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 Policy 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: Provide Sustainable Access to Financial Services for SMPs
• 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 with 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.

From July to September 2014, the political and social situation in Ukraine continued to stabilize. However, the country is still going through a period of economic, political, and social distress that had consequences for AgroInvest’s technical and administrative activities. A large part of Donetsk and Luhansk oblasts experienced fighting between armed groups, and the Autonomous Republic of Crimea remained a self-declared independent territory. In August, the President announced early parliamentary elections to be held at the end of October 2014.

On the positive side, Ukraine ratified the Association Agreement with the European Union (EU) and agreed on a military ceasefire in Donetsk and Luhansk oblasts in September 2014. The impact of the ongoing situation in Ukraine on project activities is discussed throughout this quarterly report.

QUARTERLY HIGHLIGHTS

From July to September 2014, the AgroInvest project team marked the following key activities and accomplishments:

• Finalized proposals on reforming the activities of the State Agricultural Inspection Agency and distributed them to partner industry associations for discussion and further submission to the government;
• Prepared detailed Practical Recommendations for land-owners based on main findings of the Study of Agriculture Land Lease Agreements;
• Completed an impact analysis of Deep and Comprehensive Free Trade Areas (DCFTAs) signed between the EU and other countries, and prepared recommendations for implementation of the DCFTA between Ukraine and the EU in the agricultural sector;
• Prepared an assessment of the performance of Ukraine’s Grain Warehouse Receipt System and proposed recommendations on improving its operation;
• Project experts joined the agriculture and agribusiness working group under the Reanimation Reform Package initiative (RRP) – a well-established group of Ukrainian civil society organizations that have strong support in the Verkhovna Rada and focus, in part, on agriculture reform issues;
• Held a competition and selected five regional agricultural industry associations to implement capacity building programs;
• Printed and disseminated a manual prepared by the All-Ukrainian Association of Village Mayors, entitled “Practical Advice for Village Mayors for the Improvement of Sustainable Rural Development and Agricultural Production”;
• Continued the operation of the Land Rights Resource Center and Web-Portal;
• Facilitated preparation and assisted the Land Union of Ukraine with distribution of well-structured policy proposals to prevent abuse of power and corruption in land relations, entitled “Ten Steps to Combat Corruption – Recommendations for Government Actions”;
• Expanded the Program of Legal Land Rights to Zakarpatya, a new oblast, and continued the Program in Chernivtsi, Dnipropetrovsk, Ivano-Frankivsk, Kherson, Khmelnytskyi, Mykolayiv, Odesa, Poltava, and Ternopil oblasts, with an emphasis on training village mayors and village-level land managers;
• Conducted risk assessments for five credit unions – candidates for the loan portfolio guarantee program with the USAID Development Credit Authority (DCA) – and facilitated the signing of the DCA guarantee agreements between USAID and the five credit unions;
• Finalized preparation of a study tour to Poland for representatives of the Ukrainian government and national association of credit unions, providing an opportunity for knowledge sharing and allowing participants to gain exposure to Polish credit unions’ successful experience harmonizing legislation with EU standards;
• Conducted two practical agro-technological training sessions focused on innovations in production technologies for cucumbers and other vegetables. As part of the training, the project promoted agrilending opportunities available to those employing new technologies;
• Kickstarted operations at the production facilities of four agriculture cooperatives that are AgroInvest grantees;
• Completed the first round of training seminars on HACCP-based food safety standards for agricultural produce;
• Developed and sent to the Ministry of Agrarian Policy and Food (MAPF) two draft laws of Ukraine intended to regulate establishment and operations of family farms by amending a farming law and a tax code law;
• In partnership with experts and research institutions, developed new guidelines on bookkeeping in agriculture service cooperatives.

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.

Protests in Kyiv began on November 21, 2013, following the Government of Ukraine’s (GoU) announcement that it was suspending preparations to sign an association agreement with the European Union. On February 22, following three months of large protests and violent clashes, former President Viktor Yanukovych departed Kyiv. The Ukrainian Parliament established a new government on February 27 and set new presidential elections for May 25, 2014.

In January-March 2014 this period of major political and social instability Ukraine is facing has continued to have a sizable impact on AgroInvest technical and administrative activities. The most important developments during this period included:

• Thousands of protesters continuing to demonstrate in the center of Kyiv with demands of the resignation of the government, early elections of the President and signing of the Association agreement with the EU. These demonstrations transformed into violent confrontations between the protesters and police: first in mid-January; and then again at the end of February with more than 100 people killed. During the worst of the confrontations, AgroInvest closed its Kyiv office for a total of four days and operated under its telecommuting policy for an additional ten days in total;
• Protests and demonstrations also took place in various regions of Ukraine and had an impact on activities of Project partners in the regions. Numerous business trips by both AgroInvest staff and it partners were forced to be postponed or cancelled during this period;
• On January 16, 2014 the Verkhovna Rada passed the law on “On Amendments to the Law of Ukraine On Court System and the Status of Judges and Regulatory Laws on Additional Measures to Ensure Protection of Citizens” which named all NGOs and other public organizations which receive funding from international or bilateral donors “Foreign Agents.” Under this law such organizations were required to label themselves and as “Foreign Agents”, comply with much tougher reporting requirements and pay taxes on any donor funds; this law was effective for about a month and was repealed by the Parliament at the end of February as a result of tremendous international criticism. This law, while short lived, caused delays in implementation of the capacity building programs for agricultural industry associations due to the uncertainty of how the NGOs could/would continue to operate under the detrimental legislation;
• Protesters took over the main building of the Ministry of Agrarian Policy and Food on Kherschatyk Street on January 24 and held it until January 29; the Ministry building was taken over again for several days at the end of February;
• The new Government was appointed on February 27, 2014. In the lead up to this transition, the Cabinet of Ministers and the Parliament of Ukraine have been functioning in a limited capacity this quarter which has delayed progress on AgroInvest and its partners’ agricultural policy activities;
• In February USAID informed AgroInvest to suspend all planned international short-term technical assistance consultants traveling to Ukraine. As such the Project delayed several international consultant’s engagements during this quarter;
• In late February and early March, Crimea became occupied by Russian soldiers. As the result of a less than transparent referendum, the Autonomous Republic of Crimea announced its independence from Ukraine and declared itself a part of Russia. On Tuesday March 18th, the Regional Contracting Officer informed all projects with active operations in Crimea to not execute any additional payments nor begin any new activities until further notice. As a result of this directive, and in discussions with USAID, AgroInvest closed its Simferopol office and has indefinitely suspended all of its Crimean activities until final directives are received from USAID;
• Due to the continuing political and social situation in Ukraine the Project is increasingly hearing from partners that potential investors (foreign and domestic) are increasingly becoming apprehensive to invest in Ukraine due to the instability. This is having an adverse impact on AgroInvest activities, especially those under Component 3 which rely on external investment/funding for the actual contraction of the infrastructure work the Project is supporting.

QUARTERLY HIGHLIGHTS

Despite the ongoing political and technical turmoil in Ukraine, in January-March 2014, the AgroInvest Project team continued technical implementation activities. Key activities and accomplishments during this period included the following:

• Analyzed a database of agricultural land lease agreements and prepared a draft report which identified the most important issues related to relations between lessors and lessees and developed proposals for addressing these issues;
• Together with partner agricultural industry associations, developed proposals on simplification of the registration procedure for agricultural land lease agreements;
• Commenced implementation of a new capacity building program with the National Association of Agricultural Advisory Services “Dorada” to continue building their capacity in agricultural policy analysis and advocacy of member’s interests;
• Developed and shared with the GoU and partner organizations an analysis of legislative regulations on mandatory crop rotations and proposals on simplifying these regulations;
• Prepared and shared with the Ministry of Agrarian Policy and Food of Ukraine (MAPF) an analytical report on the international experience on the role of self-regulatory organizations in the formulation and implementation of agricultural policy(s);
• Based on the organizational capacity needs assessment of partner industry associations, announced a tender and received proposals for implementation of a capacity building training program for agricultural industry associations;
• Signed an agreement with the “Interns League” to support three interns engaged with the Committee on Agricultural Policy and Land Relations and the Committee on Ecological Policy, Natural Use and Liquidation of Aftermath of Chornobyl Catastrophe of the Verkhovna Rada of Ukraine in 2014;
• Re-launched the Legal Land Rights Services Program in Chernivtsi, Dnipropetrovsk, Ivano-Frankivsk, Kherson, Mykolaiv, Odesa, Poltava and Ternopil oblasts with an emphasis on training events for village mayors and village-level land managers;
• Conducted three training seminars for financial specialists of partner banks and credit unions entitled “Agrotechnologies for Financial Analysts” focused on various crop cultivation techniques and best practices;
• Developed and began distributing a manual for SMP accountants and managers to improve the quality of their loan applications and overall management of their agricultural enterprise’s operations. This manual is the first of its kind developed specifically for accountants in rural areas;
• Conducted four practical agrotechnological training sessions combined with lending offer promotion to farmers (customers of AgroInvest partner credit unions) covering innovations in production technologies of cucumbers and tomatoes and technological support of cucumber production in greenhouses;
• Signed two new producer organization grants:
  • Agricultural Service Cooperative Snovyanka to improve the organization’s capacity to produce organic compound feed and oil;
  • Agricultural Service Cooperative Chysta Flora to establish cool storage capabilities for fresh fruits and berries.
• Finalized and began distribution of the Scientific and Practical Commentary to the Law of Ukraine on Agricultural Cooperation and related legislative texts. This is the first ever comprehensive source pertaining specifically to the development of cooperatives in Ukraine.

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.

QUARTERLY HIGHLIGHTS

In July-September 2013, the AgroInvest project team continued technical implementation activities in the project focus areas. Key activities and accomplishments during this period included the following:

• Developed proposals on improving the main provisions of the draft Law of Ukraine “On Agricultural Land Circulation”, presented them to partners, discussed them during regional public events, and submitted them to the Government of Ukraine (GoU) through the Ministry of Agrarian Policy and Food (MAPF) in the form of an “alternative” draft law;
• Five agricultural industry associations were selected through a competitive process for grant awards to build their capacity in advocacy and agricultural policy analysis and commenced implementation of the capacity building programs with two associations: the Ukrainian Pig Breeders Association and Organic Federation of Ukraine;
• Implemented a large-scale training campaign for state registrars and notaries on new registration procedures in cooperation with the Ministry of Justice and the State Registration Service. Training events were conducted in 10 regions with a total of 1,222 participants, representing 34% of the total number of state registrars in Ukraine and 1-2 public notaries per rural raion;
• Continued the Land Rights Public Education and Outreach Campaign reaching an additional 1.8 million people through a variety of media instruments. The Legal Land Rights Services Program continued with an increasing focus on improving governance and democracy in the target communities through the newly developed and innovative expert groups on land issues at the raion level involving local authorities, NGOs and community groups;
• In cooperation with subcontractor TA Consult, developed innovative training modules to be used in the comprehensive agrotechnological trainings for partner financial institutions;
• Raised awareness of SMPs on opportunities of accessing lending resources via a press tour which also sparked the development of an educational video entitled “Revival of Rural Credit Cooperation”;
• Initiated a public dialog among credit unions and their governing bodies regarding introducing new legislative initiatives that could impact credit unions’ agrilending abilities;
• Conducted two specialized agrotechnological trainings for SMP-customers of partner credit unions, their customers and potential financial partners (Agro Capital Management and Oikocredit Ukraine) to promote modern technological solutions for peach production combined with affordable lending offers and, the concept of using partner technological support as an effective instrument for risk hedging for lending through credit unions;
• Completed the national gender analysis of rural agriculture issues and opportunities. The analysis will be used to help shape Ukrainian policy initiatives with a specific focus on the needs of rural women and communities as well as to shape the activities of the AgroInvest Project and its programmatic partners;
• Conducted the training of trainers of the trainers who will be working with NGOs throughout Ukraine to better understand and integrate gender mainstreaming into their activities focused on rural development.

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 will achieve 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 US Foreign Assistance Framework Program Areas: 4.2 Trade and Investment, 4.5 Agriculture, 4.6 Private Sector Competitiveness, and 4.7 Economic Opportunity.

QUARTERLY HIGHLIGHTS

In the months April, May and June 2011, the project team launched technical implementation activities in project focus areas and continued with technical and administrative start-up activities that included recruiting local staff, project registration, project introduction to local partners, selection of office space, and procurement of office equipment. Key activities and accomplishments during this reporting period include:

• A Memorandum of Understanding (MoU) was prepared and negotiated with the Ministry of Agricultural Policy and Food. The MoU was signed on May 11, 2011.
• An Agricultural Policy Environment Assessment was undertaken with a main objective of providing an up-to-date and effective policy analysis and reform agenda as well as to identify the most appropriate way to address policy issues with human and budgetary resources available to the Project. A final version incorporating the Mission’s comments was sent to USAID on June 8, 2011.
• A position paper titled, “Potential for Ukraine to Participate in USAID’s Feed the Future (FTF) Initiative” was developed to inform the Office of Economic Growth (OEG) of opportunities and challenges for Ukraine to become a FTF Partner Country. The paper was discussed with Mission OEG staff on June, 29 2011.
• Three technical assessments were conducted: Rapid Assessment of Legal and Institutional Framework for Industry Associations (Component 1), Assessment of Regulatory and Institutional Barriers for Increasing Access to Finance for Small and Medium-Scale Producers (Component 2) and Wholesale and Regional Markets Assessment (Component 3). These reports were submitted to USAID on June 30, 2011.
• An Implementation Agreement between Chemonics International Inc., USAID Mission to Ukraine, Belarus and Moldova and Agrarian Markets Development Institute (AMDI) was signed on April 4, 2011.
• The AgroInvest Grants Manual was approved by USAID.
• AgroInvest finalized its Subcontracts Manual.
• AgroInvest completed its internal Procurement Procedure Guidelines.
• A grants/subcontracts training for AgroInvest staff was completed.
• A pre-award responsibility determination was conducted for potential grant recipient AMDI.
• Key technical and administrative staff were hired.
• The Project was registered with the Ministry of Economic Development and Trade on June 8, 2011.

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.

QUARTERLY HIGHLIGHTS

In April-June 2013, the AgroInvest Project team continued technical implementation activities in the Project focus areas. Key activities and accomplishments during this period included the following:

• Initiated implementation of grant programs with two new agricultural industry associations that were selected on a competitive basis to build their capacity in advocacy and agricultural policy analysis.
• Announced a new grants tender to select up to five industry associations to develop their capacity in advocacy and agricultural policy analysis.
• Completed the Baseline Survey and discussed its findings at 10 public events, including seven regional events, generating 186 media appearances.
• Scaled up the Legal Land Rights Services Program and the National Information Campaign “My Land, My Right” to help citizens understand and protect their land rights which resulted in over 1,700 consultations, 57 public events and the dissemination of 3,481 printed materials and 182 media appearances on land during the reported period.
• Established working relationships of two partner banks with a company – an agricultural industry leader – and its two pilot distributors. Most noteworthy, Kredobank developed two special lending offers for SMP-customers of the company which are served by the pilot distributors.
• Finalized and launched activities for the subcontract on specialized agro technological trainings for credit officers of partner financial institutions.
• Completed the Assessment of Agrilending to Small and Medium-Sized Agriculture Producers in the Ukrainian Banking Sector, and the report on the feasibility of the application of a microfinance instrument to subsidize a portion of interest rates charged by financial institutions (interest rate buy down project).
• Short term consultant Bill Maltby, U.S. Agricultural Finance and Credit Unions Specialist, provided his assessment and recommendations to partner credit unions on how to address and overcome current challenges and work towards ensuring their sustainability.
• Conducted a study tour to the Netherlands for credit union officers to learn about the Dutch system of agricultural cooperative banks and develop working relations with Dutch agricultural input suppliers.
• Developed two new specialized credit products for small and medium-sized agriculture producers, and supported the finalization and promotion of six other credit products previously developed by AgroInvest.
• Conducted five training sessions for 157 farmers from southern and western regions – clients of the partner financial institutions. The trainings aimed to improve the creditworthiness of agricultural producers through sustainable development of their agricultural activities on the basis of turn-key solutions offered by AgroInvest and its financial partners
• The Decree of the Ministry of Agrarian Policy and Food (MAPF) of Ukraine #315, dated May 21, 2013, on Approval of Model Bylaws of Agricultural Service Cooperative was signed. The Model Bylaws were developed by the AgroInvest Project at the MAPF’s request.
• The systematized scientific and practical commentary to the Law of Ukraine on Agricultural Cooperation and related legislative texts was developed and approved by the MAPF.

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.