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STRENGTHENING PRODUCTION CHAINS IN DAIRY AND ALPACA WOOL Sacha and Cumbijín, Ecuador

2303Q Page 2 Table of Contents Project Snapshot ................................................................................................................... 3 General Overview - Ecuador ......................................................................................... 4 Testimonial ............................................................................................................................... 5 Local Partners ......................................................................................................................... 5 Project Goal and Description ......................................................................................... 8 Monitoring, Evaluation and Learning (MEL) Plan ............................................. 10 Monitoring and Evaluation Reporting ................................................................. 12 Potential Risks ...................................................................................................................... 12 Budget ...................................................................................................................................... 13 About Food For The Poor .............................................................................................. 17

2303Q Page 3 Project Snapshot Project Name: Strengthening Production Chains in Dairy and Alpaca Wool Location: Sacha and Cumbijín, Cotopaxi, Ecuador Beneficiaries: 200 livestock farmers Timeline: 2 years Budget: $174,292.40 Project Goal: Increase the income and production efficiency of 200 families in Ecuador participating in small milk and alpaca wool production through agricultural inputs, training and equipment. Main Activities: Through this project, Food For The Poor (FFTP) will partner with CODESPA Foundation to provide the necessary inputs, training and equipment for 200 livestock farmers to increase their gross revenue from selling milk or other dairy products and alpaca wool by 15%. The project will work with two community associations within Sacha and Cumbijín, Ecuador. It will provide training in Climate Smart Agriculture (CSA) and alpaca herd management, diversification of food production for food security, piped water, design of business plans and market development, and improve dairy and alpaca supply chains. Total Project Costs: $174,292.40

2303Q Page 4 General Overview - Ecuador Ecuador has experienced the loss of human lives and economic decline due to the COVID pandemic, resulting in higher unemployment and poverty rates and a decrease in GDP in 2020 of 7.8%. This contributed to the poverty rate reaching 27.4% nationally and 42.4% rurally (with extreme poverty at 20.3%).1 The rural areas, especially indigenous populations, struggle with higher unemployment rates, gender-based violence, and lack of basic services, health and education. These factors, along with migration to rural areas, encourage families to expand agricultural land for subsistence farming. This has contributed to environmental issues such as deforestation, where small and medium producers were responsible for 54% of deforestation in 2016-2018. Deforestation rates are much lower in protected forests, validating strategies to promote conservation. While Ecuador has one of the highest proportions of territory under conservation (16.45%) in South America, it also faced deforestation of 115,000 hectares between 2016-2018. In the last three decades, the coverage of native forests has fallen from 68% to 56%1. Sachi and Cumbijín The Cotopaxi province is one of the 24 provinces of Ecuador, located in the central Andes. The poverty rate in rural areas is significantly higher than in urban areas (41.8% vs. 17.2%).2 According to the World Food Program, the chronic malnutrition rate ranges from high to very high (30%-70%) in children under 5 years old. These rural areas are vulnerable to global food price fluctuations, a poorly diversified diet, soil erosion and social inequity. The two communities this project is targeting, Sachi and Cumbijín, have a combined population of 65,000 people. They face low educational levels (90% of the rural population has only primary education), small plots of land (63% of producers have less than five hectares of land) and low technical assistance (only receiving technical assistance to improve production and marketing). Only 6% of producers have any level of access to credit for productive investment, a key part of increasing productivity and income. Current production conditions are not adapted to climate change, increasing climate risks. Finally, small producers have opted to create producer organizations or community associations, aiming to use associativity to improve production, storage and market access. These 1 INEC December 2021 2 BTI Transformation Index: Ecuador Country Report 2022

2303Q Page 5 organizations have achieved mixed results where the lack of training, technical assistance, financing and access to adequate tools for successful market linkage has conditioned the viability of many initiatives in this regard. Testimonial Sonya Cortez lives in the Sacha community and is part of the alpaca project. Her community is dedicated to agricultural and livestock production. A previous project from Heifer International helped introduce alpaca farming to the community. Raising alpaca has helped reduce deforestation in the area and is ideal for the mountainous ecosystem. The one challenge with alpacas is the time of the year when they must be driven to lower altitudes where the rain makes the paths treacherous. The benefit of having the alpacas is that the wool and shearing occur every year. This wool is sold to make handicrafts and clothes and taken to NGOs, which take wool for other uses. Sonya has been producing alpaca wool since 2014. The community received funding to expand the number of participants in the association. It started with 15 women and currently consists of 60 associates who are beneficiaries of the base fund. This fund is approximately $400 for each associate with the objective that they purchase guinea pigs, chickens and organic material. Each associate has to pay $35 each month or pay $420 per year. This applies to each associate so the community can generate funds for their alpacas. Local Partners CODESPA Foundation is an NGO that works to reduce global poverty by creating economic opportunities through training, guidance and access to credit. It has worked in Ecuador for over 20 years, focusing on rural areas with local indigenous populations.

2303Q Page 6 The Sierra Nevada Dairy Collection and Processing Association is an association that acts as the main milk collector in the communities of Sacha and Cumbijín, with approximately 200 supplier families. The project will support the association in improving its business management, quality, supplier training and implementation of Integrated Chain Management approaches. Sacha Community Organization is a promoter of the alpaca value chain in the area with a current herd of 10 alpacas for selling wool to textile entrepreneurs. The alpaca is regarded as a more environmentally friendly livestock than cattle. Pictured above is a livestock pasture in Sacha and Cumbijín.

2303Q Page 7 Above, a farmer fertilizes a potato field with locally made fertilizer. Improved cattle breeds graze in a pasture.

2303Q Page 8 Project Goal and Description This project aims to help increase the income of 200 vulnerable families living high in the Andean mountains in the communities of Sacha and Cumbijín while strengthening two local associations’ capacity. To achieve this goal, FFTP will work alongside CODESPA Foundation and the two local associations, the Sierra Nevada Dairy Collection and Processing Association and the Sacha Community Organization, to help livestock farmers strengthen their productive skills and food security, improve their collection, processing, marketing and business management capabilities, and promote and strengthen their business model. a. Productive skills in dairy cattle and alpacas Improving milk production will increase milk quality and yield, increasing products available for farmers to sell. The specific activities include: • Adoption of ICM and CSA practices • Improved alpaca herd management • Diversified food production b. Collection, processing, marketing and business management capacities Improving the processing of dairy products will expand the variety of types, ranging from cheeses to yogurt, while ensuring food safety through good manufacturing/hygiene practices. Activities in this component include: • Development of business plans • Increased stockpile • Financial education • Improvement of dairy product commercialization c. Promotion of business models between producer families and companies that purchase milk and alpaca products Improved marketing of products will help livestock farmers increase the number of customers, meet consumer demand, innovate new products, provide a more stable market and generate income. The specific activities include: • Meetings between producers and other sectors

2303Q Page 9 • Producers increase turnover • Link producers with financial services Additionally, this project will provide the two communities with piped water to replace the current deteriorated infrastructure. Your gift will also teach and train families to diversify their crops and improve nutrition (through grains, proteins from small animals and vegetables). Training will include planting, cultivation, harvesting and crop conservation. The piped water will help provide irrigation for the gardens while also providing safer drinking water for the families. The intervention methodology in this project is based on CODESPA’s CADENA approach. This approach focuses on identifying value chains that have potential at four levels: 1) A market secured by formal private companies that guarantee price conditions well above normal. 2) Interest on the part of financing entities in providing credit to producers and their organizations to access more demanding market segments. 3) Producer organizations with aspirations to become rural enterprises. 4) A large number of families become engaged in the identified line of business. During the project, CODESPA will work with the four links in the chain to ensure interconnectedness and win-win alliances are generated between producers, private companies and credit providers. Links will be addressed by strengthening technical production, strengthening business, financing through access to credit to scale the businesses, and access to markets.

2303Q Page 10 The farmers benefiting from your generous support in this project are mainly of Kichwa indigenous ethnicity. They depend on subsistence agriculture, experiencing low productivity and profitability. Many of the families are also engaged in dairy cattle raising. This cattle production requires large amounts of land for pasture, which is inefficient and causes high rates of deforestation and soil degradation. Monitoring, Evaluation and Learning (MEL) Plan Including a MEL plan is key for the project's success. This plan serves as a crucial tool for assessing progress and drawing insights from our interventions. To effectively monitor the project's technical aspects, we will utilize the SiGMA Knowledge and Monitoring System, which is CODESPA's primary monitoring tool. This system will enable us to track progress, identify achievements and challenges encountered, and make necessary adjustments while managing knowledge effectively. The evaluation process aims to gauge the extent to which the project has achieved its desired outcomes. The table below provides an overview of the three intended outcomes and their corresponding indicators, which will be assessed upon project completion. Strengthening Technical Production Strengthen producer organizations to become rural businesses and reach the market Strengthening Entrepreneurship Financing Access to Markets Strengthen the first value chain link: producers and their abilities in planting, cultivating, harvesting and conserving products. Connect producer organizations and credit providers to help them increase the scale of their businesses and enter new segments of the market Generate business alliances at the international level that guarantees favorable price and conditions with an increase in product quality

2303Q Page 11 Outcome Description Farming families will have strengthened productive skills in dairy cattle and alpacas At least 60% of milk-producing families will adopt ICM (Integrated Value Chain Management) and CSA (Climate Smart Agriculture) criteria Alpaca farmers will at least double the herd size At least 70% of families will diversify their production with small animals and agricultural products Two community organizations (200 farmers) will improve their collection, processing, marketing and business management capacities Two participatory business plans will be designed and implemented The enterprises (dairy and alpaca wool) increase the production stockpile by 15% 200 people will be trained in financial education Participation in two marketing fairs (local or regional) to generate new spaces for marketing and promoting new products to consumers Business models promoted between producer families and companies that purchase milk and alpaca products At least five meetings to coordinate alpaca and dairy value chains between producers and the public and business sectors, including ALPINA and PACOCHA (companies that purchase alpaca and dairy cattle byproducts) Enterprises increase their turnover by 15% with companies that buy milk and alpaca products At least one agreement signed with a savings and credit cooperative to link financial services to beneficiary families with at least 50 credit applications processed In addition to the indicators previously mentioned, other monitoring or process indicators will be measured and presented in the quarterly activity reports.

2303Q Page 12 Monitoring and Evaluation Reporting At each data collection intervention, a report will be provided. It will contain a project snapshot and key information on progress toward project outcomes and indicators. Potential Risks It should be noted that the completion date of this project may be extended for issues related to weather, natural disaster, COVID-19 or civil unrest to the extent that such events exceed normal conditions and impede the project’s progress. Another difficulty encountered is the financing and resources necessary for the design, development and implementation of interventions. Some risks can be mitigated by including an amount for possible contingencies in the budget, as well as by hiring local personnel who can live and work in the area. In general, risks can be reduced by making the process flexible and adapting the project’s strategy according to the needs and changes that occur each year of implementation.

2303Q Page 13 Budget QTY UNIT DESCRIPTION AMOUNT TOTAL Training families in Climate Smart Livestock 88 Each Travel and per diem to beneficiary workshops $80.00 $7,040.00 1 Sum Travel and per diem to beneficiary workshops (financial contribution from CODESPA) -$1,000.00 -$1,000.00 Adaptation of Productive Plots to ICM Concepts 200 Units CSA application materials $120.00 $24,000.00 1 Sum CSA application materials (financial contribution from CODESPA) -$2,000.00 -$2,000.00 Training in Alpaca Herd Management and Use of By-Products 20 Each Sacha community workshops $80.00 $1,600.00 1 Sum Training materials $2,000.00 $2,000.00 Diversification of Production for Food Security 200 Each Materials for smaller animals $80.00 $16,000.00 10 Each Travel and per diem – community workshops $80.00 $800.00 1 Sum Materials for smaller animals (financial contribution from CODESPA) -$2,000.00 -$2,000.00 Piped Water for Family Consumption and Orchard Irrigation (Sacha) 600 Each Tubing materials $8.50 $5,100.00

2303Q Page 14 QTY UNIT DESCRIPTION AMOUNT TOTAL 5 Each Travel per diem – community coordination meetings $100.00 $500.00 Business Plan Design for Sierra Nevada Association (Cumbijín) 1 Sum Technical services for business plans of the associations $2,500.00 $2,500.00 1 Sum Milk processing equipment $5,000.00 $5,000.00 44 Each Travel and per diem – improvements and Implementation workshops $80.00 $3,520.00 1 Sum Technical services for business plans of the associations (financial contribution from CODESPA) -$2,500.00 -$2,500.00 Design and Implementation of Alpaca Plan (Sacha) 1 Sum Technical services for the design of the alpaca plan $2,500.00 $2,500.00 1 Sum Veterinary supplies $1,540.00 $1,540.00 10 Each Alpaca equipment $650.00 $6,500.00 22 Each Travel and per diem for plan implementation workshops (alpaca producers) $80.00 $1,760.00 1 Sum Technical services for the design of the alpaca plan (financial contribution from CODESPA) -$2,500.00 -$2,500.00 1 Sum Veterinary supplies (financial contribution from CODESPA) -$500.00 -$500.00

2303Q Page 15 QTY UNIT DESCRIPTION AMOUNT TOTAL 1 Sum Alpaca equipment (financial contribution from CODESPA) -$1,100.00 -$1,100.00 Market Opening and Consolidation 2 Each Marketing materials $500.00 $1,000.00 2 Each Technical services – market research and market linkage $2,000.00 $2,000.00 Financial Education for Families and Organizations 10 Each Workshop materials $50.00 $500.00 10 Each Travel and per diem – refreshments, workshops and travel trainer $1,050.00 $10,500.00 1 Sum Travel and per diem – refreshments, workshops and travel trainer (financial contribution from CODESPA) -$4,436.00 $4,436.00 Strengthening Articulation Processes between Dairy and Alpaca Chains 24 Each Travel and per diem – accompaniment $80.00 $1,920.00 2 Each Materials $500.00 $1,000.00 Arrangement and Follow-up of Alliances 24 Each Travel and per diem – travel tracking $80.00 $1,920.00 1 Sum Revolving credit fund $68,064.00 $68,064.00 1 Sum Revolving credit fund (financial contribution from CODESPA) -$68,064.00 -$68,064.00

2303Q Page 16 QTY UNIT DESCRIPTION AMOUNT TOTAL Miscellaneous 1 Sum Technical services – initial baseline and final assessment $3,500.00 $3,500.00 24 Months Ecuador bank charges $15.00 $360.00 1 Sum PC and printer $1,500.00 $1,500.00 24 Months Lease, utilities, rent and communications $500.00 $12,000.00 Personnel 24 Months Project coordinator (1/2-time) $1,200.00 $28.800.00 24 Months Local technical for associative and agricultural strengthening $1,500.00 $36,000.00 24 Months Local livestock technician (1/2-time) $750.00 $18,000.00 24 Months Financial inclusion technician (1/4-time) $500.00 $12,000.00 24 Months Accountant (1/4-time) $500.00 $12,000.00 1 Sum Project coordinator (1/2-time; financial contribution from CODESPA) -$28,800.00 -$28,800.00 1 Sum Local livestock technician (1/2 time; financial contribution from CODESPA) -$18,000.00 -$18,000.00 1 Sum Financial inclusion technician (1/4 time; financial contribution from CODESPA) -$12,000.00 -$12,000.00

2303Q Page 17 QTY UNIT DESCRIPTION AMOUNT TOTAL 1 Sum Accountant (1/4 time; financial contribution from CODESPA) -$1,200.00 -$1,200.00 Total Direct Costs $149,324.00 Indirect Costs Corporate, Network & Field Operation In-country project management expenses $10,036.00 Food For The Poor fulfillment, project management and monitoring expenses $14,932.40 Total Indirect Costs $24,968.40 TOTAL PROJECT COSTS $174,292.40 The funds you generously contribute to Food For The Poor will be used toward completion of your project of choice. If any of your donation exceeds budget cost, rest assured that it will be used to fund other Food For The Poor programs and organizational support to meet the urgent needs of the poor. Contributions are tax-deductible under Internal Revenue Code Section 501(c)(3). About Food For The Poor Food For The Poor, one of the largest international relief and development organizations in the nation, does much more than feed millions of hungry children and families primarily in 17 countries of the Caribbean and Latin America. This interdenominational Christian ministry provides emergency relief assistance, water, medicine, educational materials, homes, support for vulnerable children, care for the aged, skills training and micro-enterprise development assistance. For more information, please visit www.FoodForThePoor.org.