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UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION

ORGANISATION DES NATIONS UNIES POUR LE DEVELOPPEMENT INDUSTRIEL

|Project Title |EU-EAC MARKUP (Market access Upgrade programme) |

|Project ID Number: |170183 |

|Area/Location/Countries: |Africa Kenya |

|RBM code: |GC2 Advancing Economic Competitiveness: (GC22 Competitive trade & CSR) |

|Thematic code: |GC1 Creating Shared Prosperity: (GC12 Women and Youth in Productive Activities) (GC11|

| |agribusiness and rural development) |

|Planned Start - finish date |February 2019 – December 2022 |

|Project Duration |4 years |

|Government coordinating agency: |Ministry of Industry, Trade and Cooperatives of Kenya |

|Donor |EU |

|Executing agency/ cooperating agency: |UNIDO |

|Project Inputs | |

|EDF contribution |3,680,000 EUR |

|UNIDO inputs | 50,000 EUR |

|Indirect costs (7%) | 244,019 EUR |

|Counterpart inputs |Financial contribution |

|Grand Total |3,730,000 EUR |

Brief description: The project will support the development of Kenya’s capacity to participate in international and regional trade in selected horticulture sub-sectors. The project will mainly aim at enhancing value chains stakeholders’ capabilities to produce and trade according to international market requirements. The programme is expected to start in February 2019. The UNIDO component of the EAC-EU MARKUP programme will be implemented in close coordination with the Ministry of Trade and Industry of Kenya, the EU Delegation to Kenya and other implementing agencies including ITC, and GIZ.

CONTENTS

A. CONTEXT 1

A1. Project Purpose 1

A2. Baseline Scenario 1

A3. Stakeholders 8

A4. Synergy 9

B. UNIDO APPROACH 10

B1. Rationale 10

B2. Comparative Advantage 13

B3. Inception Phase 15

B4. Sustainability Strategy 15

B5. Gender Mainstreaming Strategy 15

B6. Environmental and Social Assessment 16

C. THE PROJECT 17

C1. Project Logical Framework 17

C2. Risks & Mitigation measures 20

C3. Institutional Arrangements and Coordination Mechanism 20

D. BUDGET ITEMS 25

D1. Counterpart inputs 25

D2. UNIDO Inputs 25

E. BUDGET 29

F. MONITORING, REPORTING AND EVALUATION 29

F1. Reporting 29

F2. Monitoring and Evaluation 29

G. PRIOR OBLIGATIONS AND PREREQUISITES 30

H. LEGAL CONTEXT 30

ANNEX I - PROPOSED STANDARD to BE REVISED UNDER MARK UP PROJECT 31

ANNEX II- POLICIES AND TECHNICAL REGULATIONS RELEVANT IN THE FIELD OF HORTICULTURE IN KENYA 33

CONTEXT

A1. Project Purpose

The main project purpose is to contribute to the economic development of Kenya by increasing the value of both extra and intra-regional agricultural exports in selected horticulture sub sectors (snow peas and peas, mangoes, passion fruit, chilies, herbs and spices, nuts).

Recent studies have analysed the reasons for low productivity and competitiveness in these value chains[1] such as the need of specialised extension services and a diffuse lack of knowledge on appropriate good agricultural practices. These value chains for exports are also lacking compliance with market requirements and standards. National quality infrastructure is relatively well developed in Kenya, however some conformity assessment services are not yet fully recognized by the targeted international markets.

This project addresses these challenges through an intervention, which aims to:

• Improve the institutional and regulatory framework for better conformity assessment services in Kenya’s horticultural sector.

• Increasing revenues for Kenya’s smallholder producers and enterprises in export-oriented horticulture sectors.

The current project will build upon the success of the SMAP programme (EDF10) to further strengthen the market potential of high value horticulture.

A2. Baseline Scenario

Background

Kenya Vision 2030 identified agriculture as one of the six key economic sectors expected to drive the economy to a projected 10 percent economic growth annually. The sector is therefore central to the achievement of the Vision 2030 goal of “a globally competitive and prosperous country with a high quality of life by 2030”. The sector contribution to achievement of this goal will be through promotion of an innovative, commercially oriented and modern agriculture. The sector is also expected to deliver on Kenya’s regional and global commitments such as the Comprehensive Africa Agricultural Development Programme (CAADP), African Union (AU) Agenda 2063 and Sustainable Development Goals (SDGs). The agricultural sector continues to be the mainstream of the country’s economy. Kenya unlike many African States is not endowed with minerals, thus relies on agriculture as the main driver of the economy. Hence agriculture plays a central role in the realization of the SDGs (i.e. SDG 1 on poverty eradication) and realization of Vision 2030.

Agriculture (crop and livestock production) contributes directly an average of 27.3 percent of the national GDP and provides a source of livelihood to the majority of Kenyans. It also contributes about 26 per cent indirectly to GDP through linkages other sectors such as agro-based manufacturing, transport, wholesale and retail trade. Over the second Medium Term plan Period (2013-2017). According to the National Economic Survey 2017, contribution to GDP by crops and livestock, consistently improved from 24.2 percent in 2012 to 30.9 percent in 2016 thus making it the dominant sector. Agriculture sector contributes about 75 per cent of industrial raw materials and 60 per cent of export earnings. The sector also accounts for 65 per cent of Kenya’s total exports, and 60 per cent of the total employment. The sector average growth rate during the MTP II was 5.1 per cent.

During implementation of the third Medium Term plan Period (2018 – 2022) agriculture is expected to grow at a higher rate of 7 percent as a result of various measures to be implemented. Some of the key measures are on inputs access; market access and product development; implementation of policy, legal and institutional reforms; crop and livestock insurance; crop diversification; agriculture mechanization; climate change mitigation and adaptation; improvement of livestock productivity, disease and pest control, and increasing youth and women participation in modern agriculture. Further, the sector will employ strategies to optimize on the unique potentials of the various agro ecological zones and farming systems. Agriculture plays an important role in Kenya’s economy and is one of the main sources of income for most of the population.

The horticulture sub-sector is made up of vegetables, flowers, fruits and medicinal aromatic plants. In 2016 the value of domestic horticulture based on farm gate estimations was KES 134 billion (approximately equal to 1.2 billion USD). The total value of fresh horticultural produce exports in 2016 was KES 101.5 billion from 261,106 MT of produce, compared to KES 90.4 billion in 2015 from 238,013 MT. The value of fresh horticultural exports increased by 12.3% mainly due to increase in exports of flowers especially roses. Exports of flowers contributed KES 70.8 billion (70%) while vegetables and fruits contributed KES 23.4 billion (23%) and 7.3 billion (7%) respectively. The major flower exports in 2016 included: Roses, Carnation, Hypericum, Gypsophilla and Cuttings, while major vegetables were fresh beans, peas, Asian vegetables. The major fruits included avocados, mangoes and passion fruits. Kenya horticulture export destination is mainly the European Union (EU) taking about 45% of the country’s exports. The specific destinations are Netherlands, United Kingdom, Germany, Austria, Italy, France, Belgium, Middle East and Far East (Korea, China). Despite the previous upward growth of the horticulture sector recorded, the value and production of domestic horticulture declined in 2016 mainly due to severe adverse weather and the drought that affected the country. Other challenges that have affected the sector, requiring policy intervention, include un-harmonized levies by the counties, low incentives in terms of local market prices, high costs of inputs such as seeds, agro chemicals, high cost of energy, high air freight charges, low adoption of technologies and value addition, compliance and adherence to standards and regulations, inadequate infrastructure such as irrigation and markets. There is need to invest in better production methods, post-harvest care and quality to improve consumer acceptance of produce to earn higher value.

Among the nuts grown in Kenya, cashew nuts, macadamia nuts, ground nuts (peanuts) and bambara nuts are the most important. The average annual production volumes are 10,000 tons for cashew nuts, macadamia nuts 8,000 tons, peanuts 15,000 tons and bambara nuts 800 tons respectively. Other nuts grown to a very limited scale are betel nuts, chestnuts, walnuts and hazel nuts. Kenya’s nuts, which are largely used as confectionary comprise cashew nuts, macadamia nuts, peanuts and bambara nuts. Kenya is a net exporter of nuts and exports have also been on the increase with exports of nuts increasing from 11,170 metric tons valued at KES 0. 34 billion in 2001 to 13,057 metric tons valued at KES 3.1 billion in 2012.

Current Challenges

Despite Government’s commitment and past interventions[2], the fresh fruits & vegetables, subsectors have been unable to realize its full potential due to inadequate supportive infrastructure such as cold storage; ineffective marketing information; stringent standards set by major export destinations and weak monitoring and surveillance systems along the value chains. These problems co-exist in a policy environment whose strategy is not coherent enough and the legal framework not fully business-supportive. Moreover, there is need to develop more standards and codes of practice that will assist private sector to implement good agricultural and manufacturing practices in order to produce high quality and safe goods.

Proving conformity with standards frequently requires reforming and upgrading standards-setting services, as well as establishing efficient testing, certification and accreditation mechanisms that conform to the requirements of the WTO SPS and TBT Agreements and enjoy international recognition.

A new EU regulation on plant health will be effective as of 14 December 2019. ().  This should inform the SPS protocol in the EAC region for export commodities to the European market, also adaptation will need to take place in production processes. Kenya’s horticultural industry is not sufficiently aware of this new plant health law. Production processes will need to be adapted, requiring awareness raising and capacity-building support.

Testing, calibration and certification facilities thus take on extreme importance for Kenya as a developing country wanting to benefit from trade opportunities. If such facilities are not harmonized internationally, a country’s trade potential is seriously hampered and the prices its products can command on global markets are correspondingly lower. Moreover, local metrological and testing capabilities, provided they are internationally harmonized, reduce the costs associated with testing products that would otherwise have to be tested abroad or locally by international certification companies charging very high rates. Local assessment, combined with international good practice, provides domestic companies with easily accessible and affordable objective results essential to improving design and technologies and to assuring quality. Other challenges relate to TBT issues such as packaging, labelling, etc.

It is recognized that most of the standards and regulatory requirement related compliance challenges the country is facing can be attributed to insufficient ability of the control management system to detect potential risks and gaps, to lack of conformity to market requirements (including packaging), to lack of national standards harmonised to international ones, to improvements needed in technical regulations and ultimately to the need to share information, coordinate and identify appropriate strategies for collaborative management in the supply chain together with the private sector actors.

One of the main challenges is the need to establish an effective and efficient risk assessment management system, enhance technical capabilities of national food control agencies, strengthen interaction with private sector and safeguard public health and ensure market access.

There is a weak industry self-regulation system in the horticulture sub-sectors. The private sector should conduct its own audits of high-risk products on a regular basis. Another area of concern is that there are no effective food controls and testing programmes currently run for the selected sub-sectors. The food business operators should use a risk-based preventative controls to reassess their food safety systems. Currently, traceability is also weak, which compromises the ability to trace products or initiate any product recalls should a need arise. At a minimum, a product tracing system must enable regulators to determine the point of convergence of products to better assess if product categories, brands or lots may be associated with an outbreak. The system then enables the industry to determine if products were handled properly and allow to take necessary corrective measures if needed.

On the private sector side, one of the main challenges is to ensure smallholder producers are able to produce conforming products and remain viable in the value chain. The majority of smallholder farmers tend to be cut off from the remaining segments of the agricultural value chains. This puts high pressure on them not only to produce more efficiently, but to perform well in the overall farm management system and implement the standards and regulations. The main reasons why the small farmers remain ‘detached’ from the chains include not being able to guarantee a consistently high-quality and safety of products, not being able to reliably produce enough of the same product on a regular basis, and inability to access information and conformity services on the various standards required for production and international market access. While bodies providing technical services and conformity assessment do exist in the country, the linkage with agricultural value chains is currently weak.

These challenges can be successfully tackled over time and with adequate support to the value chain stakeholders, as demonstrated during the successful implementation of Kenya Standards and Market Access Programme (SMAP)[3]. In fact, following SMAP intervention the number of interceptions from fresh produce exports in the EU from Kenya is decreasing (evident in the latest interceptions data). It is expected that smallholders’ income will significantly rise due to the improved demand of safe produced food and improved control of pests (i.e. thrips and caterpillars) in horticulture sector. Under SMAP many of the famers benefited directly since prior to the training they either had not commenced export production, or had ceased as a result of non-compliance, mainly because of pesticide residues and other food safety reasons. As a result of the training, they were readmitted into production groups. The application of the Self-Assessment Guide among growing clusters meant that they could identify control points that needed to be strengthened to assure food safety, thus gain confidence of the exporters, who increased their orders. Awareness about food safety concerns and issues has been raised at national level reaching out more than 15 million people through social and traditional media.

Food safety is a requirement now for all food stuff, and with the coming in of Kenya Standard 1758, it will be important for the farmers to understand the importance of the adhering to the standards.  One of the current challenges will be associated with the costs of the services provided.  Farmers may be willing to be certified according to Kenya Standard 1758 but the cost of the certification and its maintenance may not be affordable for many.

MARKUP-Kenya National Window

In recognition of the above challenges and following the successful implementation of SMAP the European Union decided to support Kenya to improve market access of its agro-food products to the EU and regional markets through a technical assistance programme, MARKUP Kenya.

MARKUP Kenya is part of the regional EAC-EU MARKUP programme which aims at addressing both supply side and market access constraints of some key export-oriented sectors, namely agro-industrial crops (coffee, tea and cacao) and horticulture, supporting participation in regional and global value chains – with a particular focus on exports to the European Union, so as to enhance EAC capacity to exploit in full its trade-driven growth potential.

This programme is structured around two intervention levels, the EAC-Window and the Partner States Windows.

The EAC-Window will support EAC efforts to improve the regional trade and business enabling environment for the selected commodities, through enhanced capacity to advocate for the removal of sector trade barriers and improved sector standards and Sanitary and Phyto-Sanitary (SPS) measures harmonization. It will also support the private sector in enhancing its export competitiveness, through increased awareness and compliance with destination market requirements as well as with improved access to finance and business development opportunities (including by reinforcing business support organizations’ capacities).

Result 1 (R.1) – Enhanced capacity to advocate for the removal of sector trade barriers;

Result 2 (R.2) – Sector standards and SPS measures harmonization approved;

Result 3 (R.3) – Export competitiveness enhanced for sector SMEs;

Result 4 (R.4) – Business development capacities approved for sector SMES.

The regional intervention is managed by ITC and GIZ.

The Partner States Window includes national interventions tailored to the countries’ specific needs and complementing the EAC-Window where any single country needs it the most. Interventions will focus on one or more areas among reduction of trade barriers and quality assurance, enhancement of SME export competitiveness and business promotion.

Kenya MARKUP Window is implemented by UNIDO through this action.

The Horticulture sub-sector for Kenya window

MARKUP Kenya will focus on the horticulture sector by addressing challenges in the following value chains: snow peas and peas, mango, passion fruit, chilies, herbs and spices and nuts. Exact value chains and target locations will be determined during the inception phase and after a detailed gap analysis. The value chains and locations will be chosen out of the lists below.

The avocado value chain will be addressed by ITC under their regional intervention together with coffee and tea.

Table 1. Value chains covered by the intervention

|Value chain |Rationale for inclusion |

|Snow peas and peas|Commodity for small-scale farmers with high per kg returns |

| |Still in the 5 % EU import controls for pesticide residues |

| |Need to create awareness on market standards of exports to the EU |

| |Despite challenges area under export still increasing |

| |Over 17,000 tons produced mainly for export in 2014 valued at over KES 866 million. |

| |Challenges of quarantine pests still there |

| |Proposed counties include Taita Taveta and Transzoia, Nayandarua |

|Mangoes |Important for export, but challenge of fruit fly and mango weevil need to be addressed. Kenya did a self-ban for |

| |exports to EU but the mango exports continue to go to the Middle East. In the project to address the issues linked|

| |to Mangoes support would be required to continue with work on creating areas of low pest prevalence especially in |

| |relation to the fruit fly control. |

| |Lack of high quality material, high post-harvest losses and premature harvesting are real challenges. |

| |Need to create awareness on market standards of exports to the EU |

| |The fruit fly can be controlled through pre-harvest measures which includes the use of massive traps. In the |

| |post-harvest phase the fruit fly can be controlled through specific treatments: (i) methyl-bromide rooms; (ii) |

| |cold treatment; (iii) hot water or vapor treatment, etc.; |

| |There will be need to also implement a monitoring programme at the Country level. |

|Passion fruit |This is a growing export product after avocado. Initially a leading export from Kenya but due to challenges among |

| |them increased incidences of fusarium wilt, dieback and woodiness virus disease plus premature harvesting of |

| |fruits has negatively impacted the global competitiveness of the passion fruit from Kenya. |

| |The challenge of the passion fruit is the lack of clean planting material which has the woodiness virus. KEPHIS |

| |can work with us to set up disease free planting materials in the TVET centres. Proposed counties: Bungoma, |

| |Uasingishu and Transnzoia. |

| |Lack of high quality material, high post-harvest losses and premature harvesting are real challenges. |

| |Need to create awareness on market standards of exports to the EU. |

|Herbs and spices |Herbs and spices remain unexploited in Kenya. |

|(including |Challenges of interception of certain herbs and species in the recent past have not deterred growth in this area. |

|chilies) |Major challenge in this area is lack of label extensions for pesticides for herbs, hence farmers practice organic |

| |farming |

| |Basil this has the highest export volumes (source HCD report 2015; horticulture study by the embassy of |

| |Netherlands report for March 2017) challenges with it is leaf miners. Proposed counties to work with Nakuru, |

| |Muringa and Kajiado |

| |It’s an important area that needs farmers to be enlightened on the market standards for exports; there need to |

| |create specific manuals, brochures and documentation to assist in supporting this area. |

| |Major challenges for chilies include the false codling moth. Starting from the 01/01/2018, capsicum exports (i.e. |

| |fresh chilies) to the EU markets need to be grown in pest free environment. Support is required for small farmers |

| |in the pest monitoring and control and design a national integrated pest management system based on Good |

| |Agricultural Practices. Also, create awareness, use of greenhouses, and development of a treatment facility by |

| |KEPHIS. |

| |During the last mission of inspectors from DG SANTE in November, December 2017, chilies were singled out as |

| |requiring extra official controls; KEPHIS requests support in doing three things: |

| |a)    Create awareness/training on management of False Codling moth (FCM). |

| |b)    Support issues linked to growing in greenhouses – create model greenhouses that can be pest free zones or |

| |show how best practices from established greenhouses. |

| |c)     Create an official/private facility for treatment of chilies to ensure they are free of FCM. |

|Nuts |In 2014, nuts contributed KES 9.6 billion accounting for five percent of the domestic value of horticulture. Nuts |

| |have a potential to be processed into diversified high market end value products and hence an important sub-sector|

| |in attaining objectives of the Kenya Vision 2030 |

| |Among the nuts the following the most important in terms of potential for export are: sesame, groundnuts; |

| |macadamia nuts, cashew nuts |

The intervention will focus on specific counties relevant for the production of the products indicated above. In order to have an impact in these sectors it will be key to partner with county governments to recruit farmers, purchase the seedlings, deliver training and awareness sessions.

Table 2 below shows an indication of the export value and the area (counties) of provenance of the horticulture crops in Kenya.

Table 2: Inventory of major fruits and vegetables in Kenya - 2015

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Source, HCD 2015

Project location

The project will cover 10 counties, selected according to the following criteria:

• high productive areas (those with higher volumes of produce will be preferred)

• counties willing to partner in this programme, and take ownership to ensure continuity of extensions services and enforcement of standards

• counties that have an active private sector and experience in export

• counties with incubation or TVET centers and Common facilities centers will be given a priority

• county policies

• donor coverage (those counties having received less assistance will be preferred)

The following counties represent a preliminary list of target counties (priority counties highlighted in bold): Baringo, Bomet, Bungoma, Elgeyo Marakwet, Embu, Kajiado, Kiambu, Kirinyaga, Kisii, Laikipia, Machakos, Makueni, Marakwet, Meru, Muranga, Nakuru, Narok, Nyandarua, Nyeri, Taita, Taveta, Tharaka Nithi, Transnzoia, Uasingishu.

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Fig 1. Counties in Kenya

Project duration

The project will have duration of 48 months and implementation is expected to start in February 2019.

A3. Stakeholders

Government Agencies

Kenya Plant Health Inspectorate Service (KEPHIS) is the government parastatal whose responsibility is to assure the quality of agricultural inputs and produce to prevent adverse impact on the economy, the environment and human health. It its role is to ensure that movement and trade in plant and plant products do not cause the introduction, establishment and spread of pests within the country.

Kenya Bureau of Standards (KEBS) is a statutory body established under the Standards Act (CAP 496) of the laws of Kenya. It is responsible for providing Standardization and Conformity Assessment services that consistently meet its customers ‘requirements and endeavour to exceed their expectations.

Agriculture Food Authority (AFA) is the successor of former regulatory institutions in the sector that were merged into Directorates under the Authority, with the commencement of Crops Act, 2013 on 1st August 2014, including Coffee Board of Kenya, Kenya Sugar Board, Tea Board of Kenya, Coconut Development Authority, Cotton Development Authority, Sisal Board of Kenya, Pyrethrum Board of Kenya, Horticultural Crops Development Authority. AFA promotes development and adoption of standards for labelling, packaging, grading, transporting and storing horticultural produce in compliance with local regulations and international standards.

Other government agencies

The Pest Control Products Board (PCPB) was established under the PCPB Act (Cap 346 of Ed 1983). It is committed to provide an efficient and effective regulatory service for importation, exportation, manufacture, distribution, transportation, sale, disposal and safe use of pest control products and mitigate potential harmful effects to the environment.

The Horticultural Crops Directorate (HCD) formerly known as Horticultural Crops Development Authority was established under the Agriculture Act, Chapter 318. Initially, HCD focused on horticulture development and marketing. Other agencies will include KENAS, Ministry of Industry Trade and Cooperatives, Ministry of Health, Council of Governors and Government Chemist.

The Export Promotion Council (EPC) is Kenya’s premier institution in the development and promotion of export trade. Established in 1992, EPC’s primary objective is to address bottlenecks facing exporters and producers of export goods and services with a view to increasing the performance of the export sector. It is mandated to co-ordinate and harmonize export development and promotion activities in the country, providing leadership to all national export programmes. Today, EPC is the focal point for export development and promotion activities in the country.

The table below describes the roles and responsibilities of the government agencies along the different stages of the value chain.

Table 3- Stakeholders’ responsibilities in the horticulture value chain

|Value chain |Activity |Responsibility |

|Sourcing of Farm |Certification of agro-inputs and planting materials |KEPHIS |

|Inputs and Supplies | | |

| |Registration of Pesticides |PCPB |

|Primary Production |Registration of Producers |AFA-Horticulture Crop |

| | |Directorate (HCD) |

| |Awareness of market requirements |KEPHIS |

| |Extension services |County governments |

| |Licensing, regulation, market promotion and technical and advisory|AFA-HCD; KEBS |

| |services | |

| |Registration and control of pesticides |PCPB |

|End-Markets & Trade |Technical and business support services |AFA-HCD |

| |Grading, Inspection and Certification of Produce |KEPHIS |

| |Seed certification | |

| |Laboratory analytical service – pesticide residue, plant health | |

| |diagnostics, etc | |

| |Kenya’s premier trade Association representing growers, exporters |The Fresh Produce FPEAK |

| |and service providers in the horticulture industry | |

| |Provision of high level lobbying, advocacy and capacity building |KHC-Kenya Horticulture |

| |for sustained market access for Kenya horticulture products. |Council, FPEAK ; KEBS |

Private sector

The project will address relevant private sector operators in selected horticulture priority value chains. In particular private, sector associations or business support organizations, small holders and farmers in 10 selected counties, exporters and consumers. Some of the relevant private sector stakeholders identified are listed below.

• Fresh Producers Export Association of Kenya (FPEAK). The Fresh Produce Exporters Association of Kenya (FPEAK) is Kenya’s premier trade Association representing growers, exporters and service providers in the horticulture industry.

• Kenya Horticulture Council (KHC). The Kenya Horticultural Council (KHC) is an umbrella body consisting of the Kenya Flower Council (KFC) and the Fresh Produce Exporters Association of Kenya (FPEAK) to address crosscutting issues facing the industry including carrying out high level advocacy and lobbying on behalf of its members.

• Kenya Horticulture Association of Kenya (HAK). HAK promote horticultural science in Kenya, through the generation, dissemination, and exchange of horticultural information and technology among members.

• Kenya Association of fruit and vegetables exporters (KEFE)- KEFE is comprised of Kenyan Horticultural Exporters with the aim of growing and expanding their businesses by bringing resources together to fight challenges together, seek more markets and promote efficiency for a better business environment.

• Kenya Agricultural and Livestock Research Organization (KALRO). A corporate body created under the Kenya Agricultural and Livestock Research Act of 2013 to establish suitable legal and institutional framework for coordination of agricultural research in Kenya. KALRO has 16-commodity research institutions among them are the Horticulture Research 23 Institute (HRI) locates in Kandara. The Institute is mandated to undertake research in all aspects of production, management, postharvest and value addition of horticultural crops. The outputs from research activities implemented are to support the national horticultural industry.

• Exporters companies such as VegPro Limited; East African Growers Group (EAG Group); Wilham K Ltd; Sunripe Ltd; Mara Farming Group; Keitt Exporters Ltd; Kakuzi Limited; AAA Growers; KHE Limited.

A4. Synergy

The Kenya National Window of MARKUP is part of regional programme whereas the regional components are managed by ITC and GIZ. Therefore coordination mechanisms and synergies with regional components are necessary. In particular synergies are important in relation to standards harmonization in the region (GIZ) and improvement of market access through regional actions (ITC).

The project will also create adequate coordination mechanism with AGRI-FI Kenya programme, whose objective among others is to support the upgrading of agriculture and agri-business value chain based training curricula. MARKUP will work in close cooperation with AGRI-FI Kenya. As there could be overlap in the target value chains and on focus geographical areas, MARKUP and AGRI Kenya will coordinate activities to seek higher impact in the selected counties. Early 2018, AGRI-FI Kenya will carry out an inception study to map out the 10 priority counties, ATVET Centers and value chain. MARKUP will commit as much as possible to same counties.

UNIDO is collaborating with Food Processing and Packaging Machinery Association of the German Engineering Federation, Verband Deutscher Maschinen und Anlagenbau (VDMA), to develop vocational skills in the operation and maintenance of machinery used in the agro and food processing industry in Kenya. The proposed project will draw on resources and experiences from the UNIDO-VDMA project particular in terms of identification of technology providers as well as participating in its training activities.

The programme will build on past and current horticulture projects such as the one listed below:

|HortIMPACT: Kenya Market-Led Horticulture Programme (SNV, Hivos, Solidaridad, Delfi, Wageningen, |2015 – 2019 |

|Agri ProFocus) | |

|Youth in Modern Agriculture Project (YMAP) - MOALF |2012 – On going |

|3R (Resilient, Robust and Reliable) Kenya |2016 -2019 |

|Smallholder Horticulture Empowerment Promotion Project for Local and Up scaling (SHEP |2017 - 2022 |

|PLUS) - MOALF | |

|Integrated Agricultural Research for Development: Enhanced Food and Nutrition Security through |2017 - 2019 |

|Increased Production and Promotion of Agribusiness in Kenya - KALRO | |

|Feed the Future Programme | |

|Adoption of market and good agricultural practice standards by the region’s horticultural growers - |2011 – 2014 |

|implemented by FPEAK | |

|Program for Agriculture and Livelihoods in Western Communities of Kenya (PALWECO) - Ministry of |2010–2016 |

|Devolution and Planning | |

|Kenya Agricultural Value Chain Enterprises (KAVES) - FINTRAC |2013 – 2018 |

|Kenya Horticulture Competitiveness Project (KHCP) - FINTRAC |2012 – 2016 |

|Agricultural Sector Development Support Programme (ASDSP) - MOALF |2012 – 2016 |

In addition, the project will build partnerships and foster synergies with other initiatives in the horticulture industry which are currently being implemented in the country (i.e Fit for Market COLEACP, TMEA). The programme will also seek cooperation with the Ministry of State Department of Vocational and Technical Training.

The project will also ensure that adequate channels of communication are established to ensure synergies and avoid duplications.

UNIDO APPROACH

B1. Rationale

The UNIDO component of the EAC-EU MARKUP programme in Kenya is in line with UNIDO’s Inclusive and Sustainable Industrial Development (ISID) thematic programmes on Advancing Economic Competitiveness (specifically on, Competitive trade & CSR) and Creating Shared Prosperity (particularly on, agribusiness and rural development).

Kenya MARKUP aims at supporting the Kenyan Government’s effort to strengthen the economy through increased agricultural production, value addition and agro-processing, as well as trade expansion. Its design is based on the EAC-EU MARKUP Financing Agreement agreed between the European Commission and the EAC Secretariat and takes into account other cooperation programme funded by the EU delegation in Kenya.

During the identification and formulation phase of the action, UNIDO consulted key stakeholders regarding their perceptions of key gaps, needs and coordination needs with both public sector bodies such as KEBS, Kenya Plant Health Inspectorate Service (KEPHIS), Directorates under AFA (HCD, TD, CD) and private sector organizations like FPEAK (Fresh Producers Association) and KHC (Kenya Horticultural Council). Consultations were done also with Pesticides Control and Produce Board (PCPB), Chambers and Business Membership Organisations as well as other donor funded initiatives (TMEA, DANIDA, GIZ, Dutch Cooperation; COLEACP, USAID-KAVES).

Kenya MARKUP will take a value chain approach based on the idea that many actors connected along a chain produce goods to end users through a complex and sequenced set of activities through which value is added at every step. UNIDO’s interventions will promote competitiveness and market access of Kenya’s fruit and vegetables sub sector on the domestic and international markets. The Business Sector is expected to benefit from improved services rendered by inspection and conformity assessment bodies and better product quality, thus leading to increased access to regional and international markets. The intended product diversification and the higher export rates will also be facilitated as a result of the enhanced compliance with relevant international standards and technical regulations.

The intervention logic is based on the following principles:

• Sector approach

• County coverage and empowerment

• Engagement with the private sector

Sector approach. As mentioned previously chapter the project is focusing on specific sub sectors and related value chains. Considering the large number of sub-sectors and limited resources, the project will limit its intervention to the identified critical areas within each value chain such as the one described below:

• Snow peas and peas - training small holders and improving extension services

• Mango and passion fruits - food safety processing and international market access related issues

• Herbs and spices - training small holders and improving extension services

• Nuts - post harvesting quality issues

County coverage and empowerment. The project envisages to adopt a bottom up approach seeking commitment and participation of country governments in project activities. The aim of their involvement is to facilitate their active role in ensuring continuity of extensions services and enforcement of standards.

During the inception phase, counties representatives will be invited to workshop to present workplans and scope of activities. They will be invited to express interest in sharing resources, promoting and participating to training and awareness raising activities in selected value chains. A shortlist of 10 counties will be retained to participate to Kenya MARKUP activities.

In addition, the project will seek cooperation arrangements with the Ministry of State Department of Vocational and Technical training, and County Governments in selected counties to involve TVET centers and Agricultural Training centers during project activities. The objective will be to address low skilled professionals to promote and disseminate the use of their newly developed curricula under AGRI-FI and GIZ interventions

Engagement with the private sector. The third pillar of this project is based on private sector engagement through two private sector channel, namely private sector associations and exporting companies. The first channel is represented by Business Membership Organisations (BMOs) such as FPEAK, KEFE and KHC. The project will increase capacity, through project activities, to their members and disseminate project results through their networks. The second channel is exporting companies (ie the ones operating in value chains listed above). The aim of the project is to organise youth fora, sensitizing training and other events in cooperation with export companies for farmer groups. The aim ultimately is to increase skills and number of farmers that can potentially be contracted by exporting companies. Activities will be tendered out and private sector stakeholder will be invited to take part to the competitive bids. An informative workshop will be held during the inception phase to present the project to the private sector stakeholders.

Project Theory of Change

The proposed project is in line with the European Consensus on development in line with the UN Agenda 2030 as well as several other EU policy statements including the EU-Africa joint strategies on Regional integration for development in ACP countries and the related Economic Partnership Agreements (EPA) initiated in October 2014.

The project is also in line with national priorities and policies in relation to food safety and agri-business:

• Vision 2030 - The Kenya Vision 2030 is the national long-term development policy that aims to transform Kenya into a newly industrializing, middle-income country providing a high quality of life to all its citizens by 2030 in a clean and secure environment. The Vision comprises of three key pillars: Economic, Social and Political.

• National Horticulture Policy (2012) - The broad objective of the policy is to accelerate and sustain growth and development of the horticultural industry in order to enhance its contribution towards food security, poverty reduction as well as employment and wealth creation.

• Agricultural Sector Development Strategy (ASDS) (2010 – 2020) - The main objectives include: increasing productivity; commercialization and competitiveness of agricultural commodities and enterprises; and developing and managing key factors of production.

• National Agri-business Strategy (2012) - The objective is to bring about a highly productive and efficient agribusiness sector, competitive both locally and internationally. The strategy emphasizes the need to encouraged private sector organizations in development of diversified agricultural and food products, which are essential for improving the competiveness of the sector.

The purpose of the project is to contribute to the economic development of Kenya by increasing the value of both extra and intra-regional agricultural exports in horticulture sectors. The expected results of UNIDO’s intervention within EAC Partners State Intervention Window of the MARKUP programme for Kenya are:

• KE - R 1. An improved institutional and regulatory framework for better conformity assessment services in Kenya’s horticultural sector.

• KE - R 2. Smallholders and export-oriented enterprises have increased capacities to access regional and global markets for horticulture products.

To achieve an impact and sustainable results, the project will focus on some subsectors giving priority to target value chains such as snow peas and peas, mangoes, passion fruit, chilies, herbs and spices and nuts. The project will have a bottom up approach addressing county/district specific needs having national relevance.

The project is articulated around two technical outputs[4]. A third one has been added to cover visibility and communication activities, which are crosscutting both output 1 and 2. The reason to have a separate output for communication and visibility is that the planned activities are not only meant to provide visibility to the project, but also to complement and integrate the activities planned under output 1 and 2.

Output 1_- Strengthened national Quality Infrastructure's regulatory framework and capacities

1.1 – Policy, technical regulations and standards enhanced in priority sector. The most relevant activities include improvement of the legal and regulatory framework and services for SPS management and control; support to Agriculture and Food Authority (AFA) directorates and KEBS to better regulate the sectors and clarify attributions of Kenyan institutions and actors; support to the implementation of residue and contaminant monitoring and surveillance plans and systems; development and implementing of farm inspection guidelines in priority sectors; support in addressing issues of risk assessment and traceability in technical regulations and policies, support in drafting and implementing horticulture standards (list of standards in Annex I). A list of technical regulations and policies is provided in Annex II, during inception phase a selection of relevant technical regulations to be upgraded and improved will be selected. Focus will be given to national traceability and risk assessment aspects.

1.2 - Quality infrastructure enhanced in relation to priority horticultural sectors. The most relevant activities include support to metrology services; support to laboratories development; training for the use of equipment procured as part of SMAP programme for testing; procurement of small equipment; inspection and certification of products; promote strategic partnership between public and private providers for quality infrastructure and conformity assessment services; Support to extend the scope of accreditation in selected laboratories in priority sub-sectors; Support committees addressing SPS issues in selected sectors; National Traceability Strengthened.

Output 2 - Sector smallholders, cooperatives and enterprises supported and integrated into export-oriented value chains.

2.1: Improved compliance with market requirements in at least 10 counties in priority horticultural sectors. The most relevant activities include establishment of cooperation agreement with Agricultural Training Centers; train the trainers in target counties in priority sectors to provide combined classroom and on-the-job training; on the job training for 1500 farmers/producers in target counties (of which at least 800 are youth aged 18-30 and women) on good agricultural practices in priority sectors, protected cultivation, harvesting, post-harvesting practices and use of technology; supporting the establishment/upgrading of skills in common facility centres (CFCs) at county level for handling, packaging distribution of products including incorporating renewal energy and energy efficient technologies for storage and packing where applicable; on the job training for 500 extension officers/local authorities/community representatives in target counties in competences to improve local governance practices consistent with food safety improvement. Emphasis will be given also to self-regulation. The current agriculture policy under review makes this an objective so that the government will mainly play a supervisory role. Having the knowledge is not enough, there has to be a system of ensuring that the requirements are followed. Ideally activities under this output should not only increase skills but also increase the number of growers being part of suppliers’ control and monitoring plans elaborated by horticultural exporters according risk. The idea behind is to: (i) identify the exporters; (ii) out of those, identify those who adopt risk management principles to design their monitoring and control plans; (iii) among these latter exporters, increase the number of growers part of their control and monitoring plans.

2.2: Improved market access for champion producers in priority horticultural sectors. The most relevant activities include selection of at least 10 pilot “champion” producers one in each county and coaching them for improving market access (national, regional and international). Selection criteria for “champions” will be defined during inception period. Activities in this output will focus on identifying fresh produce market segments and players involved in the region and internationally; supporting in implementation of Kenya Standard 1758 or other relevant food safety standards; training in relevant EU Market requirements; supporting champion producers in analysing the logistical challenges related to export, including cost of freight; organising industrial study tours in relevant markets; supporting champion producers in negotiating bulk orders with importers in the region and international markets. Producers and relevant value chain stakeholders will also be provided and trained with simple and easy to use traceability tools.

Output 3: Visibility and outreach on key quality and safety issues in horticultural sectors

Under this output activities related to visibility and outreach wider public on key quality and safety issues in priority horticultural sectors, the most relevant activities include organisation of an awareness campaign, for value chain stakeholders including producers, exporters and local consumers on the benefits of local, internationally recognised market requirements; conducting awareness sessions with policy makers and journalists; publications and a documentary.

[pic]

Fig 2. Schematic representation of the theory of change for the Kenya MARKUP project

B2. Comparative Advantage

UNIDO’s overall mandate is to promote and accelerate Inclusive and Sustainable Industrial Development in developing countries and economies in transition. UNIDO provides technical assistance service for industrial upgrading and infrastructural development for standardization, metrology, testing and quality (SMTQ) as well as in private sector development and the promotion of enterprise networks and business linkages. In the agribusiness and agroindustry sector, UNIDO provides technical cooperation services to assist developing countries add value to the output of their agricultural sector and generate increased employment opportunities in off farm activities for rural communities, thereby contributing to increased food security and a sustainable reduction of poverty. In response to global trends and Member States request, UNIDO is placing an emphasis on nutrition and qualitative aspects of food processing as a critical element of food security, and innovative adaptation to climate change as a means of strengthening the resilience of smallholder farmers.

Food processing and income generation through value addition

UNIDO promotes sustainable food systems that deliver food security and safety and improve the competitiveness of the agro-food processing sector through access to support services, markets and trade opportunities, while ensuring economic, social and environmental sustainability. It enables sustainable and resilient businesses by supporting the introduction and promotion of Codex-based food safety standards and market-driven schemes essential to achieving compliance and access to global, regional and local markets. Practical interventions include among others the introduction of GMP, GHP and HACCP-based quality assurance programmes and the promotion of their certification. They also include personnel qualification schemes for staff along the food value chain including retailers and food services applying food safety-specific educational methods and materials.

UNIDO promotes appropriate technologies for food production and processing in developing countries to be able to improve the industrial potential and delivery of globally competitive products in terms of a consistent supply of quality products, for domestic consumption and export. It provides advisory services for the development of a comprehensive and sound legal and regulatory environment conducive to sustainable and inclusive food system growth. This includes enhancing compliance with national food safety regulations and with international norms and standards for improved access to global markets as well as supporting the development of an enabling business environment to allow agro-food businesses to grow and be competitive.

Emphasis is also given to industry-driven interventions and the promotion of partnerships with the private sector. Leveraging the network with UN sister agencies, global initiatives and partnerships, such as the Global Food Safety Initiative (GFSI) and the Global Food Safety Partnership (GFSP), research institutions and universities is a key element in UNIDO’s food safety-related activities and helps to achieve Inclusive and Sustainable Industrial Development.

Quality infrastructure, conformity assessment servicers

UNIDO supports countries to strengthen competitiveness in global markets through capacity-building in quality, environmental sustainability, and social accountability requirements in accordance with international management system standards and private sector requirements. It provides policy guidance and institutional capacity-building interventions related to standards, metrology, testing, inspection, certification and accreditation, which are needed to participate effectively in the multilateral trading system.

UNIDO has been involved at the regional level with the development of the SPS Protocol and harmonized trade related SPS measures, covering animal and plant health and forming annexes to the SPS Protocol in the East African Community (EAC). Harmonized trade related food safety standards have also been prepared and the EAC Business Council (EABC) was assisted in developing public private sector dialogue on SPS issues and food safety standards with a view to raising awareness and removing non-tariff barriers (NTBs) in intra EAC trade. Food safety weeks held in all EAC countries have contributed to raising awareness among stakeholders in the national food chain from ‘farm to fork’.

Technology transfer and ensuring sustainability of agro industries

Safeguarding the environment is a key element of promoting UNIDO’s ISID mandate. UNIDO recommends reduced levels of natural resource utilization as well as the reduction of emissions of greenhouse gases and other sources of pollution in industrial processes. It supports capacity development of industry, government and environmental service providers, as well as of intergovernmental and non-governmental entities, to scale up and mainstream the adoption of more resource-efficient and cleaner patterns of production through recycling, resource recovery and/or environmentally sound treatment and disposal of wastes, waste waters and toxic and/or hazardous chemicals, and in particular through the sustainable use and management of water and other natural materials used in industrial processes. UNIDO in implementing this project will draw on its in-house and global network of expertise to ensure the sustainability aspects of the project in that it will build local capacities for dairy processing in the region where product has recently be introduced, particularly targeting socially disadvantaged in the communities including youth and female headed households. In addition, with respect to output 2, the project will draw on expertise from UNIDO’s energy department to include the application of state of the art Renewable Energy & Energy Efficiency technologies where applicable.

UNIDO office in Kenya

UNIDO has extensive years of experience working in Kenya. The UNIDO office in Kenya, headed by a UNIDO representative and supported with essential administrative staff. For the implementation of its programmes and projects, UNIDO draw on the local services available through its field offices, in particular in administrative and financial matters but also through its regular contacts and relations with government institutions, private sector, etc. The field office also allows UNIDO to have a direct and short-notice communication with counterparts whenever needed.

B3. Inception Phase

An inception period of six months will be applicable for the project during which UNIDO Project Management Unit (PMU) will define baseline indicators and targets including gender responsive indicators for outputs and outcomes. Baseline results indicators and targets will require approval from Kenya MARKUP Steering Committee in Nairobi as well as from the EU Delegation to Kenya before implementation phase starts.

The participating counties and beneficiaries and key partnering exporting companies and CSO involved in the target value chains will be determined following a rapid assessment exercise. In addition, additional funding and synergies with activities of relevant private sector operators, international technical institutions, development partners and NGO’s will be sought. A detailed monitoring and evaluation plan will also be developed during the inception phase.

The inception phase will also identify other cross cutting issues to improve the efficiency of the intervention and in ensuring sustainability, such as the application of state of the art renewal energy and energy efficiency technology for storing and packaging of the horticulture products.

In coordination with the EAC-EU MARKUP teams, an inception workshop will be organized to present project objectives key expected results, implementation modality and final schedule of events. The inception workshop will also raise awareness and build partnerships for the project at national and local government level and mark the launch of the project.

An Inception Report (IR) will be prepared at the end of the inception period. It will include a detailed quarterly work plan for the project detailing the activities and progress indicators/milestones to be achieved. The IR will also include a detailed narrative on the institutional roles, responsibilities, coordinating actions and feedback mechanisms to project related partners. In addition, a section will be included on the progress to date, project establishment and start-up activities, and an update of any changed external conditions that may affect project implementation.

B4. Sustainability Strategy

The project has been designed in such a way that funds allocated will set up systems and approaches to ensure the sustainability of project intervention in the target value chains. The Project is fully integrated into the existing agricultural and trade national and regional priorities and in line with the strategic development of the agribusiness sector in Kenya.

More specifically, the project will rely on the following operational principles:

• Ensuring national leadership and ownership. The close collaboration with the government coordinating agency ensures that project initiatives, lessons and best practices easily become focal areas for government to build on in their future plans and programmes.

• Ensuring multi-stakeholder participation and consultation. The project will foster a high degree of participation and engaging stakeholders from both public and private sector will ensure high-level support and a strong sense of ownership. This is critical to generate the sense of ownership and interest after the lifetime of the project.

• Avoiding duplication and maximizing on past investments and programmes. The project will build on the existing capacities and networks in horticulture.

• Adopting a long-term approach. The project will support the promotion of policy frameworks for long term policy change and develop critical capacities at local and national for value chain development, standards compliance, conformity assessment and risk assessment.

B5. Gender Mainstreaming Strategy

Although the EAC-EU MARKUP programme is not a gender specific project, the intervention has some specific gender related outputs. It presents ample opportunity for gender mainstreaming in that it is based on agriculture commodities, stock and the agroindustry sector in general, which plays a significant role in the socio-economic development and livelihoods of both men and women as well as the youth. The area of quality infrastructure and conformity assessment is also very suitable for gender promotion, women being often leading the institutions both at management and technical levels. Further gender promotion will be systematically undertaken where possible. The project is therefore expected to contribute to UNIDO’s gender mainstreaming objectives to ensure equal opportunities for women and men, thus furthering UNIDO’s inclusive and sustainable industrial development with respect to agriculture value chains, where generally men have control over resources and tend to be the decision makers.

Gender parity will be promoted and respected throughout the UNIDO component of the project. The proposed project will ensure the representation of both men and women among the stakeholders and beneficiaries, for meeting events and training, to support the advancement of women’s equal participation with men as decision makers. The project will hold annual feature events such as on International Women's Day, highlighting the project best practices and opportunities for the women beneficiaries. The project will further ensure representation of both men and women at the project management level as well as the governance levels.

Access to information, resource empowerment and inclusion will give both women and men the opportunity to take advantage of the value chain, fully play equal role in the market development and not just remain as farm workers.

Lastly in line with UNIDO’s gender mainstreaming guidelines, all project staff will be expected sensitized on gender and will take basic online course; “I Know Gender” course on UN Women’s eLearning Campus to participate in gender training and promotion of gender.”

B6. Environmental and Social Assessment

It is well documented that the agroindustry sector in general plays a significant roles in the socioeconomic development of Kenya as it targets resource-poor farmers and other members of the rural and peri-urban communities local traders, input suppliers and processors. In addition the export of agriculture and horticulture produces is a major source of foreign exchange. The proposed project therefore has a strong socioeconomic dimension in that it is centred on major agriculture commodities which impact food security and also have high export potential.

At the local level, by building capacities for improved value addition at the primary processing level (farm-gate) the small holder farmers and women and youth in their communities will have opportunities to increase their income. Through the introduction of labour saving technologies, both men and women will have equal opportunities to be engaged in the various stages of the value chain. The project will benefit not only the rural poor but also the urban poor that are undernourished.

On the global developmental agenda, the project is in line with the new Sustainable Development Goals (SDGs), in particular SDG2: “End hunger, achieve food security and improved nutrition and promote sustainable agriculture; SDG8: “Promote sustained, inclusive and sustainable economic growth, full and productive employment, and decent work for all”. Lastly, it will contribute to allowing Kenya meet its obligations under SDG9 on “Building resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation”.

With respect to the environmental issues, Kenya, as a developing country, is vulnerable to the impacts of climate change, which threatens the sustainability of agricultural commodities and potentially affecting the livelihoods of farmers and other actors involved in the development of the value chains. Deforestation, soil erosion and pollution are also issues with respect to agriculture production. Kenya MARKUP programme has therefore been designed to take into consideration environmental sustainability especially with regards to pesticides use, waste treatment and the related impact on health. This includes ensuring standards and improved information on environmental related standards are widely disseminated.

Within the UNIDO specific project, the proposed project is categorized as “Category C” and therefore no further environmental and social review is required. The Environment & Social Screening Checklist has been completed.

THE PROJECT

C1. Project Logical framework matrix

|Intervention logic |Objectively verifiable indicators of achievement |Sources of verification |Assumptions |

|Overall objective (strategic rationale) |

|Contribute to the economic development of Kenya by |• A 30% increase in trade with targeted counties |• Baseline study on trade capacity in| |

|increasing the value of both extra and | |20 target counties and impact | |

|intra-regional agricultural exports in horticulture | |assessment study | |

|sectors (focus on snow peas, peas, mangos, passion | | | |

|fruits, spices and herbs) | | | |

|Results/Outcomes (why this project) |

|KE - R 1. An improved institutional and regulatory |• Regulatory framework and standards upgraded and accepted by main stakeholders |• Inception baseline, midterm and |• Political stability |

|framework for better conformity assessment services |• Average income of targeted smallholder producers and exporter enterprises |final reports |• Commitment and |

|in Kenya’s horticultural sector. |increased by 30% at project completion, disaggregated by sex and targeting at |• Official Journals |cooperation of county |

|KE - R 2. Smallholders and export-oriented |least 40% of producers with increased income being women (baseline will be |• Kenya National Bureau of |governments |

|enterprises have increased capacities to access |established at inception) |Statistics (KNBS) reports and data | |

|regional and global markets for horticulture | | | |

|products. | | | |

|Technical Outputs (what to accomplish by the project) |

|Output 1 Strengthened national Quality |For 1.1: |• Inception baseline, midterm and |Commitment by County |

|Infrastructure's regulatory framework and capacities|1. Number of new/revised standards, technical regulations and policies revised |final reports |Governments to support |

| |updated |• Official Journals |the initiative |

|1.1.: Policy, technical regulations and standard |For 1.2: |• Project publications and | |

|framework enhanced in priority sectors. |2. Number of laboratories conducting multi residual pesticides analysis |documentaries | |

|1.2: Quality infrastructure services enhanced in |3. At least 10% increase of number of multi-residual pesticide residue analysis | | |

|relation to priority horticultural sectors |executed by exporters through accredited laboratories. | | |

|Output 2- Support sector smallholders, cooperatives |4. At least 10% increase in number of domestic companies certified against | | |

|and enterprises better integrate into |relevant food safety standards. | | |

|export-oriented value chains |For 2.1: | | |

|2.1. Improved skills for compliance with market |5. At least 1500 smallholder farmers disaggregated by sex,: trained to fulfill | | |

|requirements in 10 counties in priority |national, regional and international market requirements; | | |

|horticultural sectors. |6. At least 40% of trained farmers/producers complying with national, regional | | |

|2.2: Improved market access for champion producers |and international market requirements as a result of the intervention | | |

|in priority horticultural sectors |7.Number of SMEs/growers/farmers groups who have developed concrete strategies | | |

|Output 3: Visibility and outreach on key quality and|to implement added value processing processes | | |

|safety issues in horticultural sectors |For 2.2 | | |

| |8. Number of the companies having signed supply agreement with international | | |

| |customers and implemented their quality protocols | | |

| |9. Number of the farmers/producers being part of suppliers’ control and | | |

| |monitoring plans elaborated by horticultural exporters according to risk | | |

| |management principles | | |

| |For Output 3 | | |

| |10.Outreach to at least 10Milion people on project best practices and results | | |

| |through various media outlets nation wide | | |

| |(baselines will be established at inception) | | |

|Activities |

|COMPONENT 1 |

|1.1: POLICY, TECHNICAL REGULATIONS and STANDARDS (linked with GIZ programme) |

|Set up baseline indicators (including an assessment of the areas for improvement and review related to standards, technical regulations and policies both at national and county level) |

|On demand legal advice to improve technical regulations and policy documents (i.e. national traceability) |

|Support to AFFA, KEBS to improve regulatory processes in priority areas |

|Realise regulatory impact assessment in 3 priority regulations/ policies |

|Support KEBS in standards setting committees |

|Support participation in standard setting committees in horticultural subsectors (i.e. mangoes, pineapple, passion fruit, herbs and spices, nuts) and related cross cutting standards affecting the|

|commodity (food hygiene, food labelling etc) |

|Support representation of the country in participation at the CODEX committees’ horticulture related standards like Fresh Fruits and Vegetables, Processed Fruits and veg |

|Support to KEBS, AFFA, KEPHIS and Private Sector Organisations (i.e FPEAK) for standard dissemination (i.e. mangoes, passion fruit, herbs and spices, nuts) |

|1.2: QUALITY INFRASTRUCTURE SERVICES |

|Set up baseline indicators |

|Development and implementation of residue and contaminant monitoring plans in priority sectors |

|Development and implementing of farm and packing facility inspection guidelines in priority sectors |

|Training on procedures for pest diagnosis, for quarantine pests, early warning system and pest forecasting |

|Improvement of procedures for risk assessment (i.e. for factory and market surveillance) |

|Training (workshops and TOTs) for KEBS, AFFA KEPHIS, FPEAK and other industry players on KS 1758, product and system certification, factory and market surveillance, |

|Capacity/skills enhancement to increase the scope of testing and calibration laboratories, including training on equipment (2 Labs KEPHIS ,1 Lab KEBS) –as follow up SMAP |

|Participation in proficiency testing and inter-laboratory comparisons -follow up SMAP |

|Development of reference material -follow up SMAP |

|Extending the scope of accreditation in selected laboratories in priority sub-sectors (i.e. KEPHIS analytical lab and plant health diagnostic)- follow up SMAP |

|Support committees addressing SPS issues in selected sectors (i.e. mangoes, passion fruit, herbs and spices, nuts) |

|Procurement of small equipment (technical specs decided during inception phase). |

|Component 2 |

|2.1 SKILLS MARKET ACCESS (linked with Agri-Fi Programme) |

|Set up baseline indicators |

|Assessing the adequacy of the newly developed curricula under AGRI-FI and GIZ interventions in addressing current job market needs in the agriculture sector |

|Establish cooperation agreements with county ministers of agriculture, Agricultural Training Centers (addressing Small holders) , TVET Centers (addressing low skilled professionals) and private |

|sector organisations to promote and disseminate the use of their improved curricula developed under AGRI-FI and GIZ interventions |

|Train the trainers in 10 counties in priority sectors to provide combined classroom and on-the-job training (focus on snow peas, mangos, passion fruits, chillies, herbs, nuts) |

|On the job training for 1500 farmers/producers in 10 counties (of which at least 800 are youth aged 18-30 and women) on: |

|good agricultural practices; |

|harvesting, post-harvesting practices and use of technology; |

|HCD code of conduct and self-regulations; |

|Agribusiness entrepreneurship |

|standards and regulations and other market requirements. |

|Supporting the establishment/upgrading of skills in common facility centres (CFCs) at county level for handling, packaging distribution of products |

|On the job training for 500 extension officers/local authorities/community representatives, council of governors, standards regulators/officers in 10 counties in competences to improve local |

|governance practices consistent with food safety improvement and its enforcement |

|Support private sector in the implementation of the Horticultural National Traceability System |

|2.2 MARKET ACCESS (linked with ITC regional and national intervention) |

|Set up baseline indicators (including selection criteria for 10 pilot champion producers) |

|Select at least 10 pilot “champion” producers one in each county and coach them in improving market access (national, regional and international) in areas such as: |

|identifying fresh produce market segments and players involved in the region and internationally; |

|supporting in implementation of Kenya Standard 1758, HACCP and national traceability system or other relevant food safety standards; |

|training in relevant EU Market requirements |

|supporting champion producers in analysing the logistical challenges related to export, including cost of freight; |

|organising industrial study tours in relevant markets |

|supporting champion producers in negotiating bulk orders with importers in the region and internationally. |

|Equip and train producers and relevant value chain stakeholders with simple and easy to use traceability tools. |

|COMPONENT 3 |

|Awareness sessions for SMEs on food safety and dissemination of new approved standards and codes of practice in the counties |

|Conduct awareness sessions with policy makers and journalists, newsletters |

|Digital awareness campaigns on market requirements |

|Short film –Documentary |

|Publications and newsletters |

|Establish annual awards for trainees and champions |

C2. Risks & Mitigation measures

|Risk |Probability |Impact to the project |Mitigation measures |

|The current political environment might create|Medium |Medium |Close cooperation with project partners|

|uncertainties in any decentralization planned | | | |

|for services related to testing and | | | |

|certification. | | | |

|Human resources limitation in certain |Medium |High |Early engagement with the relevant |

|institutions, limited availability of | | |ministries and institutions to identify|

|counterpart staff in the institutions | | |suitable counterparts, skills gaps and |

| | | |then develop training modules to suit |

| | | |the capacity development needs of |

| | | |those counterpart institutions. |

|Lack of engagement of local authorities at |Medium |High |Involve governors during design of |

|county level | | |activities |

|Lack of synergies with regional component |Low |Medium |Ensure adequate communication channels |

| | | |with regional counterparts |

|Duplication of activities with other donor |Medium |Medium |During inception phase coordinate |

|funded projects | | |intervention with other donors |

C3. Institutional Arrangements and Coordination Mechanism

A Financing Agreement was signed on 23 March 2018 between the European Commission and the EAC Secretariat regarding the financing and scope of the EAC-EU MARKUP programme.

A Delegation Agreement will be signed between the European Union Delegation to Kenya and UNIDO for the implementation of Kenya National Window as foreseen in the EAC-EU MARKUP programme Financing Agreement. Kenya National Window programme will be implemented by UNIDO, based on UNIDO rules and procedures.

UNIDO as the implementing agency will be responsible for the overall implementation, monitoring and reporting of the project according to EU procedures and established UNIDO rules and regulations. UNIDO will fulfil this responsibility by appointing a Project Manager, who will be in charge of overseeing the overall implementation of the project, as well as by mobilizing the required services of the related technical, administrative and financial departments at UNIDO headquarter and the UNIDO field office in Kenya.

Identification of beneficiaries, needs and scope of the courses and awareness programmes will be done in consultation with key stakeholders such as KEPHIS, KEBS and AFA and selected BMOs and CSOs to ensure delivery in line with national needs. Suppliers of equipment, contractors and service providers for works and services will be identified through UNIDO’s procurement process.

EAC-EU MARKUP programme governance structure

The following governance structure and programme management structure is proposed for the regional programme.

A Steering Committee will be responsible for reviewing the overall policy and strategic directions of the programme, monitoring the overall performance and coherence between the different components, and will provide guidance as appropriate. It will also review and endorse annual work plans.

It will meet at least bi-annually and will consist of: EAC Secretary General (chair); Director General (Customs and Trade), Director of Trade; Director of Productive Sectors; Representatives of the EU Delegation in Tanzania; Representatives of the EAC Partner States (i.e. from Ministries of Trade and/or Agriculture and/or EAC Affairs, or from relevant national institutions); Representatives of the private sector / Non-State Actors (such as the East African Business Council etc.). The Programme Coordination Unit officers will take part as rapporteurs.

A Technical Committee (TC) will be responsible for supervising programme implementation on a monthly basis, elaborating technical positions in preparation of SC decisions, and providing guidance and support to the PCU as necessary. The TC will consist of the following members: EAC representatives of the result areas (EAC core staff); a representative of the EU Delegation Tanzania (with observer status); the EAC Programme Coordination Unit officers (as rapporteur).

A Programme Coordination Unit (PCU) will be hosted by the EAC Secretariat. The role of the PCU shall be to support the EAC Secretariat in ensuring overall programme supervision, including planning and coordination, monitoring and reporting, evaluation, exchange of good practices and lessons learnt - including on gender - as well as communication and visibility. This will also include acting as the secretariat of the Steering Committee (preparation, holding and follow-up of meetings) and supporting the Technical Committee.

Five National Coordination Groups (NCG), one in each Partner State, which will support country level coordination bringing together on a regular basis:

• National ITC Project Teams (composed of one National Focal Manager and one Administrative Assistant), in charge of national activities under the EAC WINDOW

• National Management Units (or other structure, as relevant), in charge of national interventions under the PARTNER STATES WINDOW

• National Authorities and National EU Delegations

In Kenya a focal point will be established at the Ministry of Industry, Trade and Cooperatives under the State Department of Trade. This will be the main counterpart for the project implementation and will be the Chair of the National Coordination Group. The National Coordination Group will have the responsibility of coordination among Government agencies and providing the necessary guidance on project execution by government agencies, to ensure progress of project deliverable. The project will encourage gender balance in the composition of the National Coordination Group and further promote gender parity by having the Chair and Co-Chair as male of female or vice versa.

The National Coordination Group will be composed of representatives of EU Delegation, implementing partners such as UNIDO, ITC team based in Kenya as well as key national stakeholders. In Kenya these national stakeholders will include indicatively KEBS, KEPHIS, AFA, Council of Governors, TVET Centres, and private sector representatives. The exact membership and specific ToRs for the National Coordination Group will be reviewed and finalized during the inception phase. Meetings will be held once in every six months and the will invite members and experts for specific meetings, as needed.

The location of Kenya MARKUP PMU will be confirmed during the inception phase.

C4. Timeline for Kenya MARKUP

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[pic]Following the six-month inception phase an updated work plan for year one will be presented by UNIDO as part of the inception report. The inception report will need to be approved by the National Coordination Group and the EU Delegation to Kenya before the implementation phase starts.

BUDGET ITEMS

D1. Counterpart inputs

The contributions of the Government of Kenya will be in-kind.

Qualified staff, from the government agencies which are beneficiaries of the MARKUP programme, will be appointed and dedicate the necessary time to work with the long and short term experts of the programme to provide part or whole of organized trainings.

D2. UNIDO Inputs

The project will be implemented through a direct agreement between the EU Delegation to Kenya and UNIDO. UNIDO will contribute €50,000 towards the project cost.

A Project Management Unit (PMU) will be established at the start of the project, which will be responsible for the day-to-day implementation of all project activities, including the direct supervision of those activities contracted to external parties. The PMU will establish a good working relationship between the project, the beneficiaries, the counterparts and other on-going projects and programmes. The PMU, in addition, will ensure an effective day to day monitoring of all project activities.

The PMU will be staffed with a National Project Coordinator (NPC) and Clerk/Driver who will be recruited full time on the project and supported by a Knowledge Management Communication and Visibility expert, a Project Associate and a Chief Technical Advisor on part-time basis. International and national consultants will be recruited on the basis of short-term contracts to address specific tasks.

UNIDO will assign two Professional staff (at P5 and P4 levels respectively), to provide part-time in-house technical advisory and programme management services from its Standards and Quality Infrastructure Division (PTC/TII/SQI) and Food Systems and Nutrition (PTC/AGR/FSN) divisions.

International and National Experts

Experts and consultants will be identified in consultation with the coordinating Ministry in Kenya. In all the recruitments, due attention will be given to have a gender balance. The estimated work months and expected deliverables for the national and international experts to be recruited during the implementation of the project UNIDO according to UNIDO Individual Service Contract Policy are as follows:

| |Output 1 |Output 2 |Output 3 |Coordination |Mid & terminal |

| | | | | |evaluations |

|National Experts |15 |4 |40 |119 |2 |

|International Experts |16 |9 |2 |44 |2 |

The below table shows the overall Project Management structure:

|Output |International Experts |Work months |National Experts |Work months |

| |Description | |Description | |

|Output 1 |International experts for year 1 working on |8 |National experts for year 1 working on |4 |

|Strengthened national Quality Infrastructure's |policy, technical regulations and standard | |setting up baseline indicators including | |

|regulatory framework and capacities |framework enhanced in priority sectors. | |an assessment | |

| | | |National experts for year 1-2 providing |4 |

| | | |support and legal advice to improve | |

| | | |technical regulations and policy | |

| | | |documents | |

| |International experts for years 2-3 working on |8 |National experts for year 2-3 providing |7 |

| |quality infrastructure services enhanced in | |support to AFA, KEBS to improve | |

| |relation to priority horticultural sectors | |regulatory processes in priority areas | |

| | | |through impact assessment | |

|Work months Output 1 |  |16 |  |15 |

|Output 2 |International expert for year 2 & 3 training |3 |National expert for year 1 working on |2 |

|Sector smallholders, cooperatives and enterprises |session on improving skills market access | |setting up baseline indicators including | |

|supported and integrated into export-oriented |through training the trainers | |selection criteria for 10 pilot champion | |

|value chains | | |producers | |

| |International expert for year 2 &3 supporting |2 | | |

| |the establishment/upgrading of skills in common| | | |

| |facility centres (CFCs) at country level for | | | |

| |handling, packaging and distribution | | | |

| |International expert for year 2-4 providing |4 |National expert for year 1-2 providing |2 |

| |guidance on training the trainers and on the | |support for training of trainers session | |

| |job for local officers, farmers/producers and | | | |

| |stakeholders | | | |

|Work months Output 2 |  |9 |  |4 |

|Output 3 Visibility and outreach on key quality |International Expert designing the |2 |National expert working on awareness |4 |

|and safety issues in horticultural sectors |communication and visibility strategy as per | |sessions for SMEs on food safety and | |

| |ANNEX VI | |dissemination of new approved standards | |

| | | |and codes of practice in the counties | |

| | | |Research associate part-time data |10 |

| | | |management value addition component | |

| | | |National expert knowledge management |24 |

|Work months Output 3 |  |2 |  |38 |

|UNIDO coordination & monitoring |UNIDO HQ Staff P5 allotment holder provides |6 |National Project Coordinator full time |48 |

| |specialized technical oversight in project | | | |

| |component on quality infrastructure development| | | |

| |ensuring coherence of the UNIDO activities in | | | |

| |the project with the regional programme and | | | |

| |fostering synergies where possible with related| | | |

| |country and regional projects and provides | | | |

| |overall guidance of the project. | | | |

| |UNIDO HQ Staff P4 alternate allotment holder |9 |Driver/Clerk fulltime |47 |

| |provides technical oversight in the area of | | | |

| |food systems and nutrition as well as in | | | |

| |project component ensuring coherence of the | | | |

| |UNIDO activities in the project with country | | | |

| |and regional programmes and fostering synergies| | | |

| |where possible with related programmes | | | |

| |1 Project Associate providing support to the |5 |M&E expert (part-time) track results and |24 |

| |Project Managers at HQ and the PMU in the field| |indicators from inception through to | |

| |to sustain the coordination and efficient | |termination | |

| |implementation of the project and the | | | |

| |monitoring of results; | | | |

| |1 Chief Technical Advisor Part-time |24 | | |

| |International/regional senior project advisor; | | | |

| |provides specialized advise on technical issues| | | |

| |and provides strategic guidance in intervention| | | |

| |areas of the programme | | | |

|Work months Output 3 |  |44 |  |119 |

|Independent evaluation |Independent evaluators( for mid-term and final |2 |Independent evaluators( for mid-term and|2 |

| |evaluation) | |final evaluation) | |

|Work months evaluation |  |2 |  |2 |

*the table shows approximate durations based on average, real duration may vary during implementation phase when actual recruits takes place.

Procurement and subcontracting

In line with the PAGODA and FAFA provisions, all subcontracts and contracts necessary for the implementation of the project activities will be awarded and implemented in accordance with the UNIDO regulations, procedures and using UNIDO standard documents.

The TORs for subcontracting and the list of equipment to be purchased during the first year of implementation is to be compiled and finalized during the first six months of the project implementation. The similar lists for the second and third year of implementation are to be annexed to the work plan developed for those respective periods. Where local and/or regional expertise are envisaged, expression of interest and request for offers will be advertised through the local newspapers, in addition to the UNIDO, UNDP-Kenya and the UN procurement websites.

Visibility

Visibility and communication activities are described in Output 3 and Annex VI of the contract.

BUDGET

Overall Budget

The project follows a results-based management budget structure and is estimated to Euro 3,730,000 as detailed in annex III of the contract.

MONITORING, REPORTING EVALUATION

Baseline results indicators and targets measuring outputs and outcomes will be identified during inception phase and integrated into a revised logical framework. This will require approval by the National Coordination Group before implementation phase starts.

F1. Reporting

Reporting by UNIDO will be guided by the Joint Guidelines on reporting obligations under the FAFA-2011. Procurement of goods and costs of implementation of activities (training, mission costs, etc.) will be included in annual work plans. Both reports and work plans will be presented to the Programme Steering Committee. The Committee will assess the reports submitted by UNIDO focussing mostly on results.

Proposed reporting activities are:

Report frequency

Annual reports will be submitted in line the reporting requirements as determined in the Delegation Agreement. Reports will be on project activities detailing progress achieved towards meeting the stated outputs, the problems and constraints, and recommendations for correcting them, plus a detailed work plan for the next 12 months. The indicative work plan submitted at the start of the action for year 1 will be reviewed and shared before the end of the inception phase.

A final report will be submitted at the latest, 6 months after the end of the implementation period as defined in article 3 of the general conditions of the Delegation Agreement.

F2. Monitoring and Evaluation

The performance monitoring will be executed based on a detailed work plan and the log frame. A detailed monitoring and evaluation plan will also be developed during the inception phase. Baseline indicators established at inception will be monitored on an annual basis.

Day-to-day technical and financial monitoring will be part of UNIDO responsibilities. The National Steering Committee (NSC) will be responsible for the overall programme oversight and guidance.

The Project will be subject to independent review processes assisted by the UNIDO Evaluation Group. This will

include:

· The mid-term review; and

· The final evaluation.

The indicative budget allocated for the mid and terminal evaluations is EUR 50,000. The conclusions and recommendations of the mid-term review should lead to follow-up actions to be taken and any corrective action necessary including, if recommended, the re-orientation of Project components.

PRIOR OBLIGATIONS AND PREREQUISITES

Signing of the Financing Agreement between the EAC Secretariat and the European Commission. The Financing Agreement was signed on 29 March 2018. The EU Delegation to Tanzania will represent the European Commission for the management of the EAC-EU MARKUP programme.

LEGAL CONTEXT

The Government of the Republic of Kenya agrees to apply to the present project, mutatis mutandis, the provisions of the Standard Basic Assistance Agreement between the United Nations Development Programme (UNDP) and the Government, signed and entered into force on 17 January 1991.

ANNEX I - PROPOSED STANDARD to BE REVISED UNDER MARK UP PROJECT

| |TC |NAME OF STANDARD |PROJECT SUPPORT (indicative) |

|NATIONAL PROCESS | |

| |GENERAL |Traceability |Kenya National Window- UNIDO |

| |GENERAL |HACCP |Kenya National Window- UNIDO |

| |GENERAL |KS 2455:2013 General Standard-food Safety (Microbiology) |Kenya National Window- UNIDO |

| |COFFEE |Coffee industry- Code of practice |ITC |

| |NUTS |Pistachio nuts |Kenya National Window- UNIDO |

| |NUTS |Raw Cashew Nuts _ specification |Kenya National Window- UNIDO |

| |NUTS |Roasted Cashew Nuts - Specifications |Kenya National Window- UNIDO |

| |NUTS |Raw Macadamia - Specification |Kenya National Window- UNIDO |

| |NUTS |Roasted Macadamia - Specification |Kenya National Window- UNIDO |

| |NUTS |Sesame - Specification |Kenya National Window- UNIDO |

| |NUTS |Roasted Sesame - Specification |Kenya National Window- UNIDO |

| |SPICES AND CONDIMENTS |Herbs- Chives |Kenya National Window- UNIDO |

| | |Herbs-basil |Kenya National Window- UNIDO |

| | |Herbs-thyme |Kenya National Window- UNIDO |

| | |Herbs-Coriander |Kenya National Window- UNIDO |

| | |Herbs-Rosemary |Kenya National Window- UNIDO |

| | |Celery seed (Apium graveolens Linnaeus) - Specification |Kenya National Window- UNIDO |

| | |Tamarind concentrate |Kenya National Window- UNIDO |

| |FRESH FRUITS AND VEGETABLES |Warehouse and storage of roots and tubers |Agri-Fi |

| |PROCESSED FRUITS AND |Jams/jellies/marmalades |Kenya National Window- UNIDO |

| |VEGETABLES | | |

| | |Processed Fruits and vegetables- Code of practice | |

| | |Dairy Based fruit Juices |Kenya National Window- UNIDO |

| | |Canned fruit cocktail - Specification |Kenya National Window- UNIDO |

| | |Dried vegetables |Kenya National Window- UNIDO |

| |ROOTS &TUBERS |Cassava bread -Specification |Agri-Fi |

| | |Dried Sweet potato chips |Agri-Fi |

| |FOOD ADDITIVES |Specification for Fruit Flavoured Drink in solid Form |Kenya National Window- UNIDO |

| |FOOD ADDITIVES |Revision for Carbonated Beverages Standards |Kenya National Window- UNIDO |

| |NUTRITION AND SPECIAL DIETARY|Formula for foods for use in weight control diets |Kenya National Window- UNIDO |

| |FOODS | | |

| | |Revision of follow – up formula |Kenya National Window- UNIDO |

| | |Revision of RUTF standards |Kenya National Window- UNIDO |

|REGIONAL (NATIONAL POSITIONS) | |

| |FRESH FRUITS AND VEGETABLES |KS EAS 748:2010-Ware potatoes-specification |GIZ |

| | |KS EAS 6 Pineapples-specification |GIZ |

| | |KS EAS 19 Fresh Avocadoes specification |GIZ |

| | |KS EAS 83 Fresh tomatoes-specification |GIZ |

| | |KS EAS 321 Fresh mangoes specification |GIZ |

| | |KS EAS 56 2000 Fresh mushrooms |GIZ |

| | |KS EAS 47 2000 Fresh papaya |GIZ |

| | |KS EAS 332 2000 Fresh capsicums |GIZ |

| |PROCESSED FRUITS AND |Tomato products — Specification- Part 2: Tomato sauce and catsup |GIZ |

| |VEGETABLES |(ketchup) | |

| | |Tomato products — Specification— Part 3:Tomato juice |GIZ |

| | |Tomato products — Specification— Part 4: tomato concentrates (paste |GIZ |

| | |and puree) | |

| | |Tomato products — Specification — Part 1: Canned (preserved) tomato |GIZ |

| | |Fermented /pickled vegetables |GIZ |

| | |Tomato products — Specification— Part 4: tomato concentrates (paste |GIZ |

| | |and puree) | |

| | |Tomato products — Specification — Part 1: Canned (preserved) tomato |GIZ |

| | |Fermented /pickled vegetables |GIZ |

| |TEA |Black tea (EAS) |GIZ |

| | |Green Tea (EAS) |GIZ |

| | |Instant tea (EAS) |GIZ |

| | |Tea trade -Glossary of terms (EAS) |GIZ |

| | |Flavoured tea (EAS) |GIZ |

| | |Blended tea (EAS) |GIZ |

| |COFFEE |Green Coffee beans – Specification (EAS) |GIZ |

| | |Roasted and ground coffee (EAS) |GIZ |

| | |Instant Coffee (EAS) |GIZ |

ANNEX II- POLICIES AND TECHNICAL REGULATIONS RELEVANT IN THE FIELD OF HORTICULTURE IN KENYA[5]

POLICIES

• National Food and Nutrition Security policy-The policy thrust is to achieve good nutrition for optimum health of all Kenyans; to increase the quantity and quality of food available, accessible and affordable to all Kenyans at all times; to protect vulnerable populations using innovative and cost effective safety nets linked to long term development.

• National Agricultural Sector Extension Policy (2012) -The main objective is to empower a pluralistic extension clientele through sharing information, imparting knowledge and skills and changing attitudes to enhance technology and innovation adoption. In this regards linkages and partnerships with extension agents are crucial for deployment of comprehensive outreach strategies for the purpose of creating value.

• National Agricultural Research System Policy (2008)-The Policy aims at facilitating the prompt application of agricultural research results and services to enhance productivity and economic growth; and promoting private sector and non-state institutions engagement in research and technology transfer

• National Land Policy (2007) -The policy aims to guide the country towards efficient, sustainable and equitable use of land for prosperity and posterity. Key issues the policy addresses are constitutional, land tenure, land use management, land administration, and land issues requiring special intervention. The Land Act (GOK, 2012c) mandates the National Land Commission to reorient the use of land as a productive asset, rather than a prestige title. This could increase access to land through renting for productive purposes and innovations.

• National Horticulture Policy (2012) - The broad objective of the policy is to accelerate and sustain growth and development of the horticultural industry in order to enhance its contribution towards food security, poverty reduction as well as employment and wealth creation. Specific policy objectives are to: facilitate increased production of high-quality horticultural produce; enhance provision of the sub-sector’s support services like finances, insurance and technical advisory services; promote value addition and increase domestic and external trade; develop and improve infrastructure to support the horticultural industry particularly in major production areas; and promote horticultural investment in the ASALS. The National Seed Policy (2010)- It outlines the intervention measures to be implemented by the seed sub sector to provide guidance to the industry to sustainability avail adequate high quality seed and planting material to the users and harmonizing all seed related activities.

• Agricultural Sector Development Strategy (ASDS) (2010 – 2020) - The overall national strategy document for the agricultural sector ministries and other stakeholders in Kenya. The main objectives include: increasing productivity; commercialization and competitiveness of agricultural commodities and enterprises; and developing and managing key factors of production.

• National Agri-business Strategy (2012) - The objective is to bring about a highly productive and efficient agribusiness sector, competitive both locally and internationally. The strategy emphasises the need to encouraged private sector organizations in development of diversified agricultural and food products, which are essential for improving the competiveness of the sector.

• Sustainability Strategy for Regional Development Authorities (2010)- The goals include promoting integrated economic development through sectoral value chains and spatial concentration of infrastructure facilities and stronger linkages between zones; to enhance productivity and skills as well as firm competitiveness and expansion of export markets and diversification of export products.

LEGISLATION

A. Input related legislation

• Seed and Plant Variety Act Cap 326 - Regulate transactions in seeds, including provisions for seed testing and certification; establishment of an index of names of plant varieties; control on introduction of new varieties; seeds importation; to authorize measures to prevent injurious cross-pollination; management of proprietary rights to breeders or discovering and developing new varieties; and arbitration on seed matters.

• Fertilizer and Animal Feedstuff Act Cap 345 - Regulates the importation, manufacture and sale of agricultural fertilizers and animal foodstuffs and substances of animal origin intended for the manufacture of such fertilizers and foodstuffs, and to provide for matters incidental to and connected with the foregoing.

• Pest Control Products Act (Cap 346) - Regulate the importation, exportation, manufacture, distribution and use of pests control products and bio-control products of plant and animal origin.

B. Production and GAP related

• Agricultural Act Cap 318 - Governs agriculture production including conservation of the soil and its fertility and to stimulate the development of agricultural land in accordance with the accepted good land management and agricultural practices.

• Crop Production and Livestock Cap 205 (1948), Act No. 47 of 1949 - Provide for the control and improvement of crop production and livestock, and the marketing and processing.

• Plant Protection Act Cap 324 - Governs prevention of the introduction and spread of pests and disease destructive to plants.

• Crops (No.16 of 2013) - Developed in 2013 to consolidate and repeal various statutes relating to crops; and to provide for the growth and development of agricultural crops and for connected purposes.

• Biosafety Act 2009 (CAP 321 A) - Regulates activities in genetically modified organisms, to establish the National Biosafety Authority, and for connected purposes Environmental Management and Coordination Act) (EMCA) (CAP 387No. 8 of 1999 • Constitutes the legal and institutional framework for the management of the environment and for the matters connected therewith and incidental thereto.

• Irrigation Bill (2015) - An Act of Parliament to amend and consolidate the law relating to sustain able development and management of irrigation for the socio-economic development in the country; to align existing irrigation laws to the Constitution of Kenya 2010, to repeal the Irrigation Act, Chapter 347 Laws of Kenya; and for purposes incidental thereto and connected therewith

C. Aggregation and Quality related

• Agricultural Produce Act (Export) Cap 319 - Provides guidance on the grading and inspection of agricultural produce to be exported, and generally for the better regulation of agricultural manufactured products.

• Agricultural Produce Marketing Cap 320 - The Act aims to control and regulate the marketing of agricultural produce, establishment of marketing boards.

• Food Drugs Chemical Substances Act Cap 254(Rev. 2002) - An Act of Parliament to make provision for the prevention of adulteration of food, drugs and chemical substances and for matters incidental thereto and connected therewith.

• Public Health Act Cap 242(Rev.2002) - An Act of Parliament to make provision for securing and maintaining health.

D. Marketing and Export related

• Standards Act Cap 496 - Governs the standardisation of the specification of commodities, development of standards for various commodities and codes of practice; and creation of the Kenya Bureau of Standards for the management of the same.

E. Business Support Services

• Science and Technology (Amendment) Act, Cap 256, 1979 - The Act was established to coordinate matters relating to scientific and technological activities as well as the coordination of research and experimental development. The Act establishes the National Commission for Science, Technology and Innovation (NACOSTI) charged with the responsibility of advising the government on a national science policy, the scientific and technological requirements for the conservation of the natural and social environment and the transfer of technology into agriculture and industry.

• The Export Processing Zone (EPZ) Act, Cap 517, 1990, revised 2012 and 2015 - The Act created the Export Processing Zones Authority (EPZA) as the regulatory body. Investors in EPZs benefit from a range of fiscal incentives. These include a 10 years tax holiday followed by a 25 percent at tax for the next 10 years; exemption from all withholding taxes during the first 10 years; exemption from import duties on machinery, raw materials, and inputs; no restrictions on management or technical arrangements; and exemption from stamp duty and from the VAT on raw materials, machinery and other inputs.

ANNEX III – Indicative work plan for year one

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[1] HORTICULTURE STUDY Phase 1: Mapping of production of fruits and Vegetables in Kenya, 2017

[2] For example as a result of recently conclude SMAP Programme, French beans have been removed from EU list EU Reg 669, peas now reduced from 10 to 5 % import control checks. New equipment installed allowing agencies to reach over 200 methods (against the 106 previously covered) and faster analysis.

[3] Kenya Standards and Market Access Programme (SMAP), aimed at enhancing market access and competitiveness of Kenya’s animal and plant-based products, through greater adoption of relevant international standards and improved regulation and enforcement in the country.

[4] Expected results for the EAC Partners State Intervention Window of the MARKUP programme are articulated around 2 results:

KER 1. Strengthened national Quality Infrastructure's regulatory framework and capacities;

KER2- Support sector smallholders, cooperatives and enterprises better integrate into export-oriented value chains

[5] Source : Horticulture Study (2017) – Mapping of production of fruits and vegetables in Kenya

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