Country: China
Project Title: “Promotion of Fortified Flour in Gansu & Shaanxi Provinces”
Grant Number:
Food Vehicle: Wheat Flour
Fortificant: Iron, Folic Acid, B1, B2, Niacin & Zinc
Executing Agency: Center for Public Nutrition and Development (PNDC)

1. Project Description

1.1 Summary:
The current GAIN project is a redesign of a previous GAIN-supported flour fortification project implemented by PNDC in five northwester provinces of China which began in November 2003. The redesign was necessary due to the Chinese government’s decision to fundamentally alter the “Grain for Green” program that was the foundation of the original GAIN-supported project in which project beneficiaries would receive fortified flour in compensation for land set aside for reforestation projects. The redesign was based on considerable investigation and planning by PNDC with support from GAIN. The new project is for three years and is focused on increasing consumption of fortified wheat flour in two large provinces of northwestern China: Shaanxi and Gansu. The project aims to decrease iron deficiency anemia by 20% and expects to reach an estimated 9.4 million people, including 3.6 million “at risk” people defined at women of reproductive age and children 3 to 15 years of age in rural areas. The project will license and train over 38 mills to fortify their flour and work with national and provincial level Poverty Alleviation Office to develop a low-interest loan scheme to assist participating mills with capital improvements and subsidies on pre-mix cost. The project also includes large communication & social marketing and quality control components to ensure public acceptance and demand and to ensure the quality of fortified flour supply.

1.2 Goal
The goal of the program is to reduce the prevalence of micronutrient deficiency among women of reproductive age and children 3 to 15 years of age in Shaanxi and Gansu provinces by 20% through fortification of wheat flour by Sep 2009. Baseline anemia rates are currently unavailable, but a biological study is included in the project budget and activity plan. The specific prevalence baseline and endline rates will be added to project documents upon completion of the baseline study.

The Objecties, Outputs and Result Indicators are:

Key Objective
To increase regular consumption of fortified flour among the target group in Gansu & Shaanxi Provinces.
? Coverage – 3,655,520 (or 20% of) “at risk”in rural area people will consume fortified flour.
? Reach - 9,420,000 (or 20% of) people in Gansu & Shaanxi provinces will consume fortified flour.

Project Outputs
Increased supply of high quality, affordable fortified flour.
? 247,558 MT/year of fortified flour produced for the target area (or 3% market share.)
? 247,558 MT/year of fortified flour sold in target area
? Increased consumer awareness/demand for fortified flour.
? % of consumers who report having purchased fortified flour at least once (trial) goes from X% to Y%.*
? % who are aware (have heard) of FF goes from X% to Y%.*

* “X” and “Y” represent baseline and endline percentages that will be filled in upon completion of a baseline Knowledge, Attitudes & Practices (KAP) study.

1.3 Planned Activities/Target Groups/Beneficiaries

Project Activities
Over the three year project, the Executing Agency will implement the following activities:
? Mill Recruitment, Training & Licensing – PNDC’s Implementation Division will work to first identify eligible flour mills, then recruit them into the project, train them on the technical aspects of fortification, and finally help them through the certification process. The approach will be a proactive one, whereby a mill recruiter visits mills personally to “sell” them on the concept using specially produced materials and presentations. PNDC will also work through the CCOA, making presentations at their annual conferences and arranging special meetings with their mill members. PNDC will also advertise in the CCOA newsletter and other industry publications. Once recruited senior mill staff will be oriented and technical personnel trained in how to fortify. PNDC will work with SGA, CCOA and the NDRC to help each mill through the certification process. In total over38mills will be certified and supported by PNDC from the two provinces.

? Reduced Cost of Fortification to Mills – A potential barrier to the success of the project is the cost to mills of converting production to fortification. Many mills will need to purchase premix feeders as well as the additional cost for premix which in China is relatively high at US$5 per MT of flour. To address these barriers the PNDC has been negotiating a no-interest loan scheme with the government’s Poverty Alleviation Office and the Agricultural Development Bank of China. The funds to be used in this scheme would be contributed by the government and PNDC’s role would be processing applications from eligible mills, those that serve poorer, rural areas. Under the GAIN project PNDC will finalize negotiations with the PAO and create the implementation mechanism for this program. The result will be wider participation by mills serving the rural poor in the flour fortification program.

PNDC will also work to enlarge the number of pre-mix suppliers. They will actively encourage new suppliers into the market and will negotiate for reduced pre-mix prices on behalf of participating mills.

? Quality Assurance and Control – A major activity under this project will be developing a rigorous and appropriate QA/QC protocol for both internal and external quality testing of fortified flour. First PNDC will work with SGA, CCDC and QIMB to develop the protocol, systems and forms. Then PNDC will train mills on implementing the new QA system. Mills will send summaries of their QA results to PNDC monthly thereafter. External quality control will be done by CCDC who will test mill samples and also samples taken randomly from the market bi-annually. PNDC will also organize bi-annual visits to each mill by inspectors. CCDC will also send PNDC reports on their testing regularly which PNDC will monitor and follow-up on.

? Communication & Social Marketing – Communication and social marketing activities under this project will be data-based and therefore specific activities and products have not yet been selected. Consumer-directed campaigns will be designed based on careful analysis of quantitative and qualitative research with various target group segments that will take place in the first four months of the project. Ultimately, PNDC aims to increase consumer awareness of the fortified category and trial of the product, which will likely require increasing the public’s awareness of anemia, its severity and the efficacy of fortified flour as a practical solution to the problem. Key gatekeeps such as bakers or noodle makers may also be important target groups. A Communication strategy will be developed systematically with specific communication objectives, messages and channel selection. All campaigns and materials will be pre-tested and executed with the help of an experienced communication agency. Campaigns will be monitored regularly and evaluated.

? Monitoring & Evaluation – All project activities will be monitored regularly. All PNDC divisions will submit monthly reports on progress measured both quantitatively and qualitatively. Mills will submit monthly reports on production, sales and quality assurance results. CCDC will also submit monthly reports on their quality control activities. All reports will be consolidated into a quarterly report to GAIN.

Project evaluation will be done through two major pre-post studies. The first is a biological study of hemoglobin, zinc, folic acid, dietary intake and anthropometrics to assess overall impact. The second is a household Knowledge, Attitudes and Practices (KAP) survey to measure change in these factors related to anemia and demand and use of fortified flour.

1.4 Project Implementation Plan
As described in the activities above, the Executing Agency will coordinate activities with a number of partner organizations at the provincial and national level. PNDC has four main divisions: Implementation, Communication, Monitoring & Evaluation and Logistics and Finance. Each department will be charged with liasoning with relevant partners to implement activities.

The project will have three major phases. The first, from month one to six, will be planning and preparation and involve the conduct of consumer and biological research; establishment of QA/QC committee and development of protocols; preparation of mill recruitment materials and team, and development of the communication strategy and campaigns. By month seven the implementation phase of the project will begin with recruitment, training and certification of mills and implementation of communication activities. The final phase, to take place during the last 3 months of the project, will be evaluation, when the post biological and KAP surveys will be conducted and analyzed.

1.5 Initial National Fortification Alliance:

The composition of the National Fortification Alliance may change from time to time. Current members include:
? Centre for Public Nutrition & Development of China(PNDC)
? China Center for Disease Control (CDC)
? State Development Planning Commission
? Ministry of Health
? Ministry of Finance
? State Grain Administration
? UNICEF
? US CDC
? Chinese Cereals and Oil Association
? State Council Leading Group Office of Poverty Alleviation and Development(PAO)
? Agricultural Development Bank of China (CABD)
? Ministry of Civil Affairs of People’s Republic of China

1.6 Technical Partners

The following are partners who will provide technical support for the project:

? Centre for Public Nutrition & Development of China(PNDC)
? China Center for Disease Control (CDC)
? State Grain Administration
? UNICEF
? US CDC
? Chinese Cereals and Oil Association
? GAIN

2 Conditions Precedent to Disbursement

2.1 Conditions Precedent

2.1.1 Conditions Precedent to re-starting spending of GAIN funds in PNDC’s bank account (and/or Initial Advance Payment if any) (Terminal Date as stated in block 6A of the Face Sheet)

Before first disbursement under the Grant, the Executing Agency shall, except as GAIN and the Executing Agency may otherwise agree in writing, furnish to GAIN, in form and substance satisfactory to GAIN:

a) New GAIN-specific bank account information.

b) Copy of new financial management procedures as per audit

2.1.2 Conditions precedent to First Disbursement (Terminal Date
as stated in block 6 B of the Face sheet)

Before first disbursement under the Grant, the Executing Agency shall, except as GAIN and the Executing Agency may otherwise agree in writing, furnish to GAIN, in form and substance satisfactory to GAIN:

a) A copy of the first Quarter Report as per the GAIN template
b) List of mills with production >20 MT/day in two provinces.
c) The MOU or letter of agreement from the NDRC to the expedited process and/or relaxed criteria for certification of mills to produce fortified flour.
d) A copy of the study protocol for the Biological Baseline Study.
e) Copy of the baseline KAP and qualitative research reports.

2.1.3 Conditions precedent to Second Disbursement (Terminal Date
as stated in block 6 B of the Face sheet)

Before second disbursement under the Grant, the Executing Agency shall, except as GAIN and the Executing Agency may otherwise agree in writing, furnish to GAIN, in form and substance satisfactory to GAIN:

a) A copy of the first three Quarter Report as per the GAIN template.
b) Draft mill-directed communication materials.
c) Draft MOU or letter of agreement with the Poverty Alleviation Office on the loan scheme for mills serving poor populations.
d) A copy of the mill training materials and curricula.
e) A copy of the Quality Assurance/Quality Control protocol
f) A copy of the final Biological Baseline Study Report.
g) A copy of the final Communication Plan.

2.1.4 Conditions precedent to Third Disbursement (Terminal Date
as stated in block 6 B of the Face sheet)

Before third disbursement under the Grant, the Executing Agency shall, except as GAIN and the Executing Agency may otherwise agree in writing, furnish to GAIN, in form and substance satisfactory to GAIN:

a) A copy of the first five Quarter Report as per the GAIN template.
b) List of all mills receiving loans from the Poverty Alleviation Office/Agricultural Bank loan scheme.
c) A list of all mills who have been trained by PNDC on fortification process.
d) A summary report of Quality Assurance/Quality Control results from testing to date.
e) A copy of sample consumer-directed communication materials.

2.2 Terminal Date for Meeting Conditions Precedent

a) The terminal dates for meeting the conditions specified in this Annex A are the dates specified in blocks 6A and 6 B of this Agreement. If the conditions precedent have not been met by the stated terminal dates, GAIN, at any time, may terminate this Agreement by written notice to the Executing Agency.
b) Unless GAIN advises the Executing Agency otherwise in writing, the Executing Agency shall furnish to GAIN all items required to satisfy the conditions precedent to disbursement stated in this Annex A and shall ensure that the NFA receives copes of the items. GAIN will promptly notify the Executing Agency when GAIN has determined that a condition precedent has been met.

3. Special Terms and Conditions for this Agreement

a) In the case that items listed in section 2.1.2; 2.1.3; 2.1.4 are not satisfactory to GAIN, GAIN notwithstanding the availability or exercise of any other remedies under this agreement, may request for earlier termination of this Agreement and require the Executing Agency to refund all or any part of the amount of the disbursements.
b) The executing Agency shall regularly attend the meetings of the NFA and submit to GAIN minutes of these meetings.

4 Intended Project Results

Unless GAIN agrees otherwise in writing, it is planned that the Executing Agency will request disbursement under the Grant approximately 3, 9, 15 months after the Project Starting Date:

4.1 Activities planned to be completed and intended Results for months 1 to 3.

Activities Intended Results
Compilation of list of all mills with production >20 MT/day with info on capacity, distribution and their interest in fortification. Mill report and mill recruitment plan for each province.
Agreement with NDRC on new, expedited procedures for certifying mills. MOU with NDRC on new procedures for Gansu & Shaanxi.
Set up QA/QC committee, draft QA/QC protocol. Draft QA/QC protocol developed and circulated to relevant partners.
Prepare for conduct of qualitative research in Gansu & Shaanxi. Qualitative research protocol and questionnaires finalized.
Prepare for conduct of baseline household KAP survey in Shaanxi. Research protocol & questionnaire finalized.
Prepare for conduct of biological survey in Gansu & Shaanxi. Research & questionnaire protocol finalized.

4.2 Activities planned to be completed and intended Results for months 4 to 12

Activities Intended Results
Mill recruitment personnel hired & trained and recruitment materials developed Resources required for mill recruitment available and fielded. Mill recruitment begun.
Agreement with PAO/ADB on loan scheme for mills serving poor areas. Draft MOU with PAO/ADB on loan scheme.
Identification of premix suppliers and negotiations to lower costs. Meeting minutes. New suppliers certified.
Using baseline quantitative and qualitative consumer research develop a detailed communication strategy outlining target segments, communication messages and channels. Marketing Plan finalized. Development of materials and campaigns underway.
Finalize QA/QC protocol, field test. Train relevant staff from CCDC and SGA on protocol. Final QA/QC protocol approved and field- tested. Staff trained.
Conduct & analysis of baseline household KAP survey in Shaanxi. Research report finalized and disseminate.
Conduct & analysis of biological survey in Gansu & Shaanxi. Research report finalized and disseminate.

4.3 Activities planned to be completed and intended Results for months 13 to 24

Activities Intended Results
Recruitment, training & certification of mills to fortify flour. - At least 38 mills certified with their staff trained to fortify flour.

Authorized inspection and enforcement personnel carry out quality control inspections and internal and external samples tested as per protocol. - bi-annual inspections done
- mills sending monthly QA reports.
- CCDC sending monthly reports on external testing.
- QC failure rate less than 5%
Communication strategy implemented. - - Communication campaigns launched as per Communication Plan.

4.4 Activities planned to be completed and intended Results for months 25 to 36

Activities
Intended Results
Recruitment, training & certification of mills to fortify flour. - At least 38 mills certified with their staff trained to fortify flour.
- 247,558 MT/year of fortified flour produced.
Authorized inspection and enforcement personnel carry out quality control inspections and internal and external samples tested as per protocol. - 90% of bi-annual inspections done
- 90% of certified mills sending monthly QA reports.
- CCDC sending monthly reports on external testing.
- QC failure rate less than 5%
Communication strategy implemented as per plan. - - X% of consumers who report having purchased fortified flour at least once (trial.)*
- - X% of consumers are aware (have heard) of fortified flour.*
- * exact % to be determined after baseline.
Conduct & analysis of endline household KAP survey in Shaanxi. Research report finalized and disseminate.
Conduct & analysis of endline biological survey in Gansu & Shaanxi. Research report finalized and disseminate.
Biological impact among at risk populations. - 20% reduction in iron deficiency anemia in target groups in selected provinces.

5 (Initial Advanced funds, if any and)Estimated Project Budget- Planned Disbursement (in United Dollars)

5.1 Initial Advance Payment

US$ 355,000 remains from the last GAIN disbursement of the previous “Flour Fortification in Five Northwestern Provinces Project.” PNDC will use these funds for the first 3 months of the project. The next disbursement will take place three months after the project start date as per Article 2.1.2 above.

5.2 Estimated Project Budget and Planned Disbursement

Budget Category For Months
1 to 3 For Months 4-12 For Months
13 to 24 For Months 25-36 Total Project Disbursements
Personnel 48812 22828 85,129 93,642 250,411
Technical Assistance 19099 10506 32,566 35,822 97,993
Equipment and Premix 2024 2576 2,750 3,025 10,375
Travel 48352 28648 81,400 89,540 247,940
Supplies & Materials 65284 51016 125,950 92,565 334,815
Conference & Meetings 46043 28957 82,500 78,650 236,150
Subcontracts 111896 179104 166,000 116,910 573,910
contingency 13490 12260 23,557 19,869 69,176
TOTAL 355,000 335,895 599,851 530,023 1820,770

The actual amount to be disbursed for each period stated below will be determined in accordance with the terms of the Agreement and will take into account achievement of intended results, and any amount previously made available to the Executing Agency as an advance.

At Start Date: $355,000 (already in Executing Agency’s account)
At Month 4: $335,895
At Month 13: $599,851
At month 25: $530,023
Total over 3 years: $1,820,770

6. Forms Applicable to this Agreement

Unless GAIN and the Executing Agency agree otherwise in writing the Executive Agency will use GAIN following forms:

- for purposes of Article 4 of this Agreement (Disbursement): the form entitled “Grant Disbursement Request”, as mentioned in the Management Guidelines,
- For purposes of Article 5b (Reports) of this Agreement: the form entitled “Project Progress Report”, as mentioned in the Management Guidelines.

These forms are available upon request from GAIN.

8 Three years Project implementation plan

The three years Project Implementation Plan, including planned Project Results and Disbursements for the 3 years of the Project and related budget is provided as a reference document only in attachment A1 to this Annex A.

The Attachment or attachments to this Annex A shall be an integral part of this Annex A