Project Design involves series of multiple components and is mutually interrelated. The project approach focuses on one dominant intervention – the development of pro-poor value chains.

Component 1 facilitates this development, with Component 2 providing initiatives directly in support of value chain development:  formation/strengthening value chain producers groups, initiatives to promote gender and social inclusion, support for high value commodity production and post-harvest activities, establishment of a grant-based value chain development fund, and support for district operations and inclusion of remote communities. Component 3 provides for project management and linked activities including M&E and knowledge management.

Component 1: Inclusive Value Chain Development

Inclusive Value Chain Development accelerates the use of the emerging good practices within the project, notably through a strategic approach to support Value Chains (VCs). The objective of the component is to facilitate mutually beneficial and profitable production and marketing arrangements between producers of high value commodities and agri-businesses.

The strategy for implementing the component is based on an ‘Inclusive Business Approach’ in which the development of a given value chain would be initiated by the identification of potential private agribusinesses interested in working with poor rural producers of high value commodities – both high value agricultural commodities and NTFPs/MAPs – in a partnership based on carefully developed contracts between the two parties.

Sub-Component 1.1-Funds and facilities: These are the main instruments within the project to tackle identified VC constraints through VC facilitation and the use of designated funds, grouped into three areas based on the primary focus as described below:

Value Chain Fund: "Private good" investments that tackle identified value chain constraints by  demonstrating replicable innovations in business, production or service models but in which the large majority of benefits are captured by the individual producer's groups, cooperatives, agri-businesses or service providers the project is co-investing with.

Sector Development Fund: "Public good" investments to tackle specific VC constraints which will have clear benefits to a wider group of VC actors and which are not likely to attract purely private investment. Investments are endorsed prior to implementation by VC actors, for example through the multi-stakeholder processes.

Social Inclusion Fund: Public investments specifically designed to increase the distribution of benefits from VC growth to poorer and more marginal households that are willing and have the potential to participate in the value chains.  These will cover the following types of funds:

a) Spatial inclusion Fund (SIF): Spatial inclusion infrastructure to physically connect to the road head a small number of more remote communities in the cluster areas with good potential to engage in a particular VC.

b) Poverty Inclusion Fund (PIF): Supplementary support to poorer households that are motivated to participate in the VCs but have insufficient resources to make the transition from their existing livelihood systems.

Sub-Component 1.2: Group formation and strengthening: The strategic support to group formation and strengthening will maximise the inclusion of the poor in project value chains and will increase agricultural production.

Sub-Component 1.3: Gender and social inclusion: Specific support to inclusion through value chain clustering and the sequencing of instruments like (PIF)

The expected outputs from the component 1 are: 

1. A) Small scale producers organized in groups, with a high proportion of women and vulnerable groups, are better able to respond to market demand and opportunities;
2. B) High portion of risk averse persons/households and landless in project communities participate in the project;
3. C) Incremental volumes of agricultural commodities, NTFPs/MAPs are being produced in the quantities and qualities specified in contracts with agribusinesses;
4. D) Infrastructure, equipment and certification financed by the Value Chain Fund is contributing to the profitable production and marketing of the project’s high value commodities; and
5. E) Infrastructure projects that improve accessibility of remote communities completed and facilitate marketing of high value commodities.

Component 2: Service Market Strengthening

The objective of the component is to support a sustainable increase in the purchase of business support services (including credit) by value chain actors in project areas". Business support services needed by local VC actors and which can most easily be privatized and/or moved to a fee-based service will be strengthened with the highest priority.

Sub-component 2.1: Mobilization and capacity building of service providers

To mobilize and build the skills of a network of district and community-based service providers - public and private, individuals and organizations - and fostering their linkages with local producer groups and other VC actors who require such services.

Sub-component 2.2: Partnerships on financial services

Facilitate the use of credit from mainstream financial institutions (banks and MFIs)  to scale the investments and growth in the value chains. Similarly, to mitigate the major external production risks (such as floods or draughts) with facilitating linkages with private insurance. 

The expected outputs from Component 2 are: 

1. (i)  Contractual arrangements between producers groups and agribusinesses functioning effectively, sustainably and benefiting both parties in at least 18 value chains;
2. (ii) Strengthened institutional capacity for delivery and facilitation of market opportunities, information and support services; and
3. (iii)  Women, dalits, janajatis and other poor and vulnerable groups well represented, actively involved and benefiting from participation in project value chains.

Component 3. Project Management 
Similarly, the objective of the component is to provide effective technical, financial and contract management of the project within the context of gender and poverty targeted value chain development. Monitoring and Evaluation System, Management Information System, Knowledge Management and Communication are the components inbuilt for effective project management.

The expected outputs of component 3 are: 

1. A)  Project management, advisory and coordination systems operating effectively, and
2. B) A functioning gender strategy that guides gender mainstreaming and facilitates project response to gender issues.