REQUEST FOR PDF-B APPROVAL
BIODIVERSITY AND AGRICULTURAL COMMODITIES PROGRAM
(BACP)
AGENCY’S PROJECT ID: 523359
GEFSEC PROJECT ID: COUNTRY: Global
PROJECT TITLE: Biodiversity and Agricultural Commodities
Program
GEF AGENCY: World Bank Group (International Finance
Corporation)
OTHER EXECUTING AGENCY(IES): PROGRAM DURATION: 10 years
EXPECTED PDF ACTIVITIES DURATION: 6 months
GEF FOCAL AREA: Biodiversity
GEF OPERATIONAL PROGRAM: OP #13
GEF STRATEGIC PRIORITY: BD-2 and BD-4
ESTIMATED STARTING DATE: February 2005
ESTIMATED WP ENTRY DATE: December 2005
PIPELINE ENTRY DATE: December 2004
FINANCING PLAN (US$)
GEF ALLOCATION
Project (estimated)
Project Co-financing (est.)
$10 mm
$10-40 mm
PDF A
PDF B
PDF C
Sub-Total GEF PDF
$435,750
$435,750
PDF CO-FINANCING
$64,000
IBRD/IDA/IFC
Government Contribution
Others
Sub-Total PDF Co-financing:
$64,000
$64,000
Total PDF Project Financing:
$499,750
This proposal has been prepared in accordance with GEF policies and procedures and meets the
standards of the GEF Project Review Criteria for approval.
Steve Gorman
GEF Executive Coordinator, World Bank
Date: (Month, Day, Year)
Catherine Cassagne and Ignacio de Calonje
Project Contact Persons
Tel.: (202) 473-4706 or (202) 458 9113
E-mail: [email protected] or [email protected]
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PART I - PROJECT CONCEPT
A. Summary Program Rationale
A. The Impact of Agricultural Commodities on Biodiversity
Since the advent of high-input production systems, the agricultural commodity sector has become
arguably one of the most significant threats to global biodiversity. Agriculture and ranching have an
overwhelming impact on the world’s ecosystems, occupying over 60% of all habitable land on the planet
and accounting for approximately 70% of all human freshwater use1.
The adoption, therefore, in the last half century, of resource intensive production methods, particularly for
agricultural commodities, is exerting a substantial strain on the world’s biological diversity. As pointed
out by GEF Operational Program #13 on Conservation and Sustainable Use of Biological Diversity
Important to Agriculture: “agricultural practices such as reliance on monoculture, exotic/cross breeds,
high yielding varieties, mechanization, and misuse of agricultural chemicals have caused negative impacts
on biological diversity at all levels - ecosystems, species and genepools - on both natural and cultural
landscapes, and may be unsustainable, at least in the long term.”
B. The BACP Approach
The Biodiversity and Agricultural Commodities Program (“BACP”) is based on the premise that there is a
great potential for using the private sector to significantly bolster biodiversity conservation, on a global
scale, in the agricultural commodities industry. Given recent market trends and the relatively
concentrated nature of this sector2 there are strong reasons to believe that a streamlined program, working
with key industry players, can significantly accelerate the adoption of specific biodiversity-enhancing and
commercially-sustainable production methods in certain commodities.
The BACP’s objective is therefore to assist and encourage private agricultural commodity players to
promote the modification of specific agricultural production practices in order to preserve global genetic,
species and ecosystem biodiversity.
To do this, the Program will focus on two to four carefully selected commodities (in a phased approach)
and target commercially-viable changes to specific production practices for each of them. The BACP will
seek to work with the leading private players in each of the selected markets, ideally, in the framework of
existing commodity-wide initiatives (such as the IFC’s CCF/WWF Better Management Practices
initiative) and with the support of the IFC mainstream investment departments. The Program will also
closely collaborate with other initiatives and stakeholders (including other GEF implementing and
executing agencies) in order to maximize the impact and efficiency of the Program.
The Program is therefore based on a number of key assumptions:

Selective, step-by-step approach: Given the impossibility of a wholesale conversion of conventional
agriculture to full sustainability, the BACP will attempt to promote better, as opposed to best,
practices for agricultural commodities (but with a vision of full sustainability over the longer term).
Moreover, the Program will target only a handful of biodiversity-enhancing changes to current
production practices in each commodity selected. This selective approach will allow the BACP to
1
S. Wood et al., Pilot Analysis of Global Ecosystems: Agroecosystems, International Food Policy Research Institute and World Resources
Institute, Washington DC, 2000
2
A few examples of market concentration: The top ten cotton traders control over 61% of the global trade in cotton, the five largest soybean
crushers account for more than 75% of global crushing, in the coffee processing industry just five companies buy almost 50% of world coffee
production each year and in the sugar industry the top five sugar players in the EU and US control over 50% of these markets (Sources:
Rabobank, FAO, CCF / WWF BMP Initiative).
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push producers beyond compliance with legal, regulatory and IFC standards through realistic and
economically viable initiatives one at a time.

Bottom line is key: The main drive of the BACP is to promote changes in production methods that
are both biodiversity-enhancing and financially-sustainable in the long term. Key to this approach,
therefore, is that modifications in production methods be cost-effective and led by the private sector.
On the price side of the equation, the BACP is skeptical about the possibility of obtaining substantial
short-term positive price impacts from changes in cultivation methods of agricultural commodities,
but recognizes business benefits through enhanced supply chain fidelity, product quality and market
access. The Program will, therefore, promote commodity-wide value chain activities to encourage
producers and buyers to support mutually advantageous and more sustainable production activities.

Large potential for win-win improvements: Recent research and experience have shown the potential
for “triple bottom line” gains in the agricultural commodity sector. Integrated Pest Management
techniques, no-till cultivation or conservation buffer strips, for example, have proven their ability to
significantly bolster biodiversity, reduce costs and improve yields. The BACP’s objective is to
encourage and accelerate the adoption by private producers of some of these win-win techniques,
which have been hampered by a series of structural constraints within the sector (see C below).
C. The Barriers to Mainstreaming Biodiversity in Agricultural Commodities
Win-win changes to production methods in the agricultural commodities sector have had great difficulties
in gaining ground due to a number of limiting factors, including:




Access to innovation: Many producers of agricultural commodities, particularly smaller ones, have
limited access or ability to implement innovative techniques. Innovations are often those proposed
by their main input suppliers, with few incentives to promote less input-intensive processes.
Ties to input providers / buyers: The financial links of agricultural commodity producers to input
suppliers and buyers makes it difficult for them to attempt innovative independent changes to their
production practices.
Access to financing: Some changes in production practices require substantial investments, which are
usually not bankable through the local banking structure due, among other factors, to their innovative
nature, the often small size of production operations or the lack of collateral of producers. These
innovations may eventually lead to lower operating costs, but the capital cost of conversion can
make it hard to reach that point.
Price volatility and competition: High price volatility and competition in the agricultural commodity
markets generally lead to thin and fluctuating operating margins, which in turn reduce the ability of
producers to try new approaches.

Risk aversion: Implementation of even proven new practices is subject to a degree of uncertainty due
to the often site-specific nature of these methods. Moreover, changes to production methods often
take a number of years to yield positive results. There is therefore a natural risk aversion among
producers to change farming methods.

Difficulty to capture price premiums: Although there is a growing niche in developed countries,
there is still little willingness on behalf of the large majority of consumers or buyers to pay price
premiums for products produced in biodiversity-friendly methods. Moreover, even if consumer
price premiums were achieved, the complexity of the value chain of many commodities may make it
difficult for producers to capture them.

Subsidy regimes: The maintenance by many governments of subsidy regimes that distort market
incentives in favor of input-intensive methods.
The goal of the BACP is to help private producers overcome some of these obstacles by using a
combination of financing and technical assistance activities.
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B. Project Objective
The ultimate objective of the Program is to preserve global genetic, species and ecosystem diversity
within agricultural production landscapes. More specifically, the BACP aims to address market failures
which prevent private producers, or reduce their incentives, to transition to production methods that are at
the same time commercially viable and beneficial to biodiversity. The BACP will seek to do this by
identifying a small number of priority commodities on which it will focus on and then by working with
key private companies and other stakeholders to assist them in implementing and accelerating the
adoption of better practices.
To achieve its ultimate goal, the Program will adopt a three-pronged strategy of site specific projectlevel activities, value-chain activities, and commodity-wide initiatives. The objectives of the three
activities will be mutually-supportive:
i.
ii.
Objectives of Project-Level Initiatives:
a.
Implement proven beneficial production methods in certain regions, or by a given
producer, when there are significant market failures that prevent the private sector from
implementing it alone.
b.
Demonstrate the applicability, in a particular region or ecosystem, of alternative
production methods that have demonstrated biodiversity and business benefits in other
landscapes.
c.
Protect specific high-value biodiversity that is being threatened by the unsustainable
production methods of agricultural commodities in a given region / ecosystem. Changes
in production methods, which contribute to the restoration of degraded habitats,
restoration of wetlands, or biological corridors in agricultural landscapes could be a
particular area of focus.
d.
Create or enhance non-production related biodiversity conservation initiatives engaged in
by parties involved in the production of agricultural commodities.
Objectives of Value-Chain Activities:
a.
Help the different participants in the agricultural commodity value chain to integrate
biodiversity into their decision and production processes.
b.
Assist buyers of agricultural commodities in activities that increase the environmental
sustainability of their supply base.
iii. Objectives of Commodity-Wide Initiatives:
a.
Build the capacity and increase the effectiveness of existing commodity-wide alliances
of stakeholders that seek to improve the biodiversity impact of agricultural commodity
production.
b.
Disseminate lessons learned of the BACP’s project level and value-chain activities and
promote replication.
c.
Source opportunities for BACP project-level and value-chain initiatives by identifying
specific commodity/biodiversity trends of concern, production methods and / or regions
where market failures prevent successful implementation of beneficial production
practices and where biodiversity impact can be maximized.
Alternative Program concepts were contemplated such as focusing on purely organic agriculture, noncommodity based approaches, greater emphasis on non-production related conservation, exclusively
project-level or commodity-wide interventions, etc. The proposed concept and design of the Program,
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however, was deemed to be the most resource efficient, sustainable and with a greater potential impact on
global biodiversity.
In any case, the BACP will not:

Create new commodity-wide initiatives but rather work within existing initiatives with significant
private sector involvement.

Promote production changes that merely meet the local legal or regulatory requirements of
producers.
Fund non-applied research.


Promote production changes that could be implemented at the same speed and with the same
biodiversity impact by private producers alone.

Finance initiatives in areas/sites where natural habitats have been recently cleared for commodity
production.
C. Expected Outcomes
The BACP aims to achieve the following outcomes by the end of its 10-year operational period:
i.
Reverse, in 5-10 production landscapes or ecosystems, the loss of measurable biodiversity
caused by methods of production of agricultural commodities.
ii.
Demonstrate the financial sustainability of 1-2 substantial modifications in conventional
agricultural practices that can enhance biodiversity for each commodity.
iii. Mainstream the use of new biodiversity-friendly production methods in 2-4 global agricultural
commodities.
iv. Contribute, with other partners, to the promotion of strong, formalized, better practices alliances
among stakeholders of each of the 2-4 targeted agricultural commodities.
v.
Provide meaningful and usable lessons-learned, which will be channeled to the industry
primarily through existing commodity-wide initiatives.
D. Program Description and Activities
The main focus of the BACP will be on activities that support the biodiversity-enhancing and financially
sustainable modification of agricultural commodity production methods among private producers. The
Program will be commodity-centric and adopt a step-by-step approach by focusing on a limited number
of production changes deemed to be sustainable for each commodity.
At the outset, therefore, the Program will establish certain priorities in terms of targeted commodities,
production methods, regions and financing tools. This initial prioritization will allow the BACP to
maximize Program efficiency and the use of its resources. However, it will be important to allow
sufficient Program flexibility in order to react to market trends and lessons learned.
A.
i.
General Structure
Commodity Focus
The BACP will, during the Program development phase, determine a small number of priority
commodities on which it should focus on (two to four). In terms of implementation, however, the
Program will take a sequenced approach by initially executing the Program only in one or two of these
priority commodities and then expanding the Program to the other commodities as the BACP develops.
The potential candidates are the main agricultural commodities, including forestry products.
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Potential Commodities for the BACP*
Beef
Cocoa
Coffee
Cotton
Dairy
Palm Oil
Oil Seeds
Rice
Salmon
Shrimp
Soybeans
Sugar
Tea
Timber
* Smaller-volume or emerging commodities might also be considered (such as
flowers, açai, spices, cashews, etc.).
The Program development activities will determine which commodities the Program should be focusing
on. The selection criteria will be based on a series of factors including global biodiversity impact,
commercial and social sustainability, replicability potential, existence of good private-sector environment
and partners (including IFC mainstream traction), existence of robust existing initiatives, etc. This
commodity-centric approach will allow the BACP to optimize resources and increase the synergies
among Program activities. Furthermore, it will allow the BACP to collaborate more closely with other
commodity-centered initiatives (see below Institutional Coordination).
ii. Regional Focus
During the Program development phase, the team will also seek to establish a geographic focus by
commodity in order to maximize the efficiency of the Program’s resources. This will be done preferably
by selecting key commodities whose production is relatively concentrated in a certain geographic region
(palm oil in Indonesia, Malaysia and Nigeria, soybeans in Brazil, Argentina and China, etc.).
iii. Partnerships
Partnerships (see below Institutional Coordination section for more detail) with complementary initiatives
and complementary organizations will be key to the Program’s success by providing a source of project
level initiatives, co-financing opportunities and a means of maximizing the replication of better practices.
The team has already had, for example, very promising conversations on areas of collaboration with the
CCF/WWF BMP initiative. In addition, there are a series of other commodity-centered and SME
initiatives, which have been identified as highly complementary to the BACP. The team will also seek to
work with complementary activities of the WBG, UNEP, UNCTAD, FAO and UNDP. Furthermore, the
BACP will work closely with the IFC’s Agribusiness and Global Services and Manufacturing (“GSM”)
departments to incorporate Program activities in mainstream IFC investments, if appropriate, and
maximize IFC co-financing.
iv. Production Methods
During the Program development phase, the BACP team will consult with private producers and other
stakeholders to analyze alternative production methods on their specific merits, valuing their overall
impact on global biodiversity and their commercial sustainability. The BACP will concentrate on helping
to implement alternative production methods that have a proven positive impact on surrounding
biodiversity and are deemed to have significant potential for development and replication. In this sense,
the Program will avoid engaging in pure research activities. Also, GEF funds will be used exclusively to
encourage alternative methods that are beyond IFC compliance.
The production changes, for example, that could be encouraged could be either integrated production
methods or systems (such as Integrated Pest Management or Integrated Nutrient Management) or more
specific changes (conservation tillage, elimination of burning, rationalization of water use, encourage use
of renewables, cover crops, crop rotations, inter-cropping, re-forestation of fringe areas, abandoning
farming on marginal lands, improved wastewater management, greater efficiency of fertilizer use,
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improved soil management, etc.). In any case, during the project development phase, a clear link between
a production change and landscape biodiversity will have to be established before a production change is
encouraged.
v.
Activities
In terms of the specific activities engaged in to achieve these production changes they could be sitespecific activities (financing of specific pilot projects, support of extension or replication projects,
monitoring and evaluation at project level, training at project-level, etc.), value chain activities (help
implement identity preserved schemes, certification processes, etc.) or commodity-wide activities
(dissemination of lessons learned, provide TA for commodity-wide sustainability alliances on specific
biodiversity issues, etc.).
However, it is important that the BACP’s activities be tailored to the specific commodity and production
methods targeted. The activity will be determined by what the problem is in that specific commodity and
production method (i.e. what market barrier is preventing the implementation of financially-sustainable
and biodiversity-enhancing production changes in that commodity?). Once the specific market barrier(s)
is identified (lack of information, lack of financing, poor implementing capacity, risk, etc.), activities can
then be designed accordingly. The determination of the key activities will therefore be one of the main
objectives of the Program development phase and will be done in conjunction with the leading
stakeholders in each selected commodity. It will also be extremely important to establish a clear
mechanism where both the framework and the specific activities are ensured to be GEF-eligible, in terms
of incremental cost, global impact, sustainability, etc.
vi. Funding Structure
In order to achieve its goals, and optimize its resources, the BACP will be based on two main funding
instruments: (i) a Financing Facility and (ii) a Technical Assistance (“TA”) Program. Each component
will focus primarily, but not exclusively, on different types of BACP activities. The share and role of
both funding instruments will be more clearly delimited during the project development stage as the main
barriers to alternative production methods are identified.
i. The Financing Facility will most likely concentrate mainly on co-financing (with producers,
buyers, or other stakeholders), on market or near-market terms, the implementation of site
specific project-level initiatives. The Financing Facility will use a variety of non-grant funding
instruments such as working capital finance, senior or mezzanine debt, partial guarantees,
structured guarantees for local currency financing, concessional debt financing or commercial
risk coverage instruments. The objective of the Facility is to co-finance projects either directly,
for large one-sponsor projects, or through intermediaries. This non-grant funding will
essentially be used for risk-sharing at a project level but may also be complemented by TA
activities for non-recoverable incremental costs.
ii.
The Technical Assistance Program will support the project-level initiatives by providing grants
to support initial analysis, base-line assessments and preparatory work prior to project-level
implementation as well as for the ongoing monitoring and evaluation of project level initiatives.
Funds will also support non-production related conservation activities by commodity producers
and buyers. In addition, the TA Program will support existing commodity-wide initiatives
(including knowledge sharing and capacity building), and contribute to commodity wide
stakeholder and value-chain activities that increase the appeal and viability of biodiversityenhancing methods of production.
B. Program Components
The BACP will have six main components. These components are expected to be mutually supportive
and aligned, in order to obtain maximum impact in each targeted commodity:
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Component 1: Project-Level Implementation
The heart of the BACP will be funding site specific project-level initiatives. These projects will
implement, on the ground, biodiversity-enhancing and commercially-viable production changes. They
will mainly be sponsored by private companies involved in the agricultural commodity sector. Cofinancing will also be sought from a range of organizations including NGOs, multilateral organizations,
financial institutions, etc. As pointed out above, the BACP projects will have a dual objective of serving
as pilot projects demonstrating the sustainability of a biodiversity-enhancing change in a given region and
/ or of saving specific biodiversity under threat in a given region. In terms of the latter, site-specific
projects that contribute to restoring marginal lands or riparian areas, for example, will be of particular
interest.
These initiatives may be either large individual projects with a single producer implementing the change
(“Individual Projects”) or broader multi-producer projects affecting multiple producers within a given
region (“Multi-Producer Projects”). Individual Projects would typically be sponsored by a large producer
and co-funded directly by the BACP. Multi-Producer Projects would more likely be sponsored by a
larger private sector value-chain participant (buyers, transformers, retailers, etc.) with a stake in
improving the sustainability of production. In order to maximize the future ability to replicate a project, it
is key that the projects be sponsored and co-financed by a large regional producer, buyer or another
significant stakeholder with the capacity to extend the alternative methods rapidly and efficiently in that
or other regions. It is also key that project level initiatives be closely coordinated with, and preferably a
result of, the BACP’s efforts on commodity-wide activities.
Component 2: Project-Level Pre-Implementation and Monitoring
The BACP will provide grants to co-finance a range of activities that will help identify and prepare
project level initiatives. These will include pre-implementation activities which are deemed necessary to
the successful outcome of alternative production methods in a specific Individual or Multi-Producer
project. Pre-project biodiversity base line assessments will also constitute a core component of this
activity as well as pre-project community / stakeholder engagement initiatives. These activities will be
co-funded by the project sponsor and other relevant stakeholders and will be executed through NGOs,
environmental consultants or other organizations with substantial relevant expertise.
The Program will also provide TA funds to monitor and evaluate projects, in terms of their impact on the
triple bottom line (with a particular focus on biodiversity). This will be a crucial component of the BACP
given the intended demonstration value of project-level initiatives. The main framework of this projectlevel monitoring and evaluation will be established through the M&E component of the BACP, as
determined during the Program development phase, while the actual monitoring activities would be
carried out, on a project-level, by an independent third party to enhance the credibility of the results.
Component 3: Project-Level Non-production Conservation
The BACP will provide support to commodity producers or buyers that plan to establish or improve
conservation areas outside or on the border of production sites and whose explicit purpose is to mitigate
the negative biodiversity impacts of commodity production.
Component 4: Value-Chain Activities
The BACP will support the efforts of private agricultural commodity buyers and other value-chain
participants to integrate, beyond compliance, biodiversity criteria in the value-chain. This could include
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support for Identity Preserved Schemes3, environmental certification processes, etc. which are linked to
new biodiversity-enhancing production practices in the targeted commodity. It is important that any
value-chain activity be linked with previous or ongoing project-level efforts and have significant
replication value at a commodity-wide level.
Component 5: Commodity-Wide Activities and Dissemination
The BACP will lend its support to existing platforms of producers and other stakeholders that promote
biodiversity enhancing alternative production methods. Together with other initiatives (as detailed in
Institutional Coordination below), the BACP will engage in an active dialogue with these stakeholder
platforms on the optimal way to achieve financially sustainable and biodiversity-enhancing changes in
production methods and along the value chain.
The BACP will support these platforms by helping their participants to implement specific projects
(through Components 1 to 4) and by supporting these initiatives’ coordination and dissemination efforts.
In practical terms, the latter will come in the form of grants for activities such as biodiversity awareness
building, design of biodiversity scorecards, skill / knowledge sharing, or commodity-wide biodiversity
“clinics”. These commodity-wide initiatives will also serve as a platform for the dissemination of lessons
learned from the BACP’s project-level and value-chain activities, as well as to promote the replication of
successful projects.
The Program may also encourage, together with other complementary GEF and non-GEF funded
initiatives, the creation of regional stakeholder forums and other public-private initiatives.
Component 6: Monitoring and Evaluation (M&E)
The Program Monitoring and Evaluation component of the BACP will be designed and executed by a
competent organization in consultation with the Program team, GEF Secretariat’s M&E Unit and expert
staff within the WBG and other GEF Implementing Agencies. The outline of this M&E framework will
be designed during the project development phase. The Program M&E will seek to assess the BACP’s
overall results and impacts on a Program level using simple and measurable indicators.
The M&E framework will rely partly on self-assessment and partly on external control mechanisms to
enable the BACP to monitor, evaluate and report on the critical program impact at the commodity and
regional levels. The framework will incorporate a participatory process to produce reliable information
on environmental and financial results. The output of the M&E activities will enable and complement
commodity-wide capacity building initiatives and provide the basis of a lessons learned database from
Program experience.
E. Program Management
The Program’s exact operational structure will be determined during the Program development phase.
Notwithstanding this, a Program management team composed of IFC staff will supervise the BACP’s
implementation over its ten-year life. The day to day implementation and management of the BACP will
be carried out by different organizations, including possibly industry or professional associations,
complementary initiatives, private companies, relevant NGOs or other existing organizations. The
number of organizations implementing the day-to-day operations of the Program, however, will be
Identity Preserved (IP) commodity production uses a combination of contract farming, information and tracking technology, production,
processing and distribution technologies, and process standards. IP technology has so far largely been applied to managing risk, for example in
excluding GMOs from supply chains, or ensuring quality. Once the technology and systems exist, there is the possibility of widening the set of
attributes to include environmental and social issues more broadly. Use of this technology is growing. (IFC/CCF BMP report)
3
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limited by commodity, in order to facilitate the coordination of activities and reporting. In any case, the
ideal management structure will be established during the project development phase.
A selection committee that may include both internal and external members will implement a rigorous
screening and approval system for both the Finance Facility and the TA Program. The committee will
ensure that GEF funds are only utilized for activities that fulfill an appropriate set of eligibility criteria
(e.g., incremental cost; public good, environmental benefits, etc.) and that they conform to the principles
of the BACP.
In-country presence will be attained through partnerships with existing programs and by developing
strong linkages with, and leveraging on, IFC’s Agribusiness and Global Services and Manufacturing
departments’ experience and operations and network of field offices. Furthermore, in-country presence
will also exist through co-ordination with local sponsors and technical assistance providers.
F. Financial Plan
The request for funding from GEF is for a total of approximately $10 million to fund BACP over 10
years. Of the total BACP budget, approximately $5 million will be allocated to the Financing Facility and
another roughly $4 million will be allocated to the Technical Assistance Program. The M&E activities
would account for the remaining $1 million of the budget. These figures are only initial estimates and
will have to be refined during the Program development stage. After the initial 5 years of the Program,
the BACP will re-evaluate its funding needs and may, if necessary, return to the GEF Council to request
additional funds.
All GEF funds will be matched by a minimum 1:1 co-financing by Program partners or other
organizations. However, the expectation, to be confirmed during the Program development stage, is for a
much larger leverage of GEF funds. In particular, major co-financing is expected to come from private
agricultural commodity players as well as their existing financers (banks, buyers, etc.).
Other
complementary initiatives, NGOs and other multilateral organizations are also expected to contribute to
co-funding BACP activities, particularly in terms of the TA Program. In addition to this, the BACP will
be closely coordinating its activities with the IFC’s Agribusiness department in order to incorporate
biodiversity elements to IFC mainstream agribusiness transactions and therefore maximize IFC cofinancing.
G. Program and Policy Conformity
As described above, there are currently significant market barriers that limit the rapid development of
more sustainable production methods in the agricultural commodities sector. The objective of the BACP
is to direct GEF funding to reduce these obstacles and accelerate the adoption of more sustainable
practices in this sector. Specifically, GEF funds will be used to share the risks and mitigate the
incremental cost of producers that are willing to adopt alternative production methods.
Without GEF funds that absorb the incremental risks and costs and promote stakeholder and value-chain
pressures, private sector capital alone would not finance at an acceptable pace the transition to alternative
production methods. Speed of adoption of new practices is crucial given the rate of irreversible
biodiversity loss taking place in agricultural commodity production. As the rate of adoption of alternative
production methods accelerates and demonstrates its long-term financial viability, the market will attract
private sector financing without additional GEF support.
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Project Alignment with GEF Strategic Priorities
The BACP is fully aligned with the GEF Strategic Priorities approved by the GEF Council in its May
2003 meeting in the focal area of biodiversity. In particular, the BACP is specifically targeted at
addressing two of the GEF’s four explicit strategic priorities in this area, notably:
i.
Mainstreaming Biodiversity in Production Landscapes and Sectors: The BACP is directly
designed to engage in the three activities recommended by the GEF Council in this area : (a)
facilitate the mainstreaming of biodiversity within production systems; (b) support for
demonstration projects with high replication value, and; (c) develop market incentives
measures.
ii.
Generation and dissemination of best practices for addressing current and emerging biodiversity
issues: One of the key elements of the BACP’s TA Program will be to create and disseminate
biodiversity best practices in the agricultural commodities sector and build on the Program’s
lessons learned to improve the sustainability of the BACP’s impact.
The BACP is also developing decision III/11 on the conservation and sustainable use of agricultural
biological diversity as adopted by The Third Meeting of the Conference of the Parties ( COP) to the
Convention on Biological Diversity (CBD/COP/III) and developed by the GEF Operational Program #13
(“OP13”). As indicated in OP13, “the conservation and sustainable use of associated agricultural
biodiversity can contribute to maintaining the health and quality of the global environment, by for
example providing habitats for wildlife, protecting watersheds, and reducing the use of harmful
chemicals. […]GEF support would therefore help to integrate global environmental imperatives into
existing sustainable development efforts in the appropriate regions and countries.”
In addition, the BACP will have a beneficial impact on the GEF objectives delineated in Operational
Program #12 (Operational Program on Integrated Ecosystem Management), Operational Program #14
(Operational Program on Persistent Organic Pollutants) and Operational Program #15 (Operational
Program on Sustainable Land Management).
The BACP also responds to the recommendation by GEF’s recent Overall Performance Study (OPS 2) to
engage more directly with the private sector in the area of biodiversity. As stated in this report
“conservation efforts in production landscapes are a growing priority, reflecting the predominance of this
land use. In this context, engaging economic actors— from small farmers to commercial firms— will play
a critical role, for which economic instruments and market transformation approaches are powerful tools.
Yet GEF efforts to use these approaches within the biodiversity portfolio have so far been very limited,
representing a largely untapped opportunity.”
Finally, the BACP’s approach is fully consistent with the interim GEF report on Mainstreaming
Biodiversity in Production Landscapes and Sectors prepared by the Scientific and Technical Advisory
Panel. The report specifically points to “improving production practices” as one of the four priority areas
for GEF intervention.
The IFC Program team will develop, in consultation with GEF Secretariat, a screening process to ensure
the GEF-eligibility of individual projects. The use of experts from the WBG, GEF Secretariat and other
external sources will be considered.
Baseline vs. GEF Alternative

Baseline: Without GEF support, the agricultural commodity sector would probably transition very
slowly to more sustainable production practices on the back of regulatory pressures from local
governments and to service the very small, but growing, consumer demand for more low-input
agricultural products, mainly in developed countries. This process would be extremely long-drawn,
particularly in developing nations, where rapidly increasing population counts will exert serious
11
constraints on agricultural and environmental policies. Meanwhile, irrecoverable biodiversity will be
lost due to soil erosion, water contamination, loss of habitat, pesticide overuse, introduction of new
species, etc. Given the extension of the land devoted to agricultural commodities, the scale of these
losses to global biodiversity would be enormous.

GEF Alternative: The GEF Alternative constitutes above all a market acceleration initiative, which
will increase the pace and scope of this transformation. In the process, it should help to save
significant global biodiversity. Like any market transformation initiative, GEF support will help to
remove the existing barriers and push private sector players to focus their efforts in a direction
consistent with the CBD.
Global Significance
The BACP will have a global impact in at least three fundamental aspects:

Commodity-wide global changes: The Program is aiming to accelerate the mainstreaming of specific
biodiversity-friendly production changes in a limited number of commodities on a global scale. This
will be achieved by concentrating the Program’s resources on a narrow set of commodities and
production changes and working with major players that have the ability to replicate successful
changes on a large scale. The main challenge to this market acceleration initiative will be to evaluate
the global biodiversity impact of the acceleration for each commodity (compared to the
counterfactual of a non-GEF alternative). It will therefore be key to coordinate with the GEF’s M&E
unit during the development of the Program’s M&E framework and establish realistic and credible
quantitative and qualitative global impact indicators.

Specific, globally significant, endangered biodiversity: In certain cases, site-specific activities will
target the change of a production method that represents a specific threat to globally valuable
biodiversity in a particular ecosystem (for example, a project leading to the reduction of chemical
pesticides that threaten an endangered fish species in the production landscape’s catchment area).
These projects can either be an integral part of the overall commodity strategy or they can be done as
stand-alone initiatives if the project, due to the character of the biodiversity being saved, is deemed
to promote public awareness of the benefits of a certain production change.

Global knowledge: The BACP will contribute significantly to the, as yet, very limited knowledge of
complex agricultural eco-systems. In particular, thanks to its project-level and Program monitoring
and evaluation activities, the Program will generate a wealth of reliable quantitative and qualitative
information on the impact of alternative production methods.
Incremental Cost
The BACP will be specifically targeted to partially cover the incremental cost or risk of biodiversity
enhancing changes in the production methods of private agricultural commodity producers:

One-time incremental costs: The TA Program will particularly focus on assuming the incremental
one-time costs of biodiversity-enhancing innovation or of a first-mover in a certain region. The TA
Program will also provide enabling grants in value-chain activities and commodity-wide replication
processes. These grants will be provided only in instances where they provide significant
incremental value in terms of encouraging transition to biodiversity-enhancing production methods
and when private initiative is deemed insufficient.

Risk-sharing: The Financing Facility will be more focused on absorbing the incremental risk (or
otherwise put, the incremental financial cost) of pilot or regional projects that are expected to yield
12
long term financial benefits (in addition to significant biodiversity gains) but are unable to obtain
financing exclusively from the private sector due to some of the obstacles described above.
Many producers have not shifted to alternative, more biodiversity-enhancing, production methods
because of their inability or unwillingness to assume the incremental cost or risk of that transition. The
BACP’s goal is precisely to fund this incremental cost or risk, which will lead to an improvement in
global biodiversity. The objective is for the BACP’s activities, supporting “first movers”, to greatly
reduce or even eliminate transition costs for “second movers”. This will allow “second movers” to
replicate innovations that were funded by the BACP without the need for any further grant or
concessional support.
Sustainability
Sustainability is the core of the BACP initiative. The commercial viability of the changes to biodiversityenhancing production methods is inherent in the Program design. Vital to the long term sustainability of
the BACP’s efforts, is the continued financial viability of the new production methods and the long-term
commitment of the different stakeholders to biodiversity.
The BACP will also pay great attention to the social dimension of sustainability through its integral
approach of the entire commodity value chain and the emphasis on local / regional community
involvement at the project level. The social impact of potential production changes will need to be
assessed and weighed in during the Program design stage, particularly during the commodity selection
and strategy phase. Moreover, during the implementation of particular projects, the social impact of
specific activities will need to be evaluated and addressed. As pointed out above, this social sustainability
at a local level will be supported by the BACP’s pre-implementation TA activities.
In any case, the BACP will follow both the IFC’s and GEF’s best practice guidelines on sustainability, in
order to ensure both IFC commitment and market acceptance for the long-term continuation of Program
activities.
Replicability
Replicability is one of the explicit goals in the design of the BACP project-level initiatives and, in this
sense, the Program’s emphasis on financial sustainability of projects should maximize replicability
potential on both a regional and a commodity-wide level. Projects are intended to assume the innovation
risk / costs of new production methods to encourage replication by “second-movers”.
Replication also constitutes the essence of commodity-wide TA activities. As this Program is designed,
one of the TA activities’ main objective is to promote replication on a commodity-wide basis through
activities such as the organization of workshops, information sharing and training on proven methods and
technologies. During the Program development stage, a replication strategy will be designed for each of
the selected commodities. Furthermore the lessons learned by the BACP initiative in a given commodity,
disseminated through the above-mentioned replication plans, may have great replication value for other
agricultural commodities and even other industries.
Apart from the BACP-supported replication efforts, the Program will work closely with other global
institutions and initiatives (see below Institutional Coordination section) in order to create substantial
supply and demand side incentives for replication, and increase its speed and scope.
13
Stakeholder Involvement
A variety of different stakeholders will be affected by or involved in the Program’s activities such as:
private sector companies, financial institutions, civil society (e.g. NGOs, academics), local governments
and relevant departments and agencies, development finance institutions (DFIs), other bilateral and
multilateral organizations, research institutes and local communities. During the Program development
phase, the team will seek to consult with these different stakeholders, and if appropriate, seek their
support for the implementation of the Program.
Local communities and stakeholders will be crucial at the specific project level. Participation and
consultation of these local players will play a vital role in the pre-implementation stage as depositaries of
local knowledge in the areas of biodiversity and production methods. Transparency during projects with
all stakeholders will also be important to maximize buy-in and ownership. Each BACP project will need
to determine a framework of collaboration with local stakeholders prior to project implementation.
The BACP will also actively leverage on existing stakeholder initiatives (as described below in
Institutional Coordination) on a more global level. This will provide the BACP with direct access to
commodity-wide stakeholders along the value chain.
National Level Support
The Program will ensure that projects are carried out in countries that have ratified the Convention on
Biological Diversity (CBD) and have provided notification of participation in GEF. In addition, the
BACP will work with the GEF Focal Points for each target country to ensure that the Program is
implemented in accordance with the country priorities, action plans and programs.
H. Institutional Coordination and Support
Institutional coordination is one of the cornerstones of the BACP and will provide at the same time a
source of project level initiatives and a means of maximizing the replication of better practices and of
mainstreaming them on a commodity wide basis. A substantial part of Program development activities
will be focused on establishing formal or informal partnerships and implementation agreements with
complementary initiatives and organizations.
i.
International Finance Corporation (IFC)
The Program will seek to leverage IFC’s internal resources to maximize the BACP’s impact
while also helping IFC’s mainstream investments to go beyond compliance, in terms of their
environmental and biodiversity standards. The BACP team will coordinate with the IFC’s
Agribusiness and Global Services and Manufacturing departments to maximize the participation
of their clients in the BACP and to help enhance the environmental standards of existing and
future mainstream investments. In this sense, the BACP’s collaboration with the IFC’s
Corporate Citizenship Facility (“CCF”) and its ongoing BMP initiative will be of particular
importance. The IFC’s efforts with financial intermediaries through the IFC-managed EBFP
initiative as well as the Financial Markets and SME divisions could also be invaluable in terms
of greatly enhancing the replication potential of the BACP. Finally, the IFC-managed
Sustainable Financial Markets Facility (“SFMF”), that seeks to increase the environmental and
social responsibility in financial institutions can also be a key partner in this aspect.
ii.
GEF-Implementing Agencies (World Bank, UNEP and UNDP)
The Program will also benefit from collaboration with the wider World Bank Group (“WBG”)
and the other GEF implementing agencies. In particular, the Program will be able to leverage
off the WBG, UNDP and UNEP initiatives in the biodiversity and land resource management
14
areas. Theses initiatives will mainly complement the BACP in areas which the Program will
not be focusing on such as policy or regulatory reform, government capacity building,
smallholder rural initiatives, etc.
Examples of potentially complementary initiatives include the UNDP’s Conserving Globally
Significant Biodiversity in Cocoa Production Landscapes in West Africa and UNEP’s
Conservation & Use of Crop Genetic Diversity to Control Pests & Diseases in Support of
Sustainable Agriculture.
iii. Environmental Business Finance Program (EBFP).
As indicated above, another important collaboration will be that with the GEF-funded, IFCmanaged, Environmental Business Finance Program (EBFP). The EBFP will be extremely
valuable in terms of replicating successful project-level initiatives to a wider SME audience
through financial intermediaries. While the BACP, as part of its strategy, will reach smaller
producers only through the intermediation of larger value-chain participants, the EBFP will be
able to target SMEs directly through its partner financial institution. In this sense, the EBFP
will be able to complement the BACP’s efforts by increasing the potential replication of better
production practices among SMEs.
iv. Sustainable Agriculture Initiatives
There are a number of both GEF and non-GEF funded specific sustainable agriculture initiatives
being carried out by a range of organizations that are highly complementary with the BACP. A
collaboration with them could greatly increase the potential impact and the quantity and quality
of BACP projects. Examples of sustainable agriculture initiatives with which the BACP could
collaborate with include:





CCF/WWF Better Management Practices: Promotes the use of commodity–specific
BMP based screens that demonstrate the business benefits of BMP’s and specifically
allow: (i) producers to enhance environmental sustainability, social equity and labor
standards performance in their operations; (ii) institutional purchasers to encourage and
support sustainability through their supply chains (in the absence of formal certification);
and (iii) investors to reduce risk/exposure from their investment and working capital.
Sustainable Agriculture Initiative Platform: Platform created by the food industry to
actively support the development of and to communicate worldwide about sustainable
agriculture involving the different stakeholders of the food chain.
Common Code for the Coffee Community: A joint initiative of coffee producers,
industry, trade unions and NGOs to develop a global code of conduct aiming at social,
environmental and economic sustainability in the production, post-harvest processing and
trading of mainstream green coffee.
WBG-WWF Alliance for Forest Conservation and Sustainable Use: An alliance
among governments, the private sector and civil society to achieve promote forest
conservation and internationally recognized best practices in forest management.
Common Fund for Commodities, Sustainable Commodity Initiative, etc.
The team, for example, has already had promising conversations on areas of collaboration with
the CCF/WWF BMP initiative. The promoters of the BMP initiative have shown an interest
in the BACP’s potential activities and see a clear complementarity of both programs. The
BACP could play an important role in helping private producers participating in the BMP
initiative to implement BMPs in the specific area of biodiversity, through project-level
activities and TA support. The CCF/WWF BMP initiative has initially focused on cotton, but
will also be targeting BMPs in other commodities such as soybeans and sugar.
15
v.
Local Institutions and Initiatives
Finally, the BACP will also seek to create partnerships and leverage at a local level with
national market actors such as local TA providers, agricultural research centers, local
environment funds and initiatives and local producers, financial institutions and civil society
groups working towards the BACP’s overall goal.
I. Timetable
The project concept was approved for inclusion in GEF-Pipeline 18. A project document will be prepared
and submitted for GEF Council approval at the December 2005 meeting (see below timetable for PDF-B
activities). The BACP funding may be tranched on an operation basis depending upon GEF resource
constraints and the overall size of the WBG funding envelope. The project will be implemented over a 10year period, but will, as described above, after its initial 5 years, re-evaluate its funding needs and if
appropriate request a replenishment.
16
J. Risk Analysis
Risk
Magnitude Impact
Mitigation
Technical Limitations: Insufficiently cost- Significant
effective changes to production methods:
 Lower yielding.
 Higher than expected costs.
 Unexpected
negative
biodiversity
implications of new methods.
 New
non-biodiversity
enhancing
agricultural technology.
Market Acceptance: Slow implementation Significant
and deal flow due to:
 Over estimated market potential.
 Resistance by buyers or input suppliers.
 Difficulty to access willing producers.
 Slow implementation following low
market acceptance.
 Slow BACP implementation in new
countries/methods.
Currency / Macroeconomic / Commodity Significant
price volatility: Adverse or unexpected
deterioration of market conditions:
 Diminishes producer’s risk appetite.
 Reduces financial viability of new
production methods.
 Encourages producers to engage in more
short-term planning.
 Inability to achieve BACP
goals in a timely manner.
 Reliance on price premiums
to
achieve
financial
sustainability of projects.
 Significant reputational risk.
The BACP will:
 Ensure reliable technical
assessments.
 Accelerate
demand-side
pressure.
 Promote
non-production
conservation initiatives.
 Increased cost of managing
BACP.
 Longer
implementation
period.
 Inability to achieve BACP
goals in a timely manner.
 Reputational risk.
The BACP will:
 Carry out reliable market
research.
 Establish solid pre-project
consultation framework.
 Create stronger partnerships
with commodity-wide and
regional initiatives.
 Fewer project opportunities.
 Endangers
financial
viability of existing projects.
 Lower leverage of GEFfunds.
Replication: Replication of methods may be Medium
limited by:
 Regional specificity of new production
techniques.
 Break-down
/
inoperativeness
of
commodity-wide sustainability alliances.
 Lack of access to producers due to
atomization or buyer / input supplier
resistance.
Lack of coordination with partners: Medium
Disagreement with other initiatives on
goals/priorities/methods:
 Different approach to biodiversity
protection.
 Fewer producers will obtain
needed support.
 Less overall impact.
The BACP will:
 Require that the market
assessment produces a
comprehensive opinion on
future commodity trends.
 Exploit price premium
potential down the value
chain.
 Work with more verticallyintegrated producers.
 Engage in more TA
activities.
The BACP will:
 Work with producers with
experience in different
regions.
 Allow regional flexibility in
Program design.
 Diversify contacts with
replication agents (banks,
NGOs, etc.).
The BACP will:
 Engage in a number of
partnerships
to
reduce
reliance on any specific
commodity-wide initiative.
Monitoring and Evaluation:
Modalities of implementing a viable M&E
plan for this activity are still in development
Low
 Diminished
ability
by
BACP
to
achieve
commodity-wide impact.
 Lack
of
coordination
between project-level and
commodity-wide efforts.
 Conflicting
signals
to
market.
 Reputational risk.
 Program might not be able
to
gather
sufficient
information on projects and
impact.
17
The BACP will:
 Develop a best practice
streamlined monitoring and
evaluation framework.
PART II - PROJECT DEVELOPMENT PREPARATION
A. Description of Proposed PDF-B Activities
PDF-B Objective: PDF-B grant funds are requested from GEF to support the analysis, consultation and
project development work necessary for the design of the BACP. The ultimate objective of the PDF-B
activities will be to help select the core commodities that will be focused on and to design a
comprehensive work-plan which will detail specific activities, partnerships, co-financing commitments
and a solid M&E and operational framework that can be implemented for the selected commodities.
PDF-B Implementation: It is essential that all PDF-B activities be well coordinated to produce a
cohesive final Program design. To achieve this, the BACP team favors having one consulting
organization, or a pre-arranged consortium of consulting firms, carrying out and coordinating the entire
set of PDF-B activities. These Program development activities will be done, however, in close
collaboration and consultation with the IFC team and the relevant partners in each activity. The
disbursement of PDF-B funds to the selected organization will be phased, being tied to the successful
completion of the different activities.
In addition, the IFC proposes to hire an independent technical expert, with significant experience in the
scientific and technical issues surrounding agricultural commodity production. The technical expert will
be requested, when needed, to provide IFC with his / her independent advice on specific technical aspects
of certain project development activities. The expert will therefore help the BACP team supervise and
ensure the quality of the work carried out by the selected consulting firm.
Selection Process: For the selection of the consulting organization, the IFC will issue a call for tenders to
internationally-reputed consulting firms with experience in sustainable agriculture and a solid
understanding of the agricultural commodities market. In their proposals, these organizations will have to
detail a clear methodology and plan for the efficient development of the Program, which will be
consistent with the terms of reference outlined below.
PDF-B Activities: The following PDF-B activities will be undertaken:
1.
Market research and preliminary stakeholder consultation on the initial 10 to 15 pre-selected
commodities to determine the Program’s commodity focus (2 to 4 commodities to be short-listed for
more in-depth analysis).
2.
More in-depth analysis of the 2 to 4 short-listed commodities and detailed strategy for 1 or 2
commodities deemed most suitable for immediate implementation (including recommended
activities to be engaged in, partners and production changes with greatest potential).
3.
Commodity-wide stakeholder consultation and partner engagement process in those short-listed
commodities deemed most ready for implementation (possibly only 1 or 2 in a first stage). This will
include consultation of and pre-commitments by complementary initiatives and the main private
sector value-chain players as well as other significant stakeholders such as multilateral and bilateral
development institutions, NGOs, other financial institutions, research institutes, etc.
4.
Design of initial monitoring and evaluation framework (both at project and Program level).
5.
Design of Program operational structure (including designing appropriate mechanisms to ensure
GEF eligibility and Program effectiveness).
6.
Develop full project brief.
18
The more detailed terms of reference for each of these activities will be as follows:
Activity 1.
Market Research to Determine Program Commodity Focus
The objective of this activity is to analyze different agricultural commodities (out of a pre-selection of 10
to 15 to be selected by the Program team together with the selected consulting firm), in order to determine
their potential for the BACP. This activity will help the Program to establish a short-list of 2 to 4 priority
commodities, which will be the object of a more in-depth analysis in Activity 2.
Potential Commodities to be Surveyed in Activity 1*

Beef

Rice

Cocoa

Salmon

Coffee

Shrimp

Cotton

Soybeans

Dairy

Sugar

Palm Oil

Tea

Oil Seeds

Timber
* Smaller-volume or emerging commodities might also be considered (such as
flowers, açai, spices, cashews, etc.).
Activity 1 will involve both desk-top research and limited consultation with different stakeholders in each
commodity, particularly with private-sector market participants, commodity-wide sustainability initiatives
and professional organizations. The activity will build on the analysis already carried out by the
IFC/WWF BMP initiative, which explored the potential for environmental and social BMPs for a range of
ten agricultural commodities.
The output of this activity will give an initial assessment of the different issues surveyed and allow the
BACP team to determine the top two to four commodities that it should initially focus on. This will be
done, however, in consultation with (i) the GEF Secretariat to ensure the GEF-eligibility of the selected
commodities and the potential production changes under consideration; (ii) the IFC’s Agribusiness and, if
appropriate, Global Manufacturing and Services departments; and (iii) other complementary GEF and
IFC initiatives.
The report should examine at least seven key dimensions for each of the 10 to 15 pre-selected
commodities and produce a ranking for each one in the six categories:
1.1. Global biodiversity impact. The first task will be to assess the gravity of the threat to global
biodiversity posed by the agricultural commodity’s current production methods and the technical
feasibility of alternative methods. The report will identify for each commodity:
1.1.1.
Most prevalent production methods, by region or sub-commodity, in terms of pest
reduction practices, nutrient replenishment techniques, waste production and disposal,
water supply, erosion abatement, etc.;
1.1.2.
Global biodiversity impact of the commodity’s harmful production methods, both
qualitative (impact on particularly valuable ecosystems across the world) and quantitative
(extent of global production);
1.1.3.
Main alternative sustainable production methods with greatest potential and their
technical applicability and replicability across different regions or sub-commodities,
including their impact on value-chain or satellite activities;
19
1.1.4.
Potential impact of alternative production methods on global biodiversity.
1.2. Business case. The second task of this activity will be to analyze the business case of the alternative
production methods, identified above. In terms of production costs and input productivity, analyzing
the short-term and long-term impact of alternative production methods on:
1.2.1.
1.2.2.
Production costs (input costs, labor costs, capital expenditures, etc.);
Yields (per hectare, per input cost, etc.).
Also this section will address the potential impact of these production changes on the quality of
business and revenues of both producers and buyers, including:
1.2.3.
Ability to generate price premiums;
1.2.4.
Increased market access;
1.2.5.
Increased reliability of supply;
1.2.6.
Greater control over product safety; and
1.2.7.
Reputational benefits.
This analysis will be based on limited stakeholder consultation and available financial and economic
research and data.
1.3. Social impact. The analysis will also assess the social impact of the different potential alternative
production changes on different stakeholders. In particular, special attention will be paid to the
potential impact of contemplated production changes on small producers and transformers as well as
to surrounding communities.
1.4. Implementation barriers. This component seeks to understand the main barriers to the
implementation of technically, commercially and socially viable alternative production changes and
assess the BACP’s ability to address those barriers. In particular, this section will seek to identify
and assess the BACP’s potential to affect:
1.4.1.
1.4.2.
1.4.3.
Informational barriers (at producer or buyer level);
Replication barriers (e.g. insufficient demonstration in different production landscapes);
Capacity barriers (at producer or buyer level);
1.4.4.
Financing barriers (at producer or buyer level);
1.4.5.
Value-chain barriers (at producer or buyer level);
1.4.6.
Policy barriers; etc.
The objective of this exercise is to understand why the alternative production methods are not
already being implemented or replicated more widely and / or at a faster pace and determine the
BACP’s ability to help private players remove these barriers in a sustainable way.
1.5. Analysis of complementary GEF and non-GEF initiatives and organizations. This component
will seek to map the sustainability initiatives and organizations which are active in each commodity
(including industry platforms, IFC, World Bank, UNEP, UNDP, FAO, bilateral institutions, NGOs,
government agencies, research institutes, etc.) and assess the potential for collaboration with them.
Particular emphasis will be put on identifying GEF-funded initiatives that are deemed
complementary to the BACP. Also important will be the degree of existing IFC and World Bank
Group involvement in a given commodity. This analysis will produce:
20
1.5.1.
A map of the main complementary GEF and non-GEF initiatives which should be taken
into account by the BACP in each commodity (including initiatives focused on
sustainable agriculture, policy issues, SMEs, trade, etc.);
1.5.2.
A map of organizations (including IFC, World Bank, other GEF Implementing and
Executing Agencies as well as other multilateral and bilateral organizations) that carry
out activities in the commodity and a list of projects or programs that they have
implemented over the last 10 years;
1.5.3.
An assessment of the complementarity of the different initiatives with the BACP and the
extent to which these initiatives are effectively addressing the barriers that have been
identified;
1.5.4.
A judgment on the efficiency of those alternative initiatives, based on number of
members, activities and projects.
1.6. Private-sector traction and degree of industry organization. This section will seek to identify the
amount of private sector traction for sustainable agriculture that exists in each commodity and to
assess the ability of the BACP to influence the industry as a whole. This activity will include
surveying:
1.6.1. Which of the main private sector players in each commodity are carrying out initiatives
which are consistent with the BACP’s objectives;
1.6.2.
1.6.3.
1.6.4.
The number of private companies based in developing countries (among them IFC
clients), which are involved in sustainable agriculture initiatives or similar efforts in each
commodity;
The potential impact of these players on the industry as a whole, which will be dependent
on their size as well as on the overall industry structure and the organization of the
commodity’s value-chain;
The degree of involvement in sustainable agriculture of other private sector players,
including the financial sector, input providers, etc.
1.7. Regional concentration. Finally this last section will seek to determine the geographic
concentration of a commodity’s production. The more geographically concentrated a commodity is,
the easier it will be to address the market barriers in a comprehensive way and the more efficient the
Program will be in terms of partnering with other initiatives and maximizing its resources.
Activity 2.
Design of Program Strategy and Draft Action Plan for Selected Commodities
The objective of the second stage of the research activity will be to build on the initial analysis set out in
Activity 1 for the two to four short-listed commodities, help the team determine which of them are more
suitable for immediate implementation (probably one or two initially) and design a preliminary strategy
for those which have been designated for immediate implementation.
Activity 2 will carry-out, for each of the short-listed commodities, a more in-depth analysis of the six
themes surveyed in the previous activity (Activity 2.1). On the basis of this analysis, the team will
determine the one or two commodities which are most appropriate for immediate implementation and
develop preliminary commodity strategies (Activities 2.2 to 2.5) that will enable the team to frame its
discussion with stakeholders. It is important to stress that these will be preliminary strategies that must
maintain a certain degree of flexibility to respond efficiently to stakeholder needs and evolving market
trends, both during Program preparation and implementation.
21
The activity will involve additional desk-top analysis as well as more detailed discussions with
commodity stakeholders. The activity will seek to analyze:
2.1. More in-depth analysis of issues surveyed in Activity 1: Carry out a more detailed review of
issues already analyzed in Activity 1 for the two to four short-listed commodities. Assessing the
biodiversity impact of current and alternative production methods as well as the technical,
commercial and social feasibility of alternative production methods, assessing the complementarity
of other GEF and non-GEF initiatives and identifying the main barriers to the implementation or
mainstreaming of these production changes on a commodity-wide basis.
2.2. Types of activities to be engaged in: Detail, for the one or two commodities deemed ready for
implementation, a list of main site-specific, value-chain and commodity-wide types of activities that
the BACP should be focusing on to remove the barriers that have been identified as preventing or
slowing down the implementation or replication of alternative production methods (pilot projects,
information dissemination, training, value-chain activities, etc.). This will also include a detailed
replication strategy for each commodity;
2.3. Main funding instruments to be used for different activities: This section will determine what
kind of funding instruments will be most appropriate for funding these different activities, whether it
be through technical advisory grant funds, financing on commercial terms, concessional financing,
guarantees, etc.;
2.4. Engagement and consultation plan for key stakeholders: Identifying the key stakeholders in each
commodity that the BACP should be partnering with to carry out these activities (commodity-wide
initiatives, GEF Implementing and Executing Agencies, private players, etc.), providing a timetable
and strategy of how to engage with them and a first assessment of co-financing expectations; and
2.5. Budget and funding estimates: An initial assessment of the potential budget for each commodity
deemed ready for implementation, based on estimates of average costs of identified activities,
expected levels of co-financing, etc.
Activity 3.
Commodity-Wide Stakeholder Consultation and Engagement Process
Supporting and building on Activities 1 and 2, the IFC team will engage, in the one or two commodities
selected for initial implementation, in an active dialogue with different commodity-wide initiatives as
well as key stakeholders. More specifically, on the basis of the timetable and stakeholder consultation
plan laid out by Activity 2.4, the team will engage in more detailed discussion with stakeholders. The
objective of this activity will be to come up with a general framework of collaboration with the main
stakeholders in each commodity as well as a specific pipeline of site-specific, value-chain and
commodity-wide activities, including co-financing pledges.
This activity will involve participation in different stakeholder forums and conferences, direct one-on-one
meetings with stakeholders and on-going communications to agree on specific actions and commitments.
This will require an active dialogue with, among others, producers, producer organizations, traders,
transformers, retailers, financing institutions, research institutes, consumer groups, commodity-wide
sustainable agriculture initiatives, other GEF Implementing and Executing Agencies, industry lobby
groups, NGOs, local governments and other multilateral organizations.
The IFC BACP team will be deeply involved in this activity and will seek to leverage, among others, the
contacts of the Environmental Finance Group, the Agribusiness Department, the General Manufacturing
22
and Services Department, Regional Departments, the different IFC-sponsored SME initiatives and the
Financial Markets Department. The IFC team will also seek to take advantage of the contacts made by
the BACP’s expected partner initiatives (EBFP, CCF / WWF BMP, other GEF-funded initiatives, etc.).
The stakeholder engagement should allow the team to:
3.1. Identify main areas and mechanisms of collaboration: Seeing which specific areas of
collaboration can be found with the different private sector players, complementary initiatives and
institutions. Establish mechanisms, whereby future collaboration can be maximized (regular meeting
schedules, point people, etc.). Particular emphasis will be placed on other GEF-funded initiatives /
projects.
3.2. Establish formal or informal partnerships with key players, organizations and initiatives:
Reach specific agreements with key partners on a framework of future collaboration, for example
through Memorandums of Understanding (MoUs) or formal agreements on joint initiatives. These
potential partnerships could be made with private companies (Unilever, Kraft, etc.), other initiatives
(CCF/WWF, SAI, etc.), other GEF Implementing and Executing Agencies (WBG, UNEP, UNDP,
FAO, etc.), NGOs (Rainforest Alliance, Conservation International, etc.), etc.
3.3. Build a pipeline of site specific project-level initiatives: Start to build a pipeline of site-specific
pilot, demonstration or replication projects where the BACP can play a role by funding the GEFeligible incremental cost of the project. Particular emphasis will be placed on projects in particularly
vulnerable ecosystems.
3.4. Build a pipeline of potential value-chain activities: Seek to build a pipeline of potential projects
that will help private companies develop their value chain to promote biodiversity-enhancing
production methods (through Identity Preserved Schemes, codes of conduct, certification processes,
etc.).
3.5. Identify commodity-wide activities to be carried out: Identify, either within specific partnership
agreements or as stand-alone initiatives, activities that can be supported by the BACP and that
contribute to its objective of building the capacity of existing commodity-wide initiatives in the area
of biodiversity and of promoting the dissemination and replication of the BACP’s activities in a
given commodity.
3.6. Secure agreements of co-financing: In the context of the above activities, the team will seek the
pledging or strong indications of co-financing by partners for project-level, value-chain and
commodity-wide initiatives.
Activity 4.
Design of Initial Monitoring and Evaluation Framework
The objective of this activity is to establish a preliminary framework (to be further developed) for
monitoring and evaluation of project-level activities as well as for the Program as a whole. This
framework will need to be simple and easy to implement while providing the key parameters, guidelines
and criteria for evaluation and monitoring of Program activities. The main emphasis will be placed on
monitoring the global biodiversity impact of the Program, although a small number of general
environmental, social and commercial indicators may also be included.
23
This activity will be carried out in consultation with the IFC Program team, IFC/GEF M&E specialist and
the GEF M&E unit. It will also receive valuable input from important stakeholders and benefit from the
experience of similar GEF-funded programs, such as the IFC managed EBFP.
This activity will therefore produce:
4.1. Project-level M&E framework. At a project-level, the M&E framework will have to define critical
environmental, commercial and social metrics to be identified in the baseline assessment and
monitored during the life of the project.
4.1.1.
Biodiversity / Environmental indicators: The framework will establish a set of: (a)
intermediate indicators, (b) direct biodiversity indicators (e.g. soil biota, avian
population, plant diversity, invertebrates, etc.), and (c) possibly other relevant
environmental indicators to be monitored. The indicators should be no more than 5.
4.1.2.
Commercial sustainability: The framework will establish a small number of parameters
that will be monitored to determine long-term commercial sustainability. These may
include indicators such as cost per unit of production, yield, long term productivity trend,
quality of produce, price premium obtained, current and expected income volatility, etc.
4.1.3.
Social sustainability: Finally, the M&E framework will have to incorporate social
sustainability indicators at a project level to monitor the social distribution of
environmental or financial benefits, effects on community health, household impacts, etc.
The objective of the project-level M&E framework is to set a common template which is at the same
time complete yet sufficiently simple and flexible to be implemented in different projects. It will
crucially rely on previous M&E frameworks developed by the IFC, GEF and other Implementing
Agencies.
4.2. Program-level M&E. At a Program level, the M&E framework will need to incorporate a series of
indicators to gauge the commodity-wide impact of the Program. Some of these indicators will
necessarily be somewhat subjective and will therefore require a certain set of rules and
systematization. The Program level M&E will need to design methods to:
4.2.1.
4.2.2.
4.2.3.
Consolidate project-level data, where relevant;
Assess actual replication of project-level activities;
Identify global commodity-wide trends.
4.3. Implementation of M&E framework. In terms of the implementation of the M&E Framework this
will involve:
4.3.1. Design of the Program’s M&E structure (responsibilities, reporting mechanism
standardized reporting format and schedule for Program M&E activities);
4.3.2.
Budgeting of M&E activities;
4.3.3.
4.3.4.
Design of a lessons learned database;
Strategy for dissemination of lessons learned and incorporation into overall replication
strategy.
Activity 5.
Design of Program Operational Structure
On the back of activities 1 to 4, the objective of this activity is to design an overall Program structure,
including a framework that will establish clear responsibilities for implementation, a standardized
24
approval process for individual projects, an effective steering committee or mechanism and determine the
BACP’s business plan and budgeting.
The design of the operational structure will be done in close consultation with the IFC Program team and
GEF Secretariat to ensure the process guarantees the GEF-eligibility of all activities carried out by the
Program and will draw from the extensive operational experience of the IFC, other GEF-funded programs
and the advice of other stakeholders and complementary initiatives. The IFC team will be responsible for
taking the ultimate decision on the design of the Program’s operational structure. The consulting firm
will be required to provide the team with different options and alternatives in order to reach an optimum
project design. The end product of this activity will be:
5.1. Implementation responsibilities: Determine the responsibilities of all parties involved in the BACP
(IFC, executing organization, partners, GEF, etc.) as well as the coordination mechanisms between
the parties to efficiently manage the Program. This will include determining the responsibility for
the following activities:
5.1.1.
Origination of new project-level / commodity-wide projects;
5.1.2.
Design and sponsorship of new initiatives;
5.1.3.
Supervision of on-going projects.
5.2. Approval processes: Design a full project cycle, which will provide clear guidelines for approval of
individual initiatives and the release of funds.
5.2.1.
5.2.2.
Establish key steps for approval of initiatives;
Establish criteria for screening potential new projects;
5.2.3.
5.2.4.
Establish how GEF-eligibility of individual initiatives will be ensured;
Establish how GEF country focal point endorsement will be obtained in a timely manner;
5.2.5.
Determine composition of authorizing committee(s);
5.2.6.
Provide templates and guidelines for approval documents; and
5.2.7.
Estimate timing of approval process.
5.3. Steering Committee / Mechanism: Determine how the oversight of the entire Program will be
conducted. Identify mechanisms that can, based on the feedback from the Program’s M&E
component, the Program team, the GEF and other stakeholders:
5.3.1.
5.3.2.
Supervise the overall management of the Program;
Modify, if necessary, a commodity strategy;
5.3.3.
Relocate funds across commodities;
5.3.4.
Initiate activities in a new commodity;
5.3.5.
Modify approval or implementation processes:
5.3.6.
Solicit replenishment of Program funds to GEF.
5.4. Program Business Plan and Funding Set-up: Based on all the above, this activity will produce:
5.4.1.
Detailed financial projections for the Program, estimating yearly operational costs, fund
release, fund reflow, etc.
5.4.2.
Financial set-up.
25
Activity 6.
Preparation of Project Brief and Incremental Cost Assessment
A project brief will be prepared to incorporate all the above activities into a comprehensive project
document. In addition to incorporating the results of the other PDF-B activities, the Project Brief will
also produce:
6.1. An initial incremental cost assessment.
6.2. A Program logical framework.
B. PDF Block B Outputs
The PDF B activities described above will cover all the work necessary to produce a detailed project
design and implementation plan. In addition, the overall process of conducting the project development
activities will help to establish a firm level of awareness of and support for the project, among producers,
commodity-wide initiatives, buyers, intermediaries, NGOs and other key stakeholder groups. The
specific outputs from the PDF B activities are expected to include:
Activity 1.
Market Research to Determine Program Commodity Focus
 Report analyzing the potential of a group of the 10 to 15 pre-selected agricultural commodities for the
BACP. The report will include recommendations to the BACP on initial commodity focus and will
not exceed 75 pages in length;
Activity 2.
Detailed Design of Program Strategy for Selected Commodities
 More in-depth analysis of issues surveyed in Activity 1 for the two to four short-listed commodities;
 Initial Program strategy for the one or two commodities deemed most appropriate for immediate
implementation.
Activity 3.
Commodity-Wide Stakeholder Consultation and Engagement Process
 Report on meetings held with different stakeholders;
 Pipeline of potential projects and TA activities;
 Partnership agreements, MOUs and preliminary co-financing agreements with future partners;
 Report summarizing Program partnership agreements, coordination mechanisms and co-financing
commitments or potential at project and commodity-wide level.
Activity 4.
Design of Initial Monitoring and Evaluation Framework
 Outline of project-level M&E framework;
 Outline of Program-level M&E framework;
 Design of overall Program M&E structure and processes, including estimated budget, staffing
requirements, reporting channels, etc.
Activity 5.
Design of Program Operational Structure
 Proposed Program operational structure, including an analysis of different options detailing costs,
staffing requirements as well as respective strengths and weaknesses.
Activity 6.
Preparation of Project Brief
 Project brief to be submitted to GEF incorporating the results of all the above activities, an
incremental cost analysis and a logical framework.
26
C. Justification
Given the ambitious objectives of this Program, which seeks to combine both commodity-wide and
project-level initiatives, the PDF-B activities described above are vital in order to structure the BACP in
the most efficient way possible. These activities will allow the BACP to identify the commodities with
the greatest potential, the best partners, the optimum operational structure and, maybe most importantly,
the best way to monitor and evaluate the Program. Without these key elements well defined, the Program
would be inefficient, at best, and unviable, at worst.
The cost of the PDF B activities represents just over 4% of the requested GEF funds and, depending on
the level of co-financing, probably less than 1% of total mobilized funds.
27
D. Timetable
The PDF B activities will begin mid-February 2005 and will be completed within 6 months. The GEF project will be submitted to the December 2005
GEF Council in. The following table outlines the time schedule for the project development activities:
February
Week Beginning
6
13
March
20
27
6
13
April
20
27
3
May
10
Activity 1
Commodity Focus Report
Activity 2
Individual Commodity Strategy
Activity 3
Stakeholder Meetings
Finalise Pipeline of Projects
Finalise Partnership Agreements
Report on Partnership Coordination
Activity 4
Project-level M&E Framework
Program-level M&E Framework
Overall M&E Implementation Plan
Activity 5
Program Operational Structure
Activity 6
Project Brief
28
17
24
2
June
9
16
23
30
5
July
12
19
26
4
11
18
25
E. Budget
The following table shows the costs to be incurred under the PDF Block B activities in US dollars:
Activity and Outputs
Activity 1.
Market
Research to
Determine
Program Commodity Focus
Consultant
Resources*
2 staffmonths /
4 trips
GEF
Funding
$50,000
IFC
IFC In-Kind TOTAL
Resources** Co-funding
0.5 Staff
$58,000
$8,000
Months
2 staffmonths /
4 trips
$50,000
0.5 Staff
Months
$8,000
$58,000
4 staffmonths /
8 trips /
2 workshops
$180,000
1.5 Staff
Months
$24,000
$204,000
2 staffmonths /
4 trips
$50,000
0.5 Staff
Months
$8,000
$58,000
2 staffmonths /
2 trips
$40,000
0.5 Staff
Months
$8,000
$48,000
1 staffmonth /
1 trip
1 staffmonth
2 trips
-
$20,000
0.5 Staff
Months
$8,000
$28,000
$25,000
-
-
$25,000
$20,750
-
-
$20,750
-
$435,750
-
$64,000
$499,750

Report analyzing the potential of a group of about
twelve agricultural commodities for the BACP. The
report will include recommendations to the BACP on
initial commodity focus and will not exceed 75 pages in
length;
Activity 2.
Detailed Design of Program Strategy
for Selected Commodities

In-depth analysis of issues surveyed in Activity 1 for
the two to four short-listed commodities;

Initial Program strategy for the one or two commodities
deemed
most
appropriate
for
immediate
implementation.
Activity 3.
Commodity-Wide
Stakeholder
Consultation and Engagement Process



Report on meetings held with different stakeholders;
Pipeline of potential projects and TA activities;
Partnership agreements, MOUs or preliminary cofinancing agreements with future partners;

Report summarizing Program partnership agreements,
coordination
mechanisms
and
co-financing
commitments or potential at project and commoditywide level.
Activity 4.
Design of Initial Monitoring and
Evaluation Framework



Outline of project-level M&E framework;
Outline of Program-level M&E framework;
Design of overall Program M&E structure and
processes, including estimated budget, staffing
requirements, reporting channels, etc.
Activity 5.
Design of Program Operational
Structure
and
Institutional
Arrangements

Proposed Program operational structure, including an
analysis of different options detailing costs, staffing
requirements as well as respective strengths and
weaknesses.
Activity 6.
Preparation of Project Brief

Project brief to be submitted to GEF.
Technical Expert
5% Contingency
TOTAL
* Estimate based on: $15,000 per staff-month, $5,000 per trip, $40,000 for organization of workshop sessions.
29
** Includes only staff funded by IFC corporate budget or other non-GEF sources, including time dedicated by mainstream
IFC Investment Officers, technical staff and IFC-funded Investment Officers in the Environmental Finance Group. Based
on generic $800 / day professional staff cost average.
30