The World Bank Sao Paulo Sustainable Rural Development and Access to Markets (P108443) REPORT NO.: RES29071 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SAO PAULO SUSTAINABLE RURAL DEVELOPMENT AND ACCESS TO MARKETS APPROVED ON MAY 25, 2010 TO STATE OF SAO PAULO AGRICULTURE LATIN AMERICA AND CARIBBEAN Regional Vice President: Jorge Familiar Calderon Country Director: Martin Raiser Senior Global Practice Director: Juergen Voegele Practice Manager/Manager: Preeti S. Ahuja Task Team Leader: Maurizio Guadagni The World Bank Sao Paulo Sustainable Rural Development and Access to Markets (P108443) I. BASIC DATA Product Information Project ID Financing Instrument P108443 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 25-May-2010 30-Sep-2017 Organizations Borrower Responsible Agency State Secretariat of Agriculture - Sao Paulo,State State of Sao Paulo Secretariat of Environment - Sao Paulo Project Development Objective (PDO) Original PDO The project development objective is to increase the competitiveness of family agriculture in priority areas of the State of SãoPaulo while improving its environmental sustainability. Current PDO The project development objective is to support the Borrower in improving access to markets for rural producers’ organizations in its territory and in improving its instruments and policies that contribute to environmental sustainability of family agriculture. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-79080 25-May-2010 27-Sep-2010 22-Dec-2010 30-Sep-2018 78.00 72.63 5.37 The World Bank Sao Paulo Sustainable Rural Development and Access to Markets (P108443) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No II. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The achievement of Project Development Objective and Implementation Progress are currently rated Moderately Satisfactory with positive results in most project activities. Project management and the component to support producers' associations were recently upgraded from Moderately Satisfactory to Satisfactory. The project is producing visible results on the ground, and the pace of implementation has improved significantly. Disbursements in the first semester of 2017 were the highest of any semester since project start, a demonstration that improved project management is producing positive results. Several intermediate indicators continued to improve, such as (i) subprojects of traditional communities with market viability identified and financed by the project (+39%); (ii) producer organizations trained on the operation of their business initiative (+12%); (iii) ethno-development plans elaborated (+7%); (iv) value-chain studies carried out (+200%); and (v) rural producers trained (+54%). Rehabilitation of rural roads, which had been lagging in the past, has now picked up thanks to a recent procurement simplification (the so called "Parecer Referencial"). The length of roads which already had critical points rehabilitated increased from 325 Km in September 2016, to 472 Km at the end of March 2017, showing a 45 percent increase. 47 new “convênios” were signed with municipalities for implementation of rural road rehabilitation works, and all funds allocated to this activity have been committed. Of these “convênios”, 9 municipalities are already implementing the rehabilitation works, while the remaining 38 municipalities are in the process to finalize the bidding process, covering an additional 328 Km (BR$20.8 million). Some of these municipalities may still take advantage of the current dry season (expected to finish in October) while others would start by March 2018, after the end of the raining season. Those “convênios” will be extended as soon as the Loan Closing Date is formally extended. The collaboration with the Development Impact Evaluation group (DIME) has been advancing according to plan. DIME has been working with the project team in the preparation of the final impact evaluation. Such evaluation is more rigorous than a traditional project evaluation because it is based on a counterfactual exercise, that is, it tries to answer what would have happened to program beneficiaries in the absence of the program. It uses a non-experimental method (difference-in-differences) and primary data collected by enumerators trained by the DIME team. The survey firm that in charge of the second round of data collection started its field activity. The results of this impact evaluation will be key to the final project ratings because it will measure a key PDO indicator: “Increase in total sales value for participating organizations, by end of project”. The proposed extension of closing date does not imply any changes to the PDO or to the Safeguards policies triggered. No changes are proposed to the Economic and Financial Analysis, Technical Analysis, Social Analysis or Environmental Analysis. The extension was requested by the Borrower with a letter from the State Secretary of Finance (Fazenda), approved by the Federal Government on June 21, 2017 (COFIEX resolution 07/0283) and received the Guarantor’s legal opinion PGFN No. 1014/2017 dated July 17, 2017. The PDOs continue to be achievable under the new closing date and the performance of the Borrower remains satisfactory. An action plan to be undertaken by the Borrower to complete the The World Bank Sao Paulo Sustainable Rural Development and Access to Markets (P108443) project has been agreed upon. The Borrower does not have any outstanding audit reports nor there are audit reports which are not satisfactory to the Bank. The proposed restructuring satisfies the requirements of Bank’s Operational Policy OP/BP 10.00. On April 6, 2017, Jorge Familiar, LAC Regional Vice President, approved the proposed extension “in principle”. The one-year extension will allow a few - but important - new contracts to be signed so that targets can be fully achieved and the Loan can be fully disbursed by the new closing date. The revised Procurement Plan, approved on May 24, 2017, has been deemed realistic. Such plan includes continuing implementation of the “parecer referencial” for rural road rehabilitation and closing of idle subprojects. Delays in implementation of subprojects often result from a lengthy approval process, mostly when the granting of environmental permissions are needed. Subprojects that have been inactive for over a year have received letters informing the beneficiaries that the subproject will be cancelled if it does not become active in a short time. Such approach is freeing the funds budgeted for such subprojects while also creating an incentive for other subprojects to speed up implementation. The project had been restructured twice before. The first time it was restructured in September 2015 to extend the closing date by two years, clarify the PDO and improve the result framework. The second time it was restructured in March 2017 to allow for the Loan to finance the Payment for Environmental Services. III. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 30-Sep-2017, 30-Sep- IBRD-79080 Effective 30-Sep-2015 30-Sep-2018 30-Jan-2019 2018