Programme area: The programme will target five districts over three Southern provinces: Phouvong and Xansay (Attapeu), Dakcheung (Xekong) and Ta’Oy and Samuay (Salavan). The five districts are among the poorest districts in the country. With one exception, they are all upland districts, where the rural poor face additional constraints resulting from remoteness and isolation and where the ethnic groups composing the majority of the population are among the most food insecure.

Target group: The main target group will consist of the population of 150 target villages combining poverty with production and market potential. The programme promotes an inclusive approach, whereby in each village programme benefits will be made accessible to the whole population by supporting the different categories of households to improve food production and nutrition, and to enter into remunerative and fair partnerships with buyers for the production and marketing of target products. Women constitute a specific target within the main target group to ensure that they get equal access to programme services and benefits. The secondary target group will be constituted by the private buyers of the target products, which will get incentives to enter into fair business partnership agreements with smallholders in the target areas. Furthermore, it is expected that the development of profitable business models, dissemination of good practices, building of capacities of public and private stakeholders and substantial market potential for the target products will generate indirect benefits for a larger population of smallholders that will be able to enter into business partnership arrangements with private investors. The programme will target a total of 10,500 households, or 63,000 direct beneficiaries.

Programme objectives: The project goal is to contribute to reduce extreme poverty and hunger. Its development objectives are to ensure sustainable food and nutrition security and income of households in the target area.

Programme description: The programme has two components:

• Food and Nutrition Security and Pro-Poor Market Access: this component aims at intensifying and diversifying farming systems in the target villages, to improve nutrition and enhance the productivity and quality of both food and target cash crops. It will also improve farmers’ access to markets for selected products, by developing inclusive business partnerships between farmers and private businesses securing fair and remunerative prices to farmers.
• Institutional support: this second component aims at ensuring that the business models and innovative approaches promoted under the component above are efficiently and timely developed, bringing mutual and fair benefits to smallholders and to participating agri-businesses and buyers. To this effect, FNML will facilitate the linkages between value chain players in the programme areas, by setting up locally-based multi-stakeholders platforms, which will provide a venue for discussing business partnership achievements, tracking good practices, agreeing on collective solutions to address bottlenecks, and channelling information about value chain development at the national level. Finally, the programme will set up capacities and systems required to support pro-poor value chain development and improved livelihoods in the target villages, so that innovative business models developed under the programme can be further sustained and replicated and that value chain development can continue beyond programme completion. This will include capacity development of and institutional support to district staff, as well as the provision of technical assistance.

Important features: While subsistence agriculture remains a predominant activity, even the poorest farmers have some interaction with the markets. The target districts hold significant potential for a range of key products that are already cultivated and sold by smallholders, with rapidly expanding markets as well as opportunities to increase farmers’ value added. These include four main commodities (maize, cassava, coffee and vegetables) and niche products (such as pepper, garlic, cardamom, ginger, moringa). There is ample scope for supporting the development of inclusive business partnerships whereby sustainable and equitable linkages will be developed between small farmers and buyers (processors and traders) to facilitate access to remunerative markets and affordable support services. To preserve crop diversification, which is a key feature of current livelihoods helping in mitigating risks and absorbing shocks, FNLM will complement these interventions by a range of activities designed to improve food production and nutrition. This dual approach is in line with the 7th National Socio Economic Development Plan (2011-2015) and with the Strategy for Agriculture Development, and will contribute to all three strategic objectives of the Country Strategic Opportunities Programme agreed upon by the Government and IFAD. Lastly, project design builds on the experience gained from two on-going IFAD programmes promoting food and nutrition security and income generation, as well as from ADB-IFAD joint activities in the same target area.

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Potential cofinanciers and domestic contribution:The total programme costs are estimated at US$13.92 million, over a six year duration. The government will finance an approximate amount of US$1.07 million. The private sector and Nayoby Bank will contribute around US$1.49 million, and beneficiaries will contribute around US$0.53 million. ADB will contribute US$18.0 million as parallel cofinancing. IFAD will provide a DSF grant of US$9.7 million. Both IFAD and the Government are exploring possibilities for raising additional resources, in particular for the financing of technical assistance. Should this possibility not materialise at the time of the final design mission, alternative options would be reviewed, including reducing the number of districts.