The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) REPORT NO.: RES55476 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SRI LANKA AGRICULTURE SECTOR MODERNIZATION PROJECT APPROVED ON JUNE 28, 2016 TO MINISTRY OF FINANCE AGRICULTURE AND FOOD SOUTH ASIA Regional Vice President: Martin Raiser Country Director: Faris H. Hadad-Zervos Regional Director: John A. Roome Practice Manager/Manager: Gayatri Acharya Task Team Leader(s): John C. Keyser The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) ABBREVIATIONS AND ACRONYMS AA Administrative Agreement AF Additional Finance (of the European Commission) ASMP Agriculture Sector Modernization Project ATDP Agriculture Technology Demonstration Park BETF Bank Executed Trust Fund BoD Board of Directors (of Component 1) CPCC Central Project Coordinating Committee DoA Department of Agriculture EC European Commission EU European Union GA Grant Agreement IDA International Development Association M&E Monitoring and Evaluation MoA Ministry of Agriculture MoF Ministry of Finance MoPI Ministry of Plantation Industries MTR Mid-Term Review PCG Partial Credit Guarantee PUC Public Unlisted Company (farmer-led) PDO Project Development Objective PMU Project Management Unit RETF Recipient Executed Trust Fund RF Results Framework RVP Regional Vice President (of the World Bank for South Asia) SME Small and Medium Enterprise The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) BASIC DATA Product Information Project ID Financing Instrument P156019 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 28-Jun-2016 30-Jun-2023 Organizations Borrower Responsible Agency Ministry of Finance Project Development Objective (PDO) Original PDO The Project Development Objectives (PDO) are to support increasing agriculture productivity, improving market access, and enhancing value addition of smallholder farmers and agribusinesses in the project areas. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-58730 28-Jun-2016 17-Jan-2017 17-Mar-2017 30-Jun-2023 125.00 83.43 39.08 TF-B5382 17-May-2021 17-May-2021 17-May-2021 30-Jun-2023 25.14 11.45 13.67 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Introduction and Purpose 1. This Restructuring Paper seeks the approval of the Regional Vice President to extend the Sri Lanka Agriculture Sector Modernization Project (ASMP) project closing date by 18 months to December 31, 2024, to cancel US$10 million of the IDA Credit to support Sri Lanka’s macroeconomic reform agenda, and to make other adjustments to category allocations and project results framework. ASMP is financed by an IDA Credit of SDR89.2 million and contribution of EUR 25 million from the European Union (EU) that includes a Recipient-executed Grant of EUR23.13 for expansion of farmer-focused activities of Component 2 to five new districts.1 The proposed extension of closing date will help disburse the IDA Credit fully and enable PDO to be achieved in full particularly with regard to job creation and productivity. To ensure the EU Grant is fully utilized by the proposed closing date, it is further proposed to add Jaffna to the list of districts eligible for EU support effectively making Jaffna a “shared district” with IDA. ASMP was previously extended by 18 months in 2021; RVP approval is now needed for the proposed extension which will take the cumulative extension period to 36 months. In principle RVP approval was received on January 6, 2023. 2. ASMP is making significant contributions to export earnings, job creation, and food security that directly support Sri Lanka’s economic recovery. While disbursements slowed in FY22 and first half of FY23 due to problems in government budget provision under the economic and fiscal crisis, ASMP is having a transformational impact on sector development by introducing innovative approaches to sector modernization that can be scaled up across the country. These include: (i) development of modern agricultural value chains using an integrated cluster approach; (ii) a shift in government interventions towards enabling private sector engagement and business development; (iii) use of innovative public support instruments combining international and local expertise; and (iv) use of matching grants to leverage private financial resources and boost efficiency of public spending. From US$59.8 million of documented expenditure so far, Component 1 matching grants and Component 2 agriculture clusters have together generated at least US$141 million in new export earnings and US$8.6 million in foreign exchange savings from import substitution. 3. Without an extension many activities and key parts of the project will remain unfinished and unsustainable. With the current closing date of June 30, 2023, unused funds would be at least US$29.6 million from the IDA Credit (after allowing for US$10 million cancelation to support the macro-fiscal program) and US$15.9 million from the EU Grant. These resources can, however, be used effectively within the proposed additional 18 months delivering results that directly support recovery of the agriculture sector. Agriculture modernization is one of the top priority agenda items for Government of Sri Lanka as raised by President Ranil Wickremesinghe when he met with President Malpass in November 2022 at United Nations Climate Conference (COP 27). Given the limited lending resources available for investment projects over the next few years, the project can serve as an anchor to support the government’s development agenda in the sector. B. Project Status and Results 4. The Project Development Objective (PDO) is to support increasing agriculture productivity, improving market access, and enhancing value addition of smallholder farmers and agribusinesses in the project areas. ASMP is structured around two main components plus a third shared component for project management, monitoring, and evaluation. 1 A BETF portion (EUR 650,0000) supports management, administration, and supervision of the EU Grant. The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) Component 1: Status 5. Component 1 is focused on agriculture value chain development. This island-wide component supports matching grants to clusters of smallholder farmers and to small and medium-size enterprises that promote commercial and export-oriented agriculture products. Component 1 is financed by IDA and beneficiary and private financial contributions and is implemented by the Ministry of Plantation Industries (MoPI) and Central Bank of Sri Lanka (CBSL). Component 1 consists of three subcomponents including: (i) investment preparation and support; (ii) matching grants to farmer organizations and agribusinesses that are implemented by MoPI; and (iii) partial credit guarantees (PCGs) implemented by CBSL. Throughout the project there has been negligible demand for PCGs and zero utilization of the PCG Fund. At the mid-term review (MTR) in October 2019, all but US$1 million was reallocated from the PCG Fund to matching grants. It is now proposed to cancel the remaining PCG funds as part of the US$10 million request by Cabinet to support to the macroeconomic agenda. 6. ASMP Component 1 has made rapid progress of late supporting 1,054 matching grants so far with a total disbursed value of US$32.8 million. This is against 67 grants at the MTR in October 2019 and 125 as of June 2020. Grants to date inlcude 899 small grants under Window A with value below US$75,000 and 155 large grants under Window B with value up to US$500,000. Of Window A grants, 283 have been to individual SMEs and 616 have been to family-based farm enterprises organized around 23 cluster groups (shrimp, foliage, ornamental fish, vanilla, etc.) with direct ties to other grant recipients. Across all grants, Component 1 has so far reached an estimated 117,136 direct beneficiaries including factory workers and smallholder farmers who supply raw material for value addition. According to PMU data, a total of 5,061 permanent jobs have been created by the project (44 percent of which are female) that together provide LKR 1,926 million (US$ 5.5 million) new wages annually. 7. Without project extension, at least 507 matching grants worth US$4.2 million will not be ready for final payment leaving Government obliged to finance the remaining matching grant tranches without IDA support. Moreover, US$7.3 million of already approved grants, including 252 micro-grants to small family famers, would not be able to start. Most proponents have invested their own money and taken bank loans in expectation of receiving the grant leading to significant reputational risks if the grant payments are not made. Completion of the approved grants would enable the PDO to be achieved in full particularly with regard to technology adoption and job creation. Component 2: Status 8. Component 2 supports farm-level productivity enhancement and diversification demonstrations. This component is implemented by the Ministry of Agriculture (MoA) and aims at helping smallholder farmers to produce competitive and marketable commodities, improve their ability to respond to market requirements, and move towards increased commercialization. Component 2 consists of four sub-components: (i) farmer training and capacity building; (ii) establishment of Agriculture Technology Demonstration Parks (ATDPs); (iii) production and market infrastructure, complementing productive investments in the ATDPs; and (iv) analytical and policy advisory support. This component is financed jointly by IDA and the EU except for sub-component 2.4 which is financed only by IDA. Implementation of the policy sub-component has been slower than expected and outputs planned at appraisal would need to be scaled back. 9. Farmer training and ATDP development is focused on five provinces and 12 districts selected because of high poverty headcount and agriculture potential. Originally ATDP development focused on seven districts only: Matale (Central Province), Batticaloa (Eastern Province), Anuradhapura and Polonnaruwa (North Central Province), Jaffna and Mullaitivu (Northern Province), and Monaragala (Uva Province). With the addition of EU finance, the project was The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) scaled-up to cover five new districts: Kandy (Central Province), Ampara (Eastern Province), Kilinochchi and Vavuniya (Northern Province), and Badulla (Uva Province). 10. The key principles of ATDP development are: (i) formation of farmers into viable and sustainable producer organizations; (ii) introduction of field level technologies that enable farmers to diversify production into high value, market oriented crops; (iii) identification and facilitation of contract and buying arrangements with agro-processors and retailers, including in export markets; and (iv) provision of supporting public infrastructure including public access roads and irrigation. ASMP is presently supporting the development of 42 ATDPs (21 in the original districts and 21 in the new districts). Additionally, during the start-up phase, ASMP supported a further 32 pilot demonstrations. Crops covered include biannual and perennial fruits (avocado, banana, guava, mango, papaya, pineapple, and pomegranate) intended mainly for export plus annual crops that largely target the domestic market (chili, potato, red onion, and organic vegetables) and production of high-quality seeds also for domestic use (hybrid maize, chili, groundnut, onion, potato, and vegetable). 11. Despite steady progress of late, more time is needed to complete the development work already started. Since it was not possible to operationalize EU additional finance until late 2021, there is still a lot to do in the new districts. Across all ATDPs, planting of new crops (including of seedlings in nurseries already established) will not be finished until three to four months after the current closing date. Moreover, 17 ATDPs will not have produced their first commercial harvest by the current closing date and seven will need even more time to come into production. Additonally, some pilot demonstrations are still slated to receive support in the form of farmer business training and development of basic off-taking/post-harvest handling facilities that strengthen market linkages. 12. As Component 2 looks to conclude its work during the extension period, ensuring the long-term sustainability of ATDPs will be a priority task. Sustainability of project outcomes needs to be directed towards two focus areas. First is deepening of sustainable and attractive business arrangements between participating farmers, farmer groups and value chain partners. Second is to promote a smooth transfer of responsibilities to relevant government institutions to continue supporting farmers and the newly created farmer-owned and operated public unlisted companies (PUCs) technically, organizationally, and managerially. Component 3: Status 13. Component 3 supports the Project Management Units (PMUs) of MoPI and MoA and the Provincial Project Management Units (PPMUs) in provinces covered by Component 2. The PMUs and PPMUs are responsible for project management and coordination, financial management, procurement, social and environmental safeguards, and monitoring and evaluation (M&E). In one very positive recent move, MoF decided to reconstitute the Central Project Coordinating Committee (CPCC). This demonstrates Government’s commitment to the successful completion of ASMP and will help with transfer of responsibilities to relevant government institutions after project closes. Latest results and ratings 14. The most recent PDO-level results shown below indicate that, with the proposed extension, ASMP is on track to achieve its agreed objectives. The project is ahead of target with regard to number of direct beneficiaries and increase in average value of sales. Number of clients who have adopted an improved agriculture technology and number of jobs generated are lagging due to start-up delays and challenges associated with the COVID-19 pandemic and recent economic crisis but are expected to improve quickly with the of completion of matching grants and ATDP activities during the extended implementation period. New jobs are measured as permanent wage employment and therefore exclude part-time jobs for agriculture workers. The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) End of Current Current PDO Indicator Project Value as % Value Target Target Direct project beneficiaries 135,000 128,732 95% Of which female 54,000 51,240 95% Clients who have adopted an improved agriculture technology 90,500 33,896 37% Of which female 36,000 19,651 55% Increase in average value of sales of agriculture products (%) 25.00 35.40 142% New jobs generated through investments in agribusiness organizations 10,100 5,115 51% Of which female 4,040 2,255 56% As of December 2022 Implementaton Status Report. 15. The latest project ratings are shown below. Both components are making good progress due to highly committed PMUs in both ministries. Most project supported businessess are operational and farmer clusters have become increasingly productive delivering evident outcomes, including private sector capital mobilization, job creation, export revenues, and increased farmer income. The development objective indicators are broadly on course and the PDO rating is moderately satisfactory. Current Project Ratings Rating PDO MS Implementation progress MS Component 1: Agriculture Value Chain Development MS Component 2: Productivity Enhancement and Diversification Demonstrations MS Component 3: Project Management, Monitoring and Evaluation MS Project Management S Procurement MS FM S Overall safeguards MS C. Rationale for Restructuring 16. The proposed restructuring will enable the cancelation of US$10 million from project savings to support the macro-fiscal program and the extension of closing date by 18 months to December 31, 2024. More time is needed to complete planned activities and achieve the PDO. At the current closing date, unused funds would be at least US$29.6 million from the IDA Credit (after allowing for US$10 million cancelation to support the macro-fiscal program) and US$15.9 million from the EU Grant. These resources can be used effectively during the 18 months extended implementation period delivering results that directly support the Sri Lanka’s economic recovery. The restructuring will also introduce required changes to the category allocations, results framework, and eligible expenditures for the use EU surplus funding. II. DESCRIPTION OF PROPOSED CHANGES A. Cancellation of IDA Funds The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) 17. A letter from Ministry of Finance Department of External Resources (ERD) dated 23 January 2023 requested to cancel US$10 million from ASMP. In its request, ERD informed the World Bank of a decision by Cabinet to cancel and/or repurpose up to US$198.46 million from nine ongoing projects to support new operations in line with the structural reform agenda, including US$10 million cancelation from ASMP. Even with the proposed US$10 million cancelation, together with the EU Grant, ASMP is expected to have sufficient resources to complete planned activities without impact on achievement of the PDO or project results targets. B. Extension of the Closing Date 18. A further letter from ERD dated 22 February 2023 requested to extend the ASMP project closing date by 18 months. The letter noted the importance of an extension to achieve the financial and development objectives of Component 1 and 2 and requested to extend the IDA Credit (IDA 58730) and EU Grant (TF072936) closing date. The current closing date is June 30, 2023, and the new/revised closing date would be December 31, 2024. 19. Both PMUs have a realistic plan to complete agreed activities by the extended closing date. The project is making important contributions to the economic recovery and the full amount of the IDA Credit after cancelation and EU Grant can be used effectively with the 18 months extension delivering results that directly support increased rural incomes and economic recovery. Without the proposed extension, many activities of the project would remain unfinished and unsustainable. C. Coverage of the EU Grant 20. A detailed review of upcoming costs against the work program for the five new districts currently covered by the EU Grant revealed a surplus of around US$1.5 million. It is therefore proposed to add Jaffna to the list of districts eligible for EU support. Jaffna needs to procure around US$2.6 million of materials of which US$1.5 million could be financed by the EU and would quickly take up the apparent surplus. IDA has and will continue to finance consulting costs and farmer training work in Jaffna, effectively making Jaffna a “shared district” with IDA. Farmer training is a core part of ATDP development and is necessary to clarify that training is an eligible expense as part of EU support. These changes require amending the Administrative Agreement and Grant Agreement to take effect (see below). D. Changes to the Legal Agreements 21. Under the restructuring, several changes to the legal agreements would be required. First, the AA between the Bank and the EU must be amended. Necessary changes to the AA are to: (i) add Jaffna as an additional district eligible for EU finance; (ii) clarify that farmer training is an eligible cost for EU finance; and (iii) extend the End Disbursement Date (EDD) to June 30, 2025. Further, while amending the AA, the Bank’s point of contact should be updated to reflect the current TTL. 22. The GA between the Democratic Socialist Republic of Sri Lanka (DSRSL) and World Bank (acting as administrator of the EU ASMP Single Donor Trust Fund) would also need to be amended. Necessary changes to the GA are to: (i) add Jaffna as an additional district eligible for EU finance; (ii) amend the Schedule of the Withdrawal of Grant Proceeds by reducing the current total allocation of EUR 23.13 million to the existing category by an amount equivalent to US$1.5 million; and (iii) create a new expenditure category for Jaffna that provides for the EU to finance up to US$1.5 million of goods, works, and non-consulting services on a shared basis with IDA (5 percent) and EU (95 percent); and (iv) extend the project closing date to December 31, 2024. The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) 23. The Financing Agreement (FA) between the World Bank and DSRSL would also be amended. Necessary changes to the FA are to: (i) cancel US$10 million in SDR equivalent; (ii) create a new expenditure category that provides for IDA to finance of goods, works, and non-consulting services in Jaffna on a 5 percent cost-share until the new EU allocation for Jaffna runs out; (iii) reallocate other Credit proceeds across expenditure categories for disbursement; and (iv) extend the project closing date to December 31, 2024. E. Category Reallocations 24. To accommodate the US$10 million cancelation from the IDA Credit, new financing arrangement for Jaffna, and detailed work programs of the two PMUs, various changes to the table of Withdrawal of Grant Proceeds is required. First, Category 5 which supports Component 3 is currently overdrawn and needs to be topped up.2 Additional allocation was not provided as part of the first 18-month extension or with the expansion of Component 2 to cover five new districts. Meanwhile, there is large undisbursed balance in Category 1 (that supports preparation of matching grants) and in Category 3 (that supports the PCG Fund) that can be applied to the cancelation and additional allocation for Category 5. 25. Under the cancelation, the amount currently allocated under the IDA Credit to PCGs under Category 3 becomes zero and the rest of comes from Category 1. The necessary top-up of Category 5 also comes from Category 1. To accommodate the new financing arrangement for Component 2 in Jaffna, a new expenditure category (Category 6) is created by allocating a small amount of SDR 60,000 (US$80,286) from Category 4 that also supports Component 2. Current category allocations and proposed new allocations are shown below in US$ and SDR as of June 22, 2023. 2 More specifically, Category 5 is presently overdrawn by around US$925,000. On top of this, the two PMUs together incurred a further US$908,000 Category 5 costs in costs in 2022 that cannot be documented due to the overrun meaning US$1.83 million is required to bring the balance to zero. On top of this, an additional allocation is required to cover new costs from January 2023 to December 2024. The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) US$ SDR Percentage of Expenditure Category Current Proposed Current Proposed to be Financed Allocation* Allocation Allocation Allocation* (inclusive of tax) Category 1: Goods, non-consulting services, consultants’ services, Incremental Operating 12,933,153 985,000 9,675,000 742,000 100% Costs, and Training under Part 1 of the Project. Category 2: Matching Grants under Part 1 (b) 42,041,102 42,041,102 31,450,000 31,450,000 100% of amounts disbursed of the Project Category 3: Transfers to the Partial Credit Guarantee Account for purpose of issuing 969,151 - 725,000 - 100% Partial Credit Guarantees under Part 1 (c) of the Project. Category 4: Goods, works, non-consulting services, consultants’ services, Incremental 55,876,568 55,796,282 41,800,000 41,740,000 100% Operating Costs, and Training under Part 2 of the Project. Category 5: Non-consulting services, consultants’ services, goods, works, 7,419,018 10,336,322 5,550,000 7,680,000 100% Incremental Operating Costs, and Training under Part 3 of the Project. 5% until the full Category 6: Goods, works, and non- disbursement of the consulting services under Part 2 of the - 80,286 - 60,000 amount under Category 2 of Project for District of Jaffna the Additional Financing; 100% thereafter Cancelation - 10,000,000 7,528,000 TOTAL 119,238,992 119,238,992 89,200,000 89,200,000 * As of June 22, 2023. F. Results Indicators 26. To improve clarity and relevance of the results framework, the following changes are proposed to the intermediate results indicators. No changes to the PDO-level indictors are proposed other than to align the target achievement date for the indicators with extended closing date. (i) Number of Matching Grants approved (Window A) (Number). Since the MTR, Window A has provided two types of matching grants. These types have not been tracked individually so is proposed to add new two sub- indicators. The first sub-indictor would report the number of small grants to individual SMEs (known as “small grants” by the PMU) that was provided for in the original design and the second sub-indicator would report the number of grants to small family farmers organized in clusters around other matching grant recipients (these are known as “cluster grants” by the PMU) that was added following the MTR. The total number of Window A grants would continue to be the sum of individual small grants and cluster grants. The current target for Window A is 350 grants. At the last mission, the PMU had already approved 899 Window A Grants comprising 283 small grants and 616 cluster grants. Based on recent progress and commitments already made to grant proponents, the targeted number of small grants is now set at 300 and the targeted number of cluster grants is set at 700, equal to 1,000 Window A Grants total by the new closing date. (ii) Number of Matching Grants approved (Window B) (Number). The indicator would be renamed by inserting the word “large” to describe the nature of Window B grants better. The current target for Window B is 50 grants. At the last mission the PMU had approved 155 Window B grants and currently expects to deliver at The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) least 160 grants by the new closing date. The end of project target would be updated to reflect this expectation. (iii) Share of project-supported farmer producer organizations making a profit (percentage). This indicator is listed with the intermediate results for Component 1 but includes data for Components 1 and Component 2. To improve transparency, the indicator would be relabeled as “Share of project-supported farmer producer organizations under Components 1 and 2 making profit.” The target remains the same. (iv) Share of project-supported women-led farmer producer organizations making a profit (percentage). This is the gender disaggregated version of the above indicator and would be relabeled as “Share of project- supported women-led farmer producer organizations under Components 1 and 2 making profit”. The target remains the same. (v) Client days of training provided (Number). Similar to the above, this indicator is listed under the intermediate result indicators for Component 2 but includes data for Components 1 and Component 2. To improve transparency, the indicator will be renamed “Client days of training provided under Components 1 and 2 (Number)”. The target remains the same. (vi) Client days of training provided - female (Number). This is the gender disaggregated version of the above and will be relabeled as “Client days of training provided under Components 1 and 2 - female (Number)”. The target remains the same. (vii) Policy/strategic notes delivered to the CPCC (number). This indicator was meant to track the number of summarized notes delivered to high-level policymaker and would be dropped. MoF plans to reconstitute the CPCC, but the Committee has otherwise not existed for several years. Moreover, progress of the policy component does not require two separate indicators. (viii) Research reports completed (number). This indicator would be renamed “number of research reports and policy notes completed” and serve to track the combined output of Sub-Component 2.4 including large reports and short policy notes. The target would be revised from 25 to 20 in line with the current work program expectations. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ Disbursements Arrangements ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Agriculture Value Chain Agriculture Value Chain 102.73 Revised 89.19 Development Development Productivity Enhancement and Productivity Enhancement and 85.63 No Change 85.63 Diversification Demonstrations Diversification Demonstrations Project Management, Project Management, 9.48 Revised 11.31 Monitoring and Evaluation Monitoring and Evaluation The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) TOTAL 197.84 186.13 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IDA-58730 Effective 31-Dec-2021 30-Jun-2023 31-Dec-2024 30-Apr-2025 TF-B5382 Effective 31-Dec-2021 30-Jun-2023 31-Dec-2024 30-Apr-2025 OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation BORROWER' Disburs S REQUEST IDA-58730- ing&Re XDR 89,200,000.00 7,528,000.00 08-May-2023 81,672,000.00 FOR 001 paying COUNTRY REASONS TF-B5382- Disburs EUR 23,130,000.00 0.00 23,130,000.00 001 ing OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IDA-58730-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: Gds Ncs CS IOC Trng Part1 9,675,000.00 631,002.31 742,000.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: Matching grants Part 1b 31,450,000.00 20,954,843.47 31,450,000.00 100.00 100.00 The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) iLap Category Sequence No: 3 Current Expenditure Category: Trnf to prtial Cr Gurtee acc Part1c 725,000.00 0.00 0.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: Gds Wks NCS CS IOC Trng Part 2 41,800,000.00 19,114,711.93 41,740,000.00 100.00 100.00 iLap Category Sequence No: 5 Current Expenditure Category: Gds Wks NCS CS IOC Trng Part 3 5,550,000.00 6,236,260.83 7,680,000.00 100.00 100.00 iLap Category Sequence No: 6 Current Expenditure Category: Gds Wks NCS Part 2 for Jaffna District 0.00 0.00 60,000.00 5 Total 89,200,000.00 46,936,818.54 81,672,000.00 TF-B5382-001 | Currency: EUR iLap Category Sequence No: 1 Current Expenditure Category: Gdx Wks N/CS Tr Wkshp Part 1.1(a) 23,130,000.00 5,255,335.35 21,742,100.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: Gds Wks NCS Part 1.1(b) 0.00 0.00 1,387,900.00 95 Total 23,130,000.00 5,255,335.35 23,130,000.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2016 0.00 0.00 2017 3,000,000.00 2,720,966.00 The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) 2018 12,000,000.00 14,876,618.00 2019 7,000,000.00 7,075,419.00 2020 15,000,000.00 13,970,236.00 2021 25,000,000.00 10,791,495.00 2022 50,000,000.00 28,786,175.43 2023 38,000,000.00 30,454,601.86 2024 0.00 20,790,000.00 OPS_DETAILEDCHANGES_SORT_TABLE SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Rating at Approval Current Rating Political and Governance  Moderate  Substantial Macroeconomic  Substantial  High Sector Strategies and Policies  Substantial  Substantial Technical Design of Project or Program  Moderate  Moderate Institutional Capacity for Implementation and  High  Substantial Sustainability Fiduciary  Substantial  Substantial Environment and Social  Moderate  Moderate Stakeholders  Moderate  Moderate Other  Moderate Overall  Substantial  Substantial . The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) . Results framework COUNTRY: Sri Lanka Sri Lanka Agriculture Sector Modernization Project Project Development Objectives(s) The Project Development Objectives (PDO) are to support increasing agriculture productivity, improving market access, and enhancing value addition of smallholder farmers and agribusinesses in the project areas. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 PDO Direct project beneficiaries 0.00 1,500.00 25,000.00 55,000.00 93,000.00 115,000.00 135,000.00 (Number) Rationale: Action: This indicator has PDO level indicators end target date revised to reflect the new project closing date (Dec 31, 2024). been Revised Female beneficiaries 0.00 200.00 5,000.00 14,000.00 20,000.00 40,500.00 54,000.00 (Number) Rationale: Action: This indicator PDO level indicators end target date revised to reflect the new project closing date (Dec 31, 2024). has been Revised Clients who have adopted an improved agr. 0.00 500.00 5,000.00 15,000.00 36,000.00 84,000.00 90,500.00 technology promoted by the project (CRI, Number) Action: This indicator has Rationale: been Revised PDO level indicators end target date revised to reflect the new project closing date (Dec 31, 2024). The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 Clients who adopted an improved agr. technology promoted by 0.00 0.00 800.00 3,000.00 16,300.00 25,200.00 36,000.00 project – female (Number) Rationale: Action: This indicator PDO level indicators end target date revised to reflect the new project closing date (Dec 31, 2024). has been Revised Increase in average value of sales of agriculture products due to project interventions 0.00 10.00 25.00 (Market Access Indicator) (Percentage) Rationale: Action: This indicator has PDO level indicators end target date revised to reflect the new project closing date (Dec 31, 2024). been Revised New Jobs generated through investments in agribusiness organizations 0.00 2,500.00 10,100.00 under the project. (Number) Rationale: Action: This indicator has PDO level indicators end target date revised to reflect the new project closing date (Dec 31, 2024). been Revised PDO Table SPACE The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 Agriculture Value Chain Development Number of Small and Cluster Matching Grants 0.00 10.00 45.00 150.00 250.00 350.00 650.00 1,000.00 approved (Window A) (Number) Rationale: Since the MTR, PMU has provided two types of matching grants under Window A including small grants to individual SMEs and micro-grants to individual small farmers organized in clusters around other matching grant recipients. The name of the indicator is now revised to reflect this change and two sub-indicators are Action: This indicator has added to track the two types of Window A Grants better. The total number of Window A Grants will continue to be the sum of individual small grants and cluster been Revised grants. Grant approval is measured by the PMU by actual signing of the Matching Grant Agreement at which time the first tranche is paid. Before this restructuring, the target for Window A Grants was 350 and is now revised to 1,000 based PMU's current expectation of delivering at least 300 small grants and 700 cluster grants by project close. End target date revised to reflect the new closing date. Number of small SME grants approved 0.00 300.00 (Number) Rationale: Action: This indicator The sub indicator will report the number of small grants to individual SMEs (known as "small grants") by the PMU under Window A. is New Number of cluster grants approved 0.00 700.00 (Number) The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 Rationale: Action: This indicator This sub-indicator will report the number of grants to family farmers organized in clusters around other matching grant recipients. is New Number of large matching grants 0.00 4.00 10.00 15.00 21.00 50.00 160.00 approved (Window B) (Number) Rationale: Action: This indicator has The indicator is renamed by inserting the word "large" to clarify the type of grants provided under Window B. Before this restructuring, the target was 50 and is been Revised now revised to 160 based current expectation. Share of project- supported farmer producer organizations 0.00 50.00 70.00 under Components 1 and 2 making profit (Percentage) Rationale: Action: This indicator has This indicator is renamed by inserting the words "under Components 1 and 2" to reflect the indictor captures data form both components. End target date revised been Revised to reflect the new project closing date (Dec 31, 2024). Share of project- supported women-led farmer producer organizations under 0.00 50.00 70.00 Components 1 and 2 making profit (Percentage) The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 Rationale: Action: This indicator This indicator is renamed by inserting the words "under Components 1 and 2" to reflect the indictor captures data form both components. End target date revised has been Revised to reflect the new project closing date (Dec 31, 2024). Share of Matching Grant recipients operating based on approved 0.00 50.00 60.00 80.00 business plans (Percentage) Rationale: Action: This indicator has End target date revised to reflect the new project closing date (Dec 31, 2024). been Revised Share of matching grant recipients reporting 0.00 20.00 30.00 50.00 improved access to markets (Percentage) Rationale: Action: This indicator has End target date revised to reflect the new project closing date (Dec 31, 2024). been Revised Productivity Enhancement and Diversification Demonstrations Targeted clients satisfied with agricultural services 0.00 30.00 60.00 75.00 (Percentage) Rationale: Action: This indicator has End target date revised to reflect the new project closing date (Dec 31, 2024). been Revised The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 Targeted clients satisfied with agricultural services 0.00 30.00 60.00 75.00 - female - (Core) (Percentage) Rationale: Action: This indicator has End target date revised to reflect the new project closing date (Dec 31, 2024). been Revised Client days of training provided under 10,000.00 15,000.00 30,000.00 72,000.00 118,000.00 170,000.00 Components 1 and 2 (Number) Rationale: Action: This indicator has This indicator is renamed by inserting the words "under Components 1 and 2" to reflect that it reports data from both components. End target date revised to been Revised reflect the new project closing date (Dec 31, 2024). Client days of training provided female under 3,000.00 4,500.00 9,000.00 18,000.00 35,400.00 68,000.00 Components 1 and 2 (Number) Rationale: Action: This indicator has This indicator is renamed by inserting the words "under Components 1 and 2" to reflect that it reports data from both components. End target date revised to been Revised reflect the new project closing date (Dec 31, 2024). Number of new farmer producer organizations 0.00 35.00 75.00 80.00 registered (Number) The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 Share of farmer producer organizations functional 0.00 75.00 (Percentage) Rationale: Action: This indicator has End target date revised to reflect the new project closing date (Dec 31, 2024). been Revised Number of clusters completed in accordance 0.00 33.00 with cluster development plans (Number) Rationale: Action: This indicator has End target date revised to reflect the new project closing date (Dec 31, 2024). been Revised Policy/Strategic notes delivered to CPCC 0.00 2.00 6.00 11.00 15.00 (Number) Rationale: Action: This indicator has This indicator was meant to track the number of summarized notes delivered to high-level policymaker and is dropped. MoF plans to reconstitute the CPCC, but the been Marked for Committee has otherwise not existed for several years. Moreover, progress of the policy component does not require two separate indicators. Deletion Number of research reports and policy notes 0.00 2.00 5.00 10.00 15.00 20.00 completed (Number) Rationale: Action: This indicator has This indicator is renamed and will serve to track the combined output of Sub-Component 2.4 including large reports and short policy. The target would be revised been Revised from 25 to 20 in line with the current work program expectations. End target date revised to reflect the new project closing date. The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 Number of commercial partnerships or market contracts signed between producer groups and domestic/international 0.00 20.00 70.00 105.00 agribusiness actors (processors, wholesalers, retailers, exporters, etc.) (Number) Rationale: Action: This indicator has End target date revised to reflect the new project closing date (Dec 31, 2024). been Revised Farmers adopting improved agricultural 0.00 10,000.00 18,000.00 26,500.00 technology (CRI, Number) Rationale: Action: This indicator has End target date revised to reflect the new project closing date (Dec 31, 2024). been Revised Farmers adopting improved agricultural 0.00 3,000.00 6,000.00 10,600.00 technology - Female (CRI, Number) Rationale: Action: This indicator End target date revised to reflect the new project closing date (Dec 31, 2024). has been Revised Farmers adopting 0.00 7,000.00 12,000.00 15,900.00 improved agricultural The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 technology - male (CRI, Number) Action: This indicator has been Revised Area provided with new/improved irrigation 0.00 1,000.00 5,520.00 10,000.00 or drainage services (CRI, Hectare(Ha)) Rationale: Action: This indicator has End target date revised to reflect the new project closing date (Dec 31, 2024). been Revised Area provided with new irrigation or 0.00 800.00 5,000.00 7,000.00 drainage services (CRI, Hectare(Ha)) Rationale: Action: This indicator End target date revised to reflect the new project closing date (Dec 31, 2024). has been Revised Area provided with improved irrigation or 0.00 200.00 520.00 3,000.00 drainage services (CRI, Hectare(Ha)) The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 Rationale: Action: This indicator End target date revised to reflect the new project closing date (Dec 31, 2024). has been Revised km roads constructed and rehabilitated under 0.00 30.00 50.00 80.00 the project (Kilometers) Rationale: Action: This indicator has End target date revised to reflect the new project closing date (Dec 31, 2024). been Revised Project Management, Monitoring and Evaluation Training taken by project 0.00 100.00 250.00 400.00 500.00 500.00 staff at all levels (Days) Rationale: Action: This indicator has End target date revised to reflect the new project closing date (Dec 31, 2024). been Revised IO Table SPACE The World Bank Sri Lanka Agriculture Sector Modernization Project (P156019)