isla Corazón y Fragatas, Parque Nacional Podocarpus, Parque Nacional Sangay, Parque Nacional Sumaco, and Reserva de Producción de Fauna Cuyabeno).
5. Developed a management strategy for the Chongón Colonche Protected Forest and strengthening a coalition of local stakeholders to implement the strategy.
6. Supported agro-ecological fairs for farmers that support conservation to sell their products.
7. Began a pilot research activity on growth of crabs in captivity.
8. Assisted the Isla Escalante mangrove concession coalition file complaints to authorities regarding mangrove deforestation.
9. Shared experiences and lessons learned in the Socio Bosque Partner´s Event for the Coastal Region to share experiences and lessons learned.
10. Facilitated an in-country study tour with six communities from the Gran Reserva Chachi to share experiences and lessons learned overseeing forest conservation and participating in the Socio Bosque Program.
11. Collected and published information on ancestral practices for processing paja toquilla (straw).
12. Developed/strengthened commercial linkages for paja toquilla and caña guadúa.
13. Supported the MAE develop plans for creating an incentive program for mangrove conservation.
14. Supported implementation of the closed crabbing season.
15. Strengthened mangrove concession management and development of a management plan for the Lucha y Progresso association that is putting together a concession application.

This period USAID conducted a mid-term evaluation of the project, which concluded that the project is on the way to achieving its intended results. The evaluation made three recommendations to the project (document lessons learned and recommendations in a more didactic manner, support continuity of market linkages, and capture lessons learned), which have been incorporated in its FY14 annual work plan.

The first half of FY11 is marked with continued successes in developing effective mechanisms to mitigate threats to biodiversity conservation. The Project´s implementation strategy remains focused on providing the technical assistance needed to reduce threats to biodiversity conservation and increase local capacity to manage natural resources in priority areas, and particularly in protected areas. In the FY11 Work Plan the threats targeted, and the strategies and activities designed to minimize them, were tailored to the project´s results framework and presented in alignment with the Project´s Intermediate Results (PIRs) and are presented in the Introduction of this report. The present Semi-Annual Progress Report provides an update on the implementation of the activities and results contemplated in the approved FY11 annual work plan.

In sum, the project continues to provide a series of incentives to conserve the remnants of high biodiversity areas along the Ecuadoran coast and increase local capacity to manage natural resources, especially in protected areas. These incentives include technical assistance for land titling and meeting other prerequisites for accessing the Ministry of Environment´s (MAE) conservation incentives (Socio Bosque), facilitating market access/linkages, and training in best practices, among others. These incentives coupled with establishing partnerships with local, regional and international organizations, and strengthening local capacities, continue to result in local stakeholders taking ownership in project activities. Parallel to this, the Project formed key alliances to formalize collaboration with local public and private sector actors, and has leveraged over $7 million, and continues to work in close partnership with the MAE.

Especially noteworthy achievements this reporting period include (1) launching a historic red crab stock analysis, (2) presenting climate change adaptation measures for El Salado to local stakeholders, (3) improving fishery practices in the Gulf of Guayaquil, (4) strengthening protected area and mangrove concession management, (5) making the mangrove monitoring and enforcement system more operable in the Gulf of Guayaquil, (6) promoting implementation of priority activities in the Ayampe Environmental Land Use Plan, (7) preparing a pamphlet on land tenure policies, (8) fomenting forest rehabilitation and (9) increasing local capacity for implementing good natural resource management practices.

In addition, upon request by the MAE and in accordance with the project´s expanded scope of work (incorporated via Task Order Modification 2), the project continues supporting the Sub-Secretariat for Natural Patrimony in revising the national forestry policy and preparing a new framework for forestry governance. Progress towards meeting FY11 indicators are presented in the results reporting tables found in Annex 2 of the report and a narrative explanation of such results is presented in Annex 3. The project is on track for completing the results contemplated in the task order agreement, which are articulated in the project´s approved Performance Monitoring Plan. The project recognizes the role that the guidance and continual support the Contracting Officer´s Technical Representative, Rocío Cedeño, has played in meeting its goals and implementing work plan activities to date.

In the second half of FY11 the project continued developing effective mechanisms to mitigate threats to biodiversity conservation as well as providing high level technical assistance to the Ministry of Environment (MAE) for forestry policy development.

The Project´s implementation strategy remains focused on providing the technical assistance needed to reduce threats to biodiversity conservation and increase local capacity to manage natural resources in priority areas, and particularly in protected areas. In the FY11 Work Plan the threats targeted, and the strategies and activities designed to minimize them, were tailored to the project´s results framework and presented in alignment with the Project´s Intermediate Results (PIRs) and are presented in the Introduction of this report. The present Semi-Annual Progress Report provides an update on the implementation of the activities and results contemplated in the approved FY11 annual work plan.

In sum, the project continues to provide a series of incentives to conserve the remnants of high biodiversity areas along the Ecuadoran coast. These incentives include technical assistance for land titling and meeting other prerequisites for accessing the MAE´s conservation incentives (Socio Bosque), facilitating market access/linkages, and training in best practices, among others. These incentives coupled with establishing partnerships with local, regional and international organizations, and strengthening local capacities, continue to result in local stakeholders taking ownership in project activities, which is key for assuring their continuity and sustainability. Parallel to this, the Project formed key alliances to formalize collaboration with local public and private sector actors, and has leveraged over $12 million, and continues to work in close partnership with the MAE.

Especially noteworthy achievements this reporting period include (1) forming conservation coalitions in the Gulf of Guayaquil and the Gran Reserva Chachi, (2) presenting climate change adaptation measures for Parque Nacional Machalilla to local stakeholders, (3) facilitating award of over 15,000 hectares in mangrove concessions in the Gulf of Guayaquil and helping the MAE simplify concession award and reporting requirements, (4) strengthening communication and environmental education materials in protected areas, (5) making the mangrove  monitoring and enforcement system more operable in the Gulf of Guayaquil, (6) promoting implementation of priority activities in the Ayampe Environmental Land Use Plan, (7) presenting initial findings from the red crab stock analysis (8) fomenting forest regeneration/recovery (9) increasing local capacity for implementing good natural resource management practices and assuring sustainability of project initiatives (10) helping develop and present forestry law proposal to the Minister of Environment, Marcela Aguiñaga, and then incorporate it into the new Environmental Code proposal, and (11) being highlighted in the Regional Inspector General´s Audit of the USAID Environmental Program and by the USAID Mission Director as using exemplary and replicable methodologies.

Completion of FY11 indicators are presented in the results reporting tables found in Annex 2 of the report and a narrative explanation of such results is presented in Annex 3. As recommended by the USAID Environmental Program audit, the project will begin reporting on implementation of coalition activities going forward. The project recognizes the role that the guidance and continual support the Contracting Officer´s Technical Representative, Rocío Cedeño, has played in meeting its goals and implementing work plan activities to date.

The present Semi-Annual Progress Report provides an update on implementation of FY13 annual work plan activities and progress made towards FY13 targets established in the updated Performance Monitoring Plan (PMP) approved on May 2, 2012. The progress made this semester has the project on track to meet or exceed all FY13 targets. This report complements the weekly and monthly reports that are submitted to the Contracting Officer´s Representative (COR).

In FY13 the Project´s implementation strategy remains focused on reducing the following four main threats to biodiversity conservation in six priority sites along the coast of Ecuador: (1) Loss and/or alteration of critical habitats, (2) Climate change, (3) Lack of economic alternatives, and (4) Insufficient institutional capacity for biodiversity conservation. To this end, the project continues to build local capacity to manage Protected Areas, implement climate change adaptation measures, and manage integrated farms. In addition, the project is providing tools for communities and local governments to mitigate and respond to climate risks and has helped develop a climate change strategy for the entire Guayas province. It is also promoting market access for products that support conservation (such as red crab, which depend on protecting mangroves; tagua, which depends on forest conservation; organic cacao produced using environmentally safe practices; and ecotourism). To improve livelihoods it also continues to help people access cash-for-conservation payments for protecting natural forests under the Ministry of Environment´s (MAE) Socio Bosque Program. Lastly, the project continues to work in close partnership with the MAE and provide technical inputs for policy making.

To date, the Project has trained 4,185 people, promoted 17 new commercial linkages, and helped communities and families access over $11.1M in cash-for conservation payments for protecting 50,718 hectares. As a result of project technical assistance, over 15,375 people are benefiting economically and over 614,000 hectares of critical habitats are under improved management. Parallel to this, the Project is strengthening seven conservation coalitions that serve as platforms for coordinating natural resource management with local public and private sector actors, and has leveraged over $16.3 million. For a more detailed summary of results to date please see Section 1.

Especially noteworthy achievements this reporting period include:

1. expanding red crab stock analysis to El Oro province with the National Fishery Institute (INP for its Spanish acronym)
2. developing a policy proposal for managing tagua palm commercialization within Machalilla National Park (PNM for its Spanish acronym), which resulted in the MAE signing a cooperative agreement with the Matapalo Association
3. helping establish two hybrid tagua drying racks and linking their value added products (dried tagua) with new markets at higher prices
4. designing a Manual for Protected Area Operational Management and developing a pilot annual operations plan for Yasuni National Park, Machalilla National Park and Antisana Ecological Reserve based on the manual
5. helping crabbing organizations (Mondragón and APAREBAFIE/Isla Escalante) apply for new mangrove concessions
6. supporting the Galera San Francisco Marine Reserve in promoting sustainable fishing practices among local fishermen (contributing to the Reserve´s workshops with fishermen)
7. supporting grantee Ecocacao to provide technical assistance to beneficiaries of the Caja Campesina Agro-Ecológica Muisne (CCAM) for implementing sustainable farming practices
8. providing technical assistance for integrated farm management
9. publishing the red crab value chain study, the study on tagua harvesting and management, the survey on profitability of timber harvesting, and a guide on best tagua management practices
10. concluding proposal to improve fishery management in Churute
11. working with the Guayas provincial government to finalize the Guayas Climate Change Adaptation Strategy and share it with stakeholders,
12. providing PNM with technical guidelines and recommendations for regulating fishery activities
13. holding an in-country study tour to help communities that participate in the Socio Bosque Program exchange lessons learned and experiences with investing their incentives and monitoring forest conservation
14. conducting a national level assessment of protected forests as well as a more detailed assessment for the province of Guayas.

This period the project also updated its communications materials (one page descriptions), was evaluated by SETECI, and hosted a by the US Ambassador and Consul to a project activity site in Guayas Province. Key to the project´s ability to complete the FY13 work plan activities and meet its goals is the MAE´s ownership of project technical assistance, which is also an integral part of its internal work plans and goals.

The present Semi-Annual Progress Report provides an update on implementation of FY12 annual work plan activities and progress made towards FY12 targets established in the updated Performance Monitoring Plan (PMP) . It complements the weekly and monthly reports that are submitted to the Contracting Officer´s Representative (COR).

The Project´s implementation strategy remains focused on reducing the following four main threats to biodiversity conservation in six priority sites along the coast of Ecuador: (1) Loss and/or alteration of critical habitats, (2) Climate change, (3) Lack of economic alternatives, and (4) Insufficient institutional capacity for biodiversity conservation. To this end, the project has built local capacity to manage Protected Areas, implement climate change adaptation measures, and manage integrated farms. In addition, the project has provided tools for communities and local governments to mitigate and respond to climate risks and is helping develop a climate change strategy for the entire Guayas province. It is also promoting market access for products that support conservation (such as red crab, which depend on protecting mangroves; tagua, which depends on forest conservation; and organic cacao produced using environmentally safe practices). To improve livelihoods it also helps people access cash-for-conservation payments for protecting natural forests under the Ministry of Environment´s (MAE) Socio Bosque Program. The project continues to work in close partnership with the MAE and provide high level policy guidance, which this semester included helping guide integration of the national biodiversity and climate change programs into the new Environmental Code proposal.

To date, the Project has trained 3,399 people, promoted 14 new commercial linkages, and helped individuals and communities access $7.7M in cash-for conservation payments for protecting 33,285 hectares. As a result of project technical assistance, over 10,135 people are benefiting economically and 362,575 hectares are under improved management. Parallel to this, the Project strengthened conservation coalitions that serve as platforms for coordinating natural resource management with local public and private sector actors, and has leveraged over $13.7 million. For a more detailed summary of results to date please see Section 1.

Especially noteworthy achievements this reporting period include (1) expanding the conservation coalition in the Gulf of Guayaquil and concluding one year of data collection for the red crab stock analysis, (2) implementing climate change adaptation measures in El Salado and initiating them for Parque Nacional Machalilla, (3) supporting tagua collectors in adding value to their harvests, (4) developing a Manual on Best Practices for Developing Climate Change Adaptation Measures in Coastal Regions (5) strengthening mangrove concession management, helping new groups apply for concessions and helping the 6 de Julio Crabber´s Association renew its concession, (6) incorporating activities from the Ayampe Environmental Land Use Plan into the Territorial Land Use Plan (Plan de Ordenamiento Territorial – POT) for the municipality on Jipijapa and presenting the respective municipal ordinance for approval, (7) facilitating reforestation to protect water sources (8) providing technical assistance for integrated farm management (10) presenting an assessment regarding small producer´s perceptions of profitability for timber products in Ecuador (“Sondeo sobre la percepción de la rentabilidad del aprovechamiento de madera por parte de pequeños productores en Ecuador” to high level MAE authorities (11) continuing to support the MAE to improve protected area management, including tourism and fishery management and strengthening surveillance and monitoring systems (12) initiated participatory process for developing a Protected Area Management Manual that will be used across Ecuador, and (13) supporting new applications to protect over 7,000 hectares under Socio Bosque and helping communities already in Socio Bosque increase their payments by over $2.6M per the updated rates approved in 2011. This period the project has also expanded communications materials, launching the first project video regarding its work to strengthen livelihoods and protect mangroves in the Gulf of Guayaquil, and initiating monthly newsletters in English. The project recognizes the role that the guidance and continual support the COR, Rocío Cedeño, has played in meeting its goals and implementing work plan activities to date.