Feed the Future Egypt Food Security and Agribusiness

Feed the Future Egypt Food Security and Agribusiness Food-Security and Agribusiness Support Cost Benefit Analysis for RFA-263-15-000002 under LWA EEM-A-00-04-00002 ASU METHODOLOGICAL FRAMEWORK (2-3 PAGE SUMMARY DOCUMENT) ASU will conduct: 1) A comprehensive value-chain analysis at the beginning of the program 2) Cost benefit analyses of the planned interventions 3) Ongoing cost benefit analyses of new or modified interventions as the program proceeds The comprehensive value-chain analysis will incorporate financial, environmental as well as social impacts (such as gender social justice issues and nutritional status of women and children) of the internal and external activities from which stakeholders derive value. This systems approach is consistent with developing a truly sustainable value chain (sustainable from the standpoint of financially, socially and environmentally sustainable for the present and the future). The foundational basis will involve a mapping and analysis of the physical and financial agricultural value chain of Upper Egypt smallholder farmer products. The mapping and analysis covers value chain flows from producers to consumers (domestic and export), and includes the following major physical activities that create value: Acquiring raw materials, energy, natural resources Crop production and management, including waste Food processing and packaging Logistics of food collection, shipping and distribution Product marketing, sales and consumption Disposal Analysis will include MENA and global imports and exports of crops grown in Upper Egypt, stakeholder identification, transactional pricing along the value chain, identification of weaknesses and competitive strengths along the value chain, and opportunities for intervention. Concurrent to developing the physical and financial value chain map, ASU will analyze the social and environmental dimensions and impacts of the current value chain. From a social perspective, we will identify stakeholder interests (needs and desires), behaviors, and formal (regulatory) and informal (cultural or economic) pressures defining their current role in the value chain. As with the financial value chain, we will analyze social value chain weaknesses (such as vulnerability of young women in food processing or nutrition deficits) and opportunities for improvement. For the environmental aspects of the system, we will conduct baseline Life Cycle Analysis on the current agricultural products and processes associated with Upper Egyptian smallholder farmers. This involves determining the environmental impacts (such as global warming, ozone depletion, acidification, eutrophication, photochemical smog generation, terrestrial toxicity, aquatic toxicity, human health, resource depletion, land use and water use) along steps in the value chain. With this comprehensive value chain analysis, program designers and stakeholders can identify inefficiencies, inequities and opportunities for improvements along all three dimensions of the value chain. ASU will then develop a cost benefit analysis of the planned interventions along all three dimensions. It is almost assured that most interventions will involve trade-offs among the economic, social and environmental dimensions, as well as among various stakeholder groups. With this comprehensive cost-benefit analysis, the program and Advisory Committee will be empowered to select the highest value planned interventions based upon its primary mandate to maximize internal rate of return and on-farm net present value of benefits and then prioritize those interventions based upon the secondary criteria of social and environmental costs and benefits. It is important to note that, for true sustainability in the long run, all three dimensions of impact need to be considered and trade-offs balanced. This systems approach will result in an integrated scorecard upon which interventions can be evaluated on all criteria simultaneously. As interventions are implemented and as new ones are contemplated, ASU will validate cost benefit analysis inputs and provide updated analyses to the program to inform decision-making. Operationalizing the Methodology For the value chain and cost benefit analysis, ASU will gather data from reports by previous and current Upper Egypt agricultural projects (such as El Shams, Heinz GDA, Premium Project and Upper Egypt Development Project) as well as statistics from regional and international data sources (such as MALR, WHO, UNESCO, UN Women, TradeMap, FAOStat, World Bank, ComTrade, etc.). This data will be augmented by site visits and stakeholder interviews (with prior approval by the USAID AOR) such as with FAs, food processors, logistics companies, brokers, exporters, womens groups, NGOs, infrastructure contractors and operators, technical experts and other stakeholders (including the Advisory Committee). Analyses will include both quantitative and qualitative data and evaluation methods. Economic cost benefit analysis of alternative interventions being considered by the Advisory Committee will include net present value (NPV) and internal rate of return (IRR) of the projected financial benefits of the intervention versus the costs. Traditional economic cost/benefit analysis will be augmented by monte-carlo simulation of risky aspects of the interventions (e.g., projected costs and revenues linked to volatile commodity prices) as well as scenario analysis and real options valuation. Evaluation of funding and capital sources for interventions will also be conducted. Economic measurement and modeling of alternative production practices and new technology uses for enhancing output production will be evaluated taking into consideration the presence of climate change and other exogenous variables. Life Cycle Assessment of the value chain and proposed interventions will be conducted using established LCA software and environmental datasets, augmented and/or modified to unique Egyptian environmental phenomena where data is available or can be gathered on the ground. Social impact data will be gathered and interventions evaluated using the mixed methods identified above. Evaluation will balance both the social justice value particularly for women and children of change created by interventions as well as the feasibility and potential societal friction and resistance created by the intervention. Anticipating such unintended consequences will provide for better evaluation of alternatives as well as refinement of proposed interventions to maximize success. The heavy lifting for the value chain analysis and cost benefit analysis will occur up front in the first year of the program in order to provide maximum value to program intervention selection, design and implementation. As such, the LCA analysis in the first year will be conducted at a broader and higher level in order to facilitate the evaluation of quick intervention wins. During the second and subsequent years, the LCA analysis will dive more deeply into inter-dependent environmental impacts of specific areas of opportunity or concern. On the economic and social dimensions, intense data gathering and analysis will be conducted in year one with succeeding years focused on refinement, validation and evaluation of new or modified interventions. QUESTIONS: 1) If already knows which interventions it is going to propose, we can add more specificity on how certain interventions will be analyzed, as examples. 2) So far, we are describing our activities as ASU will. We can get more granular as to who at ASU will do what, if desired. We will also punch this up in terms of credentials to perform this analysis. 3) Will nutrition be discussed in this section or another section? * Mapping of value chain, identifying points along the value chain including potential risks along the chain as well as marketing and distribution bottlenecks. * Environmental impacts (costs and returns) of interventions will be evaluated to ensure sustainability of interventions in a cost/benefit framework * Economic evaluation of traditional welfare measures (e.g., consumer and producer surplus) arising from potential interventions. * Feasibility of developing alternative markets for agricultural products and assessment of the opportunities for higher value agricultural outputs and value added enterprises along the value chain. This includes. *