world bank document...5. the break-up of somalac's paddy purchasing monopoly - in 1988 - has...

Document of

The World Bank

FOR OmCLAL USE ONLY

Report No. 11459

PROJECT COMPLETION REPORT

MADAGASCAR

LAC ALAOTRA RICE INTENSIFICATION PROJECT(CREDIT 1337-MAG)

DECEMBER 22, 1992

Agriculture Operations DivisionSouth-Central and Indian Ocean DepartmentAfrica Regional Office

This document has a restricted distribution and may be used bY recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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EXCHANGE RATESCurrency Unit: Malagasy Franc (FMG)

Year Malagasy Francs Malagasy Francsper SDR per US$

1982 405.6 349.71983 515.3 430.41984 645.0 576.61985 698.4 662.51986 941.6 676.31987 1,751.0 1,069.21988 2,054.1 1,407.11989 2,014.0 1,603.41990 2,012.0 1,494.0

WEIGHTS AND MEASURES

I are (a) = 0.0247 acresi hectare (ha) = 2.47 acresi kilometer (km) = 0.62 milesi square kilometer (km2) = 0.39 square milei kilogram (kg) = 2.20 poundsI liter (1) = 0.26 US gallon

0.22 Imperial gallonI ton (t) = 2,204 pounds

ACRONYMS

ASAC Agricultural Sector Adjustment CreditBTM Agricultural Credit BankCCCE Caisse Centrale de Cooperation EconomiqueCIRIR Rural Irrigation DistrictCIRVA Agricultural Extension DistrictERR Economic Rate of ReturnFAC (Fonds d'Aide et de Cooperation)FMG Malagasy FrancFOFIFA Center for Agricultural and Rural Development ResearchPCR Project Completion ReportSOMALAC Development Agency for the Lac Alaotra RegionWUA Water Users' Association

ADMINISTRATIVE NOMENCLATURE

Faritany Administrative equivalent of a provinceFivondronona Sub-prefectureFiraisana CantonFokontani Village level local government

FISCAL YEARJanuary I - December 31

FOR OFFICIAL USE ONLYTHE WORLD BANK

Washington, D.C. 20433U.S.A.

Office of Director-GeneralOperations Evaluatlon

December 22, 1992

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on MadagascarLac Alaotra Rice Intensification Project (Credit 1337-MAG)

Attached is a copy of the report entitled "Project Completion Report on Madagascar -Lac Alaotra Rice Intensification Project (Credit 1337-MAG)" prepared by the Africa Regional

Office.

While implementation took two an a half years longer than planned, the projectachieved its physical objectives of rehabilitating modern irrigation schemes and improving wateravailability on traditional small schemes. Paddy yields and production have increased significantly andthe project has been instrumental in getting farmers involved in operating irrigation works byestablishing water user associations in the project area. As such, the project is rated as satisfactory.

Project sustainability, however, is not assured because of uncertainty regardingmaintenance arrangements for the civil works and political resistance to water charges. The issue ofwhich Government agency should be given the responsibility for maintaining the irrigation schemesremains unresolved. Without adequate maintenance, the project may not generate the economic rateof return of 25 percent reestimated in the PCR.

The Project Completion Report (PCR) is comprehensive and informative. Nocomments on Parts I and III were provided by the Borrower but a Project Completion Report writtenby the Borrower's implementing agency is available in the project files. An audit is planned jointlywith two other agriculture investment projects and an agricultural sector adjustment operation(ASAC).

Attachment

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

FOR OFFICIAL USE ONLY


MADAGASCAR

LAC ALAOTRA RICE INTENSIFICATION PROJECT (CREDIT 1337-MAG)

TABLE OF CONTENTS

PREFACE ................................................... i

EVALUATION SUMMARY . ........................................ iii

PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE .................. 1Identity of the Project ............ ............................ 1Background ............................................... 1Project Objectives and Description ................................ 2Project Design and Organization .................................. 2Implementation ............................................. 3Results .................................................. 5Economic Results . .......................................... 6Project Sustainability . ........................................ 6IDA Performance . .......................................... 7Borrower Performance ............ ............................ 7Consulting Services . .......................................... 7Project Documentation and Data .................................. 8

PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE .... .......... 9

PART III: STATISTICAL INFORMATION .............. ................ 10Table 1: Related Bank Credits .................................. 10Table 2: Project Timetable .................................... 11Table 3: Project Costs and Financing ............................. 12Table 4: IDA Credit Disbursements .............................. 13Table 5: Main Results ........... ............................ 15Table 6: Compliance with Credit Condition ......................... 16Table 7: Use of Bank Resources ................................ 17

ANNEX 1: ECONOMIC RATE OF RETURN ............................. 19

Map: IBRD 15665R

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

i


MADAGASCAR


PREFACE

This is the Project Completion Report (PCR) for the Lac Alaotra Rice Intensification Projectin Madagascar, for which Credit 1337-MAG in the amount of US$ 18.0 million equivalent (SDR16.7 million) was approved on March 22, 1983. The credit was closed on September 30, 1991, twoyears and three months after the original closing date. The last disbursement was on February 20,1992, at which time, the undisbursed balance of SDR 0.9 million was canceled.

Parallel financing was received from the Fonds d'Aide et de Cooperation (FAC), equivalentto SDR 4.1 million, and from the Caisse Centrale de la Cooperation Economique (CCCE), equivalentto SDR 9.3 million. At the time of IDA credit closing, the actual FAC contribution had increasedto SDR 7.9 million; from the CCCE loan, SDR 8.6 million had been used. 1/

The PCR was prepared by the Agriculture Operations Division of the South-Central andIndian Ocean Department, Africa Region (Preface, Evaluation Summary, Parts I and III).Preparation of this report was started during the final Bank supervision mission of the project inMarch of 1991, and is based, inter alia, on the Staff Appraisal Report, the Credit Agreement,supervision reports, correspondence between the Bank and the Borrower, internal Bank memorandaand a project completion report prepared by the implementing agency.

The Borrower was sent a copy of the PCR with a request to prepare Part II. The Borrowerdid not prepare a Part II but a project completion report prepared by the implementing agency isavailable in the project files.

1/ At the time of the IDA credit closing on September 30, 1991, FAC and CCCEsupport was still on-going.

iii


MADAGASCAR


EVALUATION SUMMARY

Background

1. Agriculture is the most important economic activity in Madagascar, supporting over 80% ofthe population. It contributed about 40% to GNP and 80% to the export earnings of the economyat the time of project preparation in 1981. At that time, the growth of Madagascar's agriculturalproduction was disappointing. As a result, Madagascar had to import about 175,000 tons of rice(staple food for the Malagasy population) in 1981, which represented an important use of foreignexchange resources. Government priorities were for the country to become self-sufficient in foodproduction, increase the production of cash crops for export, expand basic agro-industries to processlocal raw materials, and increase rural employment. A previous irrigation project in the Lac Alaotraarea (1970-1975) was cofinanced by the Bank (Credit 214-MAG) and other donors. This project wassmall and although it succeeded in expanding the irrigated area, it failed to strengthen the executingagency (Development agency for the Lac Alaotra region, SOMALAC); project results were thereforenot sustainable.

Project Description and Objectives

2. Project objectives were in line with the Government's agricultural objectives. The mainproject objective was to increase rice production and the marketed surplus in the Lac Alaotra basin,thereby saving foreign exchange expenditures on rice imports. Major project components were: a)rehabilitating 25,000 hectares of modern irrigation schemes and improving water availability on 3,000hectares of traditional small schemes; b) reinforcing SOMALAC, the public enterprise responsiblefor irrigation in the Lac Alaotra region; c) strengthening the regional extension service (CIRVA) ofthe Ministry of Agriculture to assist farmers in small schemes; and d) strengthening research(FOFIFA) for seed breeding and multiplication.

3. The project was to be financed by the Caisse Centrale de Cooperation Economique (CCCE;mainly civil works, SDR 9.3m), the French Cooperation (FAC; mainly technical assistance, SDR4. lm), Government (SDR 5. lm) and IDA (SDR 16.7m). The project was to be managed accordingto annual work plans, making it flexible in its execution. As part of project preparation, SOMALACwas reorganized in three semi-autonomous units: one for civil works and maintenance, one forproduction and extension, and one for rice milling and marketing, all under a General Directorate,with a view to progressively privatize some of its functions.

Project Implementation

4. The main difficulties encountered during implementation have had to do with the functioningof the project authority, SOMALAC. During implementation, SOMALAC was one of the publicenterprises to be restructured as part of the adjustment process. Extensive studies were carried out

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(one of the main reasons for the delay in the project closing date of two years and three months)which led to (a) the elimination of SOMALAC's paddy purchase and milling monopoly and theopening up of paddy buying to private hullers and traders; (b) the transfer of SOMALAC's extensionfunctions to the Ministry of Agriculture's regular extension services (CIRVA's); and (c) the transferof SOMALAC's maintenance role to the Ministry of Agriculture's irrigation district (CIRIR).

5. The break-up of SOMALAC's paddy purchasing monopoly - in 1988 - has led to aconsiderable increase in competition between traders, leading to better farmgate prices and to a strongexpansion of private hulling and milling. However, it also weakened SOMALAC's financialperformance to the point that Government decided, in February 1990, to do away with SOMALACand transfer its extension and maintenance functions to other services, as recommended in the studies.Extension activities in the area are presently supported by the Agricultural Extension Pilot Project(Cr. 2150-MAG). Government has yet to reinforce these services to assume their expanded role, asforeseen in the studies, and consequently, it is doubtful whether the project's achievements can bemaintained.

Proiect Results

6. The project has had considerable success in achieving its physical objectives. Some 31,000hectares were rehabilitated (28,000 hectares estimated at appraisal) on schedule and without costoverruns (in SDRs; in local currency, the cost was considerably higher due to several devaluationsduring the implementation period).

7. The effect of rehabilitation has been an increase in paddy yields by just over 50%: from anaverage of 2.1 tons per hectare on the large schemes at the start of rehabilitation, to an average 3.2tons per hectare in 1991, and from an average of 1.8 tons per hectare on the small schemes at thestart of rehabilitation to an average 2.9 tons per hectare in 1991. This has entailed an increase intotal annual paddy production from 57,900 tons in 1981 to 98,500 tons in 1991.

8. Results have also been generally positive in getting the farmers more involved andaccountable for operating and maintaining irrigation works in their own areas. Water UserAssociations (WUAs) have been established covering the entire irrigated area, and WUAs have alsoincreasingly been consulted on the design of rehabilitation works. However, payment of watercharges, initially successful, has declined because of active resistance from local political interests.

9. The economic rate of return of this project is largely positive, estimated at 25% comparedto 24% estimated at appraisal, but this is based on continued adequate maintenance of the irrigationsystem which under present conditions is not assured. Without adequate maintenance, production islikely to fall back to pre-project levels, which would imply a marginal rate of return.

Sustainabil itv

10. Although the project was largely successful in achieving its objectives, its sustainability is indoubt (as was the case after the first project), largely because the institutional questions have still notbeen resolved. The main outstanding issue is that after dissolving SOMALAC, Government did notcreate an institution capable of assuring maintenance of the main civil works (storage dams, maincanals and drains). The studies done on restructuring actually proposed one of two options to theGovernment: to create an autonomous maintenance organization (preferred by the French co-financiers) or to reinforce the existing CIRIR so as to enable it to take responsibility of maintenance

v

(preferred by the Bank). No decision on either has yet been taken, which has potentially seriousconsequences for the security of storage dams and for a rapidly diminishing capacity of thedistribution and drainage network (canals and drains need to be regularly cleaned because of on-goingsiltation due to erosion in watersheds). Unless such an organization is established (or the existingCIRIR reinforced), it will not be possible to sustain the results achieved.

Lessons Learned

11. The major lessons to be drawn from this project are:

- Flexible project execution through annual work plans, which helped to adjustactivities during implementation and provided a mechanism for donor coordinationduring supervision missions, has been a main factor in the smooth implementationof the irrigation rehabilitation works.

The difficult and protracted process of restructuring SOMALAC has been partly dueto the fact that, at appraisal, there was no consensus on SOMALAC's ultimate roleamong the donors and between donors and Government; this situation delayed thedecision to reinforce the Government's regular extension and irrigation services andto replace SOMALAC's functions.

Pioneering work was done in establishing farmer-led WUAs and credit associations,with largely positive results, which are now being extended elsewhere in Madagascar.

The project did include works on both large and small schemes. The results suggestthat it is preferable to concentrate on the rehabilitation of small schemes: (i) the costper hectare of rehabilitation is 56% lower on small schemes than on large ones(approximately SDR 200 per hectare versus SDR 450 per hectare, respectively); (ii)at present, paddy yields are only 10% lower on small schemes than on large ones(2.9 tons per hectare versus 3.2 tons per hectare); and (iii) maintenance on smallschemes can be taken care of to a larger degree by farmers themselves, thusimproving sustainability.

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MADAGASCAR


PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE

1. Identity of the Project

Project name: Lac Alaotra Rice Intensification ProjectCredit number: 1337-MAGRVP Unit: Africa Regional OfficeCountry: MadagascarSector: AgricultureSubsector: Irrigation

2. Background

2.1 At the time of project preparation in 1981, agriculture was the most important economicactivity in Madagascar and contributed about 40% of GNP, 80% of export earnings and supportedover 80% of the population. However, because of a poor policy framework emphasizing stateintervention in the economy at that time, the growth of Madagascar's agricultural production wasdisappointing. As a result, Madagascar, which was used to export 10,000 to 20,000 tons of ricethrough 1972, had to import about 175,000 tons of rice (staple food for the Malagasy population) in1981, which represented a substantial use of foreign exchange resources. The Lac Alaotra basin,with an irrigated surface of 68,000 ha at the time of appraisal, has traditionally been the largest riceproducing area in Madagascar. It provides the country with about one-third of total marketedsurplus.

2.2 Faced with poor agricultural production performance, mounting food import bills andwidespread disorganization in the provision of basic agricultural services, the Government definednew sectoral priorities including: a) self-sufficiency in food supply (particularly rice); b) increasedproduction of cash crops for exports; c) expansion of basic agro-industries to process local rawmaterials; and d) increased rural employment.

2.3 IDA financed three rice irrigation projects in Madagascar, including one in the Lac Alaotraarea. The Lac Alaotra irrigation project (Credit 214-MAG), was closed on June 1975. The ProjectCompletion Report (PCR) was issued in December 1976 and estimated the ERR at 22%, althoughwith a high likelihood of variation (instead of 11 % at appraisal), primarily the result of meeting theproduction targets combined with sharp increases in the world market price of rice. The projectconsisted of rehabilitating irrigation and drainage networks serving 4,000 ha, the construction ofirrigation and drainage networks on 6,000 ha of peat marshlands and the construction of drainageworks on 2,000 ha of peat marshlands. The project did not include any changes in the functioningof the existing project authority, the Development Agency for the Lac Alaotra Region (SOMALAC).It also did not pay any attention to social and land tenure aspects. The PCR criticized the project

2

design for not paying sufficient attention to the social aspects of the project and for not analyzing insufficient detail the financial and managerial capabilities of SOMALAC. By the end of the project,Madagascar was in political turmoil and SOMALAC was in dire financial straits because paymentfor SOMALAC's services to farmers was delayed by Government, and farmers were unwilling tocontribute to the maintenance of canal works. This situation led to a rapid deterioration of theirrigation works in the ensuing years, and consequently to a fall in rice production, which promptedthe Government to request external financing for renewed rehabilitation.

3. Project Objectives and Description

3.1 Objectives. The objective of the project was to increase rice production for the market in theLac Alaotra basin, thereby saving foreign exchange expenditures on rice imports. This would bemainly achieved through the rehabilitation of the existing irrigation infrastructure, the supply of farminputs, and management and institutional technical assistance.

3.2 Components. The project, which was to be implemented over a period of five years (1983-87), had the following components:

(a) the rehabilitation of existing modern irrigation networks on about 25,000 ha; and theimprovement of water availability on traditional schemes on about 3,000 ha;

(b) the reorganization of SOMALAC, the regional development company responsible foragricultural development in the project area, through restructuring, material support,technical assistance and training;

(c) the support of the regional extension service (CIRVA) of the Ministry of Agriculture,including the provision of vehicles and equipment, training and construction of acentral warehouse;

(d) the supply of farm inputs including paddy seed research and multiplication byFOFIFA (research service);

(e) the establishment of a network of gauging stations;

(f) pilot activities aimed at increasing agricultural production;

(g) the establishment of a monitoring and evaluation unit; and

(h) studies related to the project and for the preparation of other agricultural projects inMadagascar.

4. Project Design and Organization

4.1 Preparation of the project was first discussed between Government and IDA in 1978 in thecontext of the Lac Alaotra Master Plan prepared in 1976. Pre-investment studies were financed bythe French Fonds d'Aide et de Cooperation and an accounting and management audit of SOMALACwas carried out in 1981. Preparation took into account the experience drawn from the Lac AlaotraIrrigation Project (Credit 214-MAG). Total project costs in the amount of SDR 35.2 million were

3

to be financed by the French Caisse Centrale de Cooperation Economique (CCCE; mainly civilworks, SDR 9.3m), FAC (mainly technical assistance, SDR 4.1m), Government (SDR 5.1m) andIDA (SDR 16.7m).

4.2 On the technical side, design of the main irrigation/drainage works was carried out by aconsulting firm. Insufficient attention was paid to soil erosion on hilly watersheds even though thisproblem had already been identified at appraisal. During implementation, erosion of these watershedscreated siltation of dams and canals that had been built and increased maintenance costs of theschemes. Modifications had to be made to minimize the effects of the erosion. This necessitatedmore detailed studies and caused delays during implementation.

4.3 In terms of organization, three agencies were involved: a) SOMALAC, which had beenreorganized into three separate entities: one for engineering and maintenance, one for extension, andone for rice milling and marketing; b) the CIRVA, the local extension service of the Ministry ofAgriculture responsible for areas outside SOMALAC's perimeter; and c) the Center for Agriculturaland Rural Development Research (FOFIFA), for seed breeding and multiplication. It was envisagedthat: a) the SOMALAC engineering and maintenance service would supervise execution of thephysical works through contractors, but, once rehabilitation was completed, the service woulddecrease in size and eventually be privatized and Water Users' Associations (WUA) would take overmaintenance; and b) the SOMALAC rice marketing service would loose its monopoly and wouldcompete on an equal footing with other firms. This evolution of SOMALAC's organization wasthought to have been well understood during appraisal but apparently was never fully accepted byGovernment, or by other donors.

5. Implementation

5.1 Effectiveness was delayed by about 6 months for lack of Government counterpart funds torecapitalize SOMALAC, which was a condition of effectiveness. Partly due to this delay, to changesin civil works design, to lack of timely counterpart fund availability during project execution(particularly in 1989), and to the studies on the restructuring of SOMALAC, the closing date had tobe delayed three times from June 30, 1989, to September 30, 1991.

5.2 The design changes proved to be important as they focussed on erosion and siltationprevention, which have become a growing problem over the last fifteen years, as hillsidessurrounding the lake area are increasingly grazed and cultivated.

5.3 Apart from the delayed start-up, no major problems in civil works execution wereencountered: procurement, selection of contracting firms and execution have proceeded smoothlyunder the able supervision of SOMALAC, supported by technical assistance. The area on whichrehabilitation works have been completed (31,000 ha) has exceeded the appraisal estimate by about10%. Moreover, most of the civil works were completed within the time allowed and withoutexceeding appraisal estimates in SDR terms. 2/ Total project costs expressed in SDRs were 35.7million (SDR 35.2 million estimated). However, in local currency (FMG), total cost has been about

2/ Increases in the cost of rehabilitating the large schemes as a result of the designchanges, were more than offset by decreases in the cost of rehabilitating the smallschemes. In SDR terms, the average rehabilitation cost dropped from SDR 475 perha at appraisal to SDR 427 per ha during implementation.

4

210% higher, which has given rise to counterpart funding difficulties; allocations from the budgethave been delayed - particularly in 1988/89 - which has contributed to delays in the final contracts(e.g. land planning). Actual Government financing was 60 percent of the amount estimated atappraisal (SDR 3.1 million actual versus SDR 5.1 million estimated). Financing by IDA was 95%of the amount estimated at appraisal (SDR 15.8 million actual versus SDR 16.7 million estimated);financing for studies and training was higher than estimated, while financing for inputs was less.Financing by the FAC was much higher than estimated (SDR 8.1 million actual versus SDR 4.1million estimated); financing was increased for technical assistance and for the expansion of the seedscenter. Financing by the CCCE was close to the appraisal estimate (SDR 8.7 million actual versusSDR 9.3 million estimated).

5.4 Pioneering work was done in getting the farmer more involved ,n water management andoperation/maintenance of the irrigation network through the establishment of water-user associations(WUAs). None existed at the start of the project; at present, the entire area is covered by WUAs.The WUAs were set up by SOMALAC and received support from specialized SOMALAC agents.The WUAs are organizing water distribution effectively, and handling routine maintenance on thetertiary distribution system; they are also collecting water charges to contribute to the cost ofmaintenance of the main works. Collection of user fees, which was initially satisfactory (80-90%)has worsened to about 46% in 1991, mainly because of the appeal of local politicians, thatmaintenance has to be provided by the state.

5.5 The major problem during implementation has been institutional. Although during appraisal,SOMALAC was reorganized, the basic framework under which it operated, was left in place:SOMALAC's paddy purchasing, milling and marketing monopoly was maintained; it paid farmersbelow-market prices for paddy and out of the surplus it retained, it paid for irrigation maintenanceand part of its operating costs (including the cost of running its own extension service). When in1986, Government complied with conditionality under the Agricultural Sector Adjustment Credit(ASAC; Cr. 1691-MAG), and opened up the rice trade to private traders, SOMALAC was forcedto pay considerably higher purchase prices for paddy, as it had to compete with other buyers. Whenthe Government subsequently imported rice in order to reduce prices for urban consumers,SOMALAC incurred significant losses on stocks. These losses, combined with the fact thatSOMALAC's functions in collection, marketing and milling were successfully taken over by theprivate sector, finally led to a Government decision, in February 1990, to do away with SOMALAC.

5.6 The decision to eliminate SOMALAC was taken after extensive studies on its restructuringwere made. A consensus was reached on the studies' recommendations to sell off SOMALAC's ricemills and to transfer its extension service to the Agricultural Ministry's extension district (CIRVA)of Ambatondrazaka, and the newly created CIRVA of Amparafaravola. The Agricultural ExtensionPilot Project (Cr. 2150-MAG) is presently supporting extension activities in these two CIRVAs. Noconsensus could be reached, however, on whether the Agricultural Ministry's irrigation district(CIRIR) could henceforth take care of all system maintenance, nor whether an autonomousorganization in charge of maintenance of the main works was needed, nor on the number of personnelto be laid off.

5.7 To date, although SOMALAC nominally does not exist any more, no decisions on thesematters have been taken, in spite of repeated proposals and requests by IDA and the French co-financiers to solve these issues urgently. As a result, adequate system maintenance is by no meansensured.

5

6. Results

6.1 The main objective of the project was to increase rice production, which has been achieved(incremental paddy production on rehabilitated schemes has reached 34,230 tons versus an estimated34,300 tons at appraisal) due to a 50% increase in yields (from 2.1 tons/ha to 3.2 tons/ha) and anincrease in irrigated land (31,100 ha versus 28,000 ha at appraisal). Yields are a little less thanexpected at full development (in year 8 after project completion) due to the unfinished land planningon some schemes. Land planning should be completed shortly. The extension services of theMinistry of Agriculture (CIRVA of Ambatondrazaka) have been strengthened and have establishedvery good relations with farmers through on-farm demonstrations. SOMALAC's extension servicehas been successful in promoting urea use and chemicals for weed control, but has been lesssuccessful in introducing direct planting in straight lines. Two new rice varieties that are moreproductive and more flexible in terms of cultivation timing, were developed by FOFIFA andintroduced to farmers. The seed multiplication center of FOFIFA was strengthened and is presentlyproviding enough seeds for the region and is, in addition, shipping seeds to other parts of thecountry. The monitoring and evaluation activities carried out under the project yielded valuableinformation that was used during project supervision.

6.2 A second objective of the project was to trigger a participation process with the farmers toget them more involved in scheme management and maintenance. This objective has been partiallyachieved through the establishment of WUAs and Credit Associations. WUA's were successfullyestablished on all schemes with strong assistance from the extension services of SOMALAC and theCIRVA in order to manage water use at the farm level and plan for maintenance works for whichthey would become eventually responsible. Rehabilitation of the last schemes was executed incollaboration with the WUAs. The WUA was a new concept for Madagascar and the project can beregarded as a good field experiment for setting up farmers' organizations. By 1991, twenty-sixWUAs had been formed. Towards the end of the project, however, an increasing number of WUA'sdelayed paying maintenance dues because of interference by local politicians.

6.3 A third objective of the project was to strengthen SOMALAC while opening progressivelyits civil works and marketing services to competition. As a result of the poor planning of therestructuring, this was only partially successful. Four small local construction companies werecreated in the region for the execution of rehabilitation works on the micro-schemes. Thesecompanies were ready to take over part of SOMALAC's civil works activities. Unfortunately, as theimplementation of the restructuring of SOMALAC was delayed, these construction companies movedto other regions to find other markets, or went bankrupt. The marketing of rice was quickly takenover by the private sector, after lifting SOMALAC's monopoly.

6.4 Although not planned at appraisal, the project made a special effort to create CreditAssociations which could borrow funds to finance seeds, fertilizers, and equipment from theAgricultural Credit Bank (BTM) on an individual basis but with collective guarantees. The volumeof credit distributed to farmers belonging to Credit Associations is growing and the rate ofreimbursement to BTM is close to 100%. Yields of farmers in Credit Associations (primarily on thelarge schemes) are significantly higher than the average yield (4.5 t/ha versus 3.2 tlha) due to creditavailability and to increased attention from the extension service of SOMALAC. Discussions areongoing with BTM on the feasibility of increasing the number of farmers organized in CreditAssociations by giving access to credit to farmers who do not own land. Farmers in CreditAssociations account for about 25% of rice production in the Lac Alaotra region.

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6.5 In order to protect farmers' incomes, the project attempted to intensify and diversifyproduction in the Lac Alaotra basin. This action was unsuccessful. 3/ Research and extensionpromoted the introduction of other irrigated crops and inter-seasonal crops (rainfed rice, wheat,maize, beans, etc.), but farmers did not respond due to a preference among farmers for a rice varietythat was well suited to the area, but that did not allow for multiple crops and to competition fromother production activities in non-irrigated areas (cassava, groundnuts, livestock). 4/ No productionfigures are available for the non-irrigated areas.

6.6 The land tenure situation on the large schemes is not clear. After rehabilitation, land holdingswere to be consolidated and farmers would receive a valid title. At credit closing, half of the farmersstill had no valid title and subdivision of land was increasing (in 1990, it was estimated that 21% ofthe reallocated parcels had been subdivided again).

7. Economic Results

7.1 The overall Economic Rate of Return (ERR) of the project is estimated at 25% (Annex I) ascompared to 24% at appraisal. However, due to the unknown consequences of the political turmoilin 1991 and the uncertainty surrounding SOMALAC, the rate of return may turn out to be optimistic.Sensitivity analysis indicates that the rate of return remains above 10% even if net benefits decreaseby as much as 25%, as a result of increased maintenance costs or decreased yields. It was assumedthat irrigation works would continue to be maintained, either by the Government or the private sector,which may be overly optimistic. If no solution is found to the institutional problems that arose afterthe dissolution of SOMALAC, maintenance will suffer and production is likely to drop to pre-projectlevels; this would mean a rate of return close to zero. Separate rates of return for the SOMALAC(large) and CIRVA (small) irrigation schemes could not be calculated because the data collectedduring implementation were not detailed enough. However, a comparison of investment costs andyield increases between the large and smaller schemes suggests that the rate of return on smallerschemes may well have been higher. During implementation, it turned out that rice selling priceswere higher than estimated during appraisal, but this was offset by higher production costs to farmers(mainly fertilizers, pesticides and small mechanization).

8. Proiect Sustainability

8.1 Although the project was largely successful in achieving its objectives, its sustainability is indoubt (as was the case after the first project), largely because the institutional questions have still notbeen resolved.

8.2 The main outstanding issue is that after dissolving SOMALAC, Government did not createan institution capable of assuring maintenance of the main civil works (storage dams, main canals anddrains). The studies done on restructuring actually proposed one of two options to the Government:to create an autonomous maintenance organization (preferred by the French co-financiers) or toreinforce the existing CIRIR so as to enable it to take responsibility of maintenance (preferred by the

3/ The Staff Appraisal Report did not expect any significant impact of this activity ontotal output.

4/ Farmers owned land in both irrigated and non-irrigated areas.

7

Bank). No decision on either has yet been taken, which has potentially serious consequences for thesecurity of storage dams and for a rapidly diminishing capacity of the distribution and drainagenetwork (canals and drains need to be regularly cleaned because of on-going siltation due to erosionin watersheds). Unless such an organization is established (or the existing CIRIR reinforced), it willnot be possible to sustain the results achieved. At present, the CCCE is reviewing the possibility ofa follow-up project that would focus on resolving the present institutional impasse. Extensionactivities in the project area have been taken over by the Agricultural Extension Pilot Project (Cr.2150-MAG).

9. IDA Performance

9.1 IDA supervision fell short during the design of the civil works, which did not properly takeinto account the existing erosion of the surrounding hills. Otherwise, the project was carefully andcontinuously supervised by the three co-financiers in good coordination with each other (CCCE, FACand IDA). Supervision missions took place twice a year on average and received well prepareddocuments from SOMALAC that served as the basis of discussions between cofinanciers andGovernment. Because of the successful implementation of the physical components of the project,IDA decided to cancel the planned mid-term review. When problems arose later on, Government,IDA and CCCE met regularly in Paris.

9.2 SOMALAC suffered from a lack of timely counterpart funding, especially since 1987. In1989, IDA was obliged to stop new procurement during a period of four months in order to pressGovernment to provide counterpart funding.

9.3 During implementation, there were differences of opinion among the cofinanciers and betweencofinanciers and Government on the timing of the liberalization of rice marketing and therestructuring of SOMALAC, which slowed down the decision-making process.

10. Borrower Performance

10.1 SOMALAC's management performed well in executing the project, but was unable to adjustto a changing environment. It failed to manage the necessary reduction in staff over time. This wastrue both for extension and for the marketing service where staff was kept even when SOMALAC'spurchases of paddy declined by 80% after the break-up of its monopoly.

10.2 Due to lack of Government clarity and decisiveness, the studies on the future of SOMALACtook more time than needed and, as a result, demotivated SOMALAC personnel and diminishedfarmers' confidence in Government's capacity to deal with their problems. Some very goodcounterparts, trained by expatriate technical assistance left SOMALAC when they realized that therestructuring of SOMALAC was delayed amid interference by local and national politicians. Thisis also one of the main reasons why it is difficult at this moment to assess the sustainability of theproject and of project impact on the development of the Lac Alaotra region.

II. Consulting Services

11.1 The project used foreign technical assistance in different areas (extension, civil works,research, general management, etc.) and at different levels. In general, they performed well

8

throughout the project. However, due to a lack of long term planning on the part of SOMALACmanagement, and the scarcity of local trainable counterparts, some foreign experts left without havingbeen able to train local staff.

12. Project Documentation and Data

12.1 The Staff Appraisal Report very often referred to policy orientation (liberalization, costrecovery, general organization, extension approach, etc.) and was helpful to the Borrower and thecofinanciers. For each supervision mission, SOMALAC management prepared in advance detailedreports on the relevant aspects of the project, which helped considerably in supervision discussionswith SOMALAC and Government.

9


MADAGASCAR


PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE

The Borrower did not submit a Part II. However, a project completion report was preparedby the implementing agency, which is available in the project files.

10


MADAGASCAR


PART III: STATISTICAL INFORMATION

Table 1: Related Bank Credits

Loan/Credit Title Year of Purpose Amount of StatusApproval Loan/Credit

(Millions ofSDR)

Cr. 121 1-MAG 1982 Second Village Livestock and Rural 15.0 CompletedDevelopment Project June 1989

Cr. 1433-MAG 1983 Cotton Development Project 7.5 CompletedJune 1990

SF-008-MAG 1983 Cotton Development Project 9.4 CompletedJune 1990

Cr. 1589-MAG 1985 Irrigation rehabilitation Project 12.6 On-going

Cr. 1709-MAG 1986 Technical Assistance to Agricultural 8.7 CompletedInstitutions Project Dec. 1990

Cr. 1691-MAG 1986 Agricultural Sector Adjustment 50.0 CompletedCredit June 1990

Cr. 1804-MAG 1987 Second Agricultural Credit Project 8.0 On-going

Cr. 1878-MAG 1988 Forestry Management and 5.1 On-goingProtection Project

Cr. 2041-MAG 1989 National Agricultural Research 18.6 On-goingproject

Cr. 2125-MAG 1990 Environment Project 19.8 On-going

Cr. 2150-MAG 1990 Agricultural Extension Pilot Project 2.8 On-going

11

Table 2: Project Timetab

Project Timetable Date Planned Date Revised Actual Date

Identification 1/ - 1978

Preparation 2/ - 1979/81

Appraisal - 09/81

Post Appraisal - 12/81

Credit Negotiation - 12/82

Board Approval - 03/83

Credit Signature - 05/83

Credit Effectiveness l/ 01/83 - 03/84

Completion 01/89 06/90,03/91 09/91

Credit Closing 06/89 01/91,09/91 09/30/91

Last Disbursement 12/89 06/91,01/92 02/20/92

1/ Identification was done by Government in 1978 in line with the master plan of the LacAlaotra region prepared in 1976.

2/ Technical and organizational preparation were done by two consulting firms over aperiod of two years and an accounting and management audit of SOMALAC wascarried out by a consulting firm in 1981.

3/ Delays due to lack of counterpart funds and delays in putting technical assistance inplace.

12

Table 3: Proiect Costs and Financing

A. Proiect Costs

Appraisal Estimate Actual Costs Expressed inSDRc; Actual us % of

M'n FMG '000 SDR M'n FMG '000 SDR Estimate

Buildings 293 700 1,090 695 99

Irrigation Rehabilitation 5,390 13,300 17,656 13,270 100

Vehicles & Equipment 4,022 9,800 6,436 6,169 63

Inputs, Research & Seeds 1.325 3,200 7,196 6,482 203

Technical Assistance, Studies, Training 3,226 8,200 11,994 9,078 111

Total 14,256 35,200 44,372 35,694 101

Comments: Actual cost in FMG are much higher than estimated at appraisal because of several devaluations ofthe currency. Actual costs in SDR are close to those estimated at appraisal, although less equipment (farmermechanization) has been bought due to delays in rehabilitation, more studies and technical assistance have beenprovided, and the seeds center was expanded.

B. Project Financing

Estimate Actual (estimated) Financing Expressed inSDRs; Actual as % of

M'n FMG '000 SDR M'n FMG '000 SDR Estimate

IDABuildings 206 507 895 489 96Irrigation Rehabilitation 2,774 6,842 9,053 5,551 S1Vehicles & Equipment 2,141 5,281 5,905 5,380 102Inputs, Research & Seeds 562 1,385 306 226 16Technical Assistance, Studies, Training 1,089 2,685 5,009 3,420 127

Total 6,772 16,700 21,168 15,805 95

FAC 1,640 4,091 10,123 8,066 197

CCCE 3,763 9,27S 9,155 8,731 94

Government 2,081 5,131 3,926 3,092 60

Total 14,256 35,200 44,372 35,694 101

Comments: FAC financing was increased for technical assistance and for the expansion of the seeds center.For IDA, the financing of input supply was stopped in 1987, but more studies and training were financed.

13

Table 4: IDA Credit Disbursements

A. Cumulative Estimated and Actual Disbursements (million SDRs)

Fiscal Year 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992

Appraisal Estimate 0.9 3.3 6.5 10.4 13.8 16.0 16.7 _ __ _

ActualJ 0.8 1.6 4.8 6.8 10.9 13.2 14.2 15.2 15.8

Actual as % of Appraisal 0 24 25 46 49 68 79 85 91 95

Estimate IlI_ I I_____

Date of last disbursement: February 20, 1992.Amount cancelled: SDR 895,013.28.

14

Table 4: Credit Disbursements

B. Disbursements by Credit Category(million SDRs)

=

Category Original Actual

I. Equipment not included in Category 4 below, vehicles and spares for:

(a) The Borrower(b) SOMALAC (excluding vehicles and workshop equipment 0.12 0.25(c) FOFIFA 4.13 4.86

0.28 0.26

2. Civil works for building construction and rehabilitation

(a) Under Part E.3 and H.2 of the Project 0.11 0.05(b) Under Part C of the Project 0.19 0.17(c) FOFIFA 0.14 0.27

3. Civil works for irrigation rehabilitation

(a) Under Parts A & B of the Project 5.85 5.42(other than on PC 15 and the Andranobe perimeter)

(b) Under Part G. of the Project 0.02 0.13

4. (a) Incremental agricultural inputs and equipment, excluding ploughs, for CVA 0.49 0.00under Part H. I of the Project

(b) Incremental agricultural inputs and equipment, excluding ploughs, for 0.69 0.23SOMALAC under Part H.2 of the Project

5. Consultants' services

(a) Under Part F of the Project 0.37 0.30(b) Under Part G. of the Project 0.46 0.18

6. Training

(a) Under Parts E.l & E.2 of the Project 0.23 0.83(b) Under Parts EA4 & G0 of the Project 0.23 0.04

7. Services under Part D of the Project 0.23 0.44

8. Studies

(a) Under Part 1.5 & 1.6 of the Project 0.49 0.32(b) Under Parts 1.1 through 1.4 of the Project 0.28 1.29

9. Refunding of Project Preparation Advance 0.93 0.74

10. Unallocated 1.46 0.00

Total 16.70 15.80

15

Table 5: Main Results

Appraisa Fstimate Actual Actual as a% of

Large Small Total Large Small Total AppraisalSchemes Schemes Schemes Schemes Estimate

Rehabilitated surfaces (ha) 25,000 3,000 28,000 27,569 3,546 31,115 111

Paddy yields (tlha). prior to project 2.10 1.80 2.07 2.10 1.80 2.07 -

. at full development (year 8) 3.40 2.40 3.29 3.20 2.90 3.17 96. credit associations n.a. n.a. n.a. 4.50 2.90 4.32 n.a.

Incremental Yields 1.30 0.60 1.23 1.10 1.10 1.10 89

Production (t). prior to project 52,500 5,400 57,900 57,895 6,383 64,278 -

. at full development (year 8) 85,000 7,200 92,200 88,221 10,283 98,504 -

Incremental Production 32,500 1,800 34,300 30,326 3,901 34,227 100

Comments: On large schemes, yields are a little lower than expected because land surfacing is not yetcompleted. It is expected that, when surfacing is finished, yields will be higher than originally estimated. It isalso expected that the number of farmers in Credit Associations will increase as a result of changes in BTM'srequirements for providing credit to farmers (no longer necessary to be a land owner). The main reasons forthe Water Users' Associations to delay paying their dues for maintenance are: a) all land surfacing is not yetterminated and farmers are reluctant to pay dues for unfinished works; and b) pressure from local politicians whoclaim that water should be free; SOMALAC and the Ministry of Agriculture are now taking disciplinary actionsto force payments.

16

Table 6: Compliance with Credit Condition

Section Obiect

3.01 (b) (i) Price of paddy seeds, rice and inputs. Mostly complied with. Since 1987, paddy price to farmers ison a free-market basis. Since 1988, SOMALAC does notsell inputs.

3.01 (b) (ii) Counterpart funding. Often late, particularly in 1989 when IDA suspended newprocurement financing for 4 months.

3.01 (c) Supplement to Subsidiary agreement with Complied with.SOMALAC.

3.01 (d) Proceeds of credit available to FOFIFA. Complied with.

3.02 Employment of consultants. Complied with.

3.03 Equipment insurance. Complied with.

3.04 (a) Preparation reports on certain parts of the Not consistently on time.project.

3.04 (b) Quarterly reports on certain parts of the Complied with.project.

3.04 (c) Inform on nationality of suppliers. Complied with.

3.04 (d) Reports on project execution after Not yet due.completion.

3.05 Annual work plans. Complied with.

3.06 Funds available for purchasing paddy and Not always complied with, particularly in 1986.marketing rice.

3.07 Transportation plan by June 1984. Complied with.

4.01 Audit reports and separate accounting. Complied with.

4.02 Inform IDA of SOMALAC and CVA status Complied with.change.

4.03 Proper maintenance of equipment by CVA. Complied with.

4.04 Land titling to farmers on irrigated land. Not complied with.

4.05 Adequate head of CVA and sound CVA Complied with.administration.

4.06 Foreign exchange allocation. Complied with.

4.07 Adequate SOMALAC salary structure. Complied with.

4.08 Water charges adequate at project Not complied with.completion.

4.09 Credit available to farmers. Hardly complied with (only to Credit Association and bigfarmers).

17

Table 7: Use of Bank Resources

A. Staff Inputs(staff weeks)

Stage in Project FiscaL YearCycle- -- - - - - - - - - - -

____Cycle ____ 79 80 81 82 83 84 85 86 87 88 89 90 91 92 Total

Preparation and 2.7 5.8 9.4 5.2 23.1Identification

Appraisal 46.7 7.5 54.2

Negotiations = =_= = 11.5 = = = 11.5

-Spuervision _ _ _ _ 1.3 29.9 12.6 30 19.5 15 13.1 9.4 8.5 4.9 144.2

PCR I___ 8 8

TotaL 2.7 5.8 9.4 51.9 20.3 29.9 12.6 30 19.5 15 13.1 9.4 8.5 12.9 241

B. Supervision Mission Information

Supervision Month/ Days in Number SpeciaLization Performance Rating Type ofMission Year Field of Represented Status Trend Problems

____ ___ ____ ____ Persons __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _

1 Dec-83 15 4 Financial Analyst 2 2Sr. Agriculturalist F,T,MIrrigation Engineer

_______ ________ Training SpeciaList | __ __ __

2 Feb-84 21 1 Financidl Anelyst 2 2 F,T,M

3 Jul-84 20 2 Sr. Agriculturalst F,T,MI______ I__ I__I_ FinanciaL Analst yst I_ 11

4 Nov-84 26 1 Sr. Agriculturalist 2 2 F,T.M

5 N.A. N.A. N.A. NA. 2 2 F,M

6 Dec-85 9 4 Sr. Agriculturalist 2 F,MIrrigation Engineer

| Training Specialist

7 Apr-86 26 4 Economisat 2 FIrrigation Engineer

_______| Training Specialist |

8 JuL-86 N.A. 1 Irrigation Engineer 2 ______ F

9 Mar-87 9 4 Sr. AgricuLturalist 2 F,MIrrigation Engineer

| Financial Analyst

10 Oct-87 15 1 Irrigation Engineer 2 _ | 11 _

11 Jun-88 8 2 Irrigatlon Engineer 2 M_______ ____ |___| FinanciaL Analyst | _____

12 | Feb-90 8 1 Financial Analyst 2 | | F,4T |

13 Jul-90L 14 1 Financial Anaylt s2 7 I F.4T |

14 Apr91 20 1 Fnancial Analyst 2 T

Note: N.A. means data not avaiLable.Key to types of probLem F: Financial

M: ManagerialT: Technical

Lac Alaotra Rice Intensification ProjectEconomic Rate of Return

p..j-I I Y 2 2 4 5 a 1 a a 10 II I2 13 14 I a II IA 1 20l 2 1 22 22 24 21Cd.A. V.0 244 US I'M 10417 Is" late In le ss 0 *2 1*81 11,4 1494 less ls) lose 13*8 2000 2001 2002 2002 2004 200 a2, 20 2

44.44 Wm 444.70 M. 412.20 72840 uon0.40 1003.101) 1122.10 1280A0484 -* lob 100.SO 11.OL 1246.4 144.14 184.44 01.24 3221.01 4SS47 264.47 214.1 27 S4.4)7 21.167 254.47 28.817 214.41 284.41 248.41 284.41 21441 2a 27 441 2*.41 214.17 244.4) 23*_7

_yM4 D_4.42 I OO C0 4 70.4* "Al 441.43 4.1 4.481 44.44 34.44 28.44 24.44 24.44 24.* 34.44* 4.s4s 204 2.4 4 2 382 . 28 44 2S." 34.44 28.11 34.44 2348

IIL.... 61-4 I*OUALAcIS.4.d ". 0 14401 21444 22414 21742 24284 2)848 2116 21144 21141 214413379 27144 2)4 27141 2,141 27444 2)541 27141 21184 21141 2144s 2114g3 2124 2)141 21613

_.d4 P -. .. 2_ 87 2.17 2 .7 3 82 ** Z 3 2. ) 2.17 2.11 3 .1 1 2.1) 2l2 2.1 I 11 211 3.17 217 21 2 I1) 2.1) 211 2.110.00 4oo )41 4444 761114 41220 7434* 30428 0)94 41214 83124 913)14 *3)24 47124 47124 874124 )3114 12734 41214 0)314 )3284 42144 8344 41214 41234 43124

s20>. 0.00 24114 404I 4 a1110 40271 4 401 41440 *4424 1124 18424 14424 41424 11424 64420 1442379 61424 14414 24428 S1421 14424 12423 1142S 11428 12428 41424p... ........ 114 140 o71 41 IsI 42 41 1a 24 4 III 122 *5 644 441 11 441 "*1 47 41 447 So0 187 101 7170

u. F caG 410 *"44 1384 1)342 24224 21*5 3414 31142 2144 20212 21444 32 42 341 32,41 32441 34641 21441 22041 91441 31*4 42012 42012 47012 42012. I ..k. 1444 424 12 9440 4404 12024 12440 14121 10S 11426 11760 12224 11321 16321 IS,12s 24221 116 11322 11211 16326 63211 14141 14241 16342 IS241

23 4410 Uft- OCVANa- _.a 42 2210 2844 2144 2148 *44 2 *4* 2644 2144 2244 2644 2644 2144 2444 2144 244 2144 246 21544 3244 21s44

pT M

y s..I. 1I. 24 2 )*0 2.40 3.01 2.0 2.24 32.1 3.70 3 20 220 la 2.70 3 10 3.70 3 10 2 l .10 320 3 21 3 1O 2.10- _ p.44 2243f *127 10242 10114 31221 1104 I1200 12126 13120 12120 11210 13120 13120 19210 12120 12120 12120 11210 17210 11120 12120

t. o0l 1404 0)1 332 1242 701 40S S0 424 43224412 *122 3211 4322 0422 84122 422 4922 3322 4122 4222 4123*d.p.. 6.0.GAI I ISO 271 431 .I 44s 41 24 443 sit 422 441 S*t &II 447 447 441 as) ") 447 202 701 0 07 0) 0M)

:sA 441. 2 2114 2131 4144 40* 4043 4347 41*4 1811 1341 S161 4411 1111 1*41 4411 521 1 40) 4201 4201 4201

VA5M .h. 1844 824 24*4 Zile 2441 201 l)4 1440 142 201 2203 201l 2201 2203 201 1201 201 2m0l 2423 2434 1243 2424

P80OlmI03i COSTS T0 fAINAM".*. 04 -- ,u 210.00 224A0 240.Ao 401.00 414.00 601A0 414.00 20.00 £2000 420hO 420.0042000 420.00 420.00 420.00 420 00 820.00 6o.0 320 0042 000 42000 420.00 420.00420.00 420.00.41*. 000 FUR .48-. 1444 3SQ 242.0 284.43 2)41.0) 228.24 244.40 212.414 242.14 243.14 243,11 243.46 24214 242.41 142.14 242416 242.16 242.14 242.46 24241 142.11 242.246 242.44 242.41 242.41 241.1*

115T . W- lUS0.. h. is"4 4.00, 4401 020 64142 4024 7414 $444 74)3 111 760 108 764 7681 7113N 1114 7114' 11)8 111* 7414 Isis 111S 7414 I113 7M7 1114 11)3

4w4gT43415 AND 0*a" IIOMALIC.CUVA. POPOAS

W. tmG .2 2254 452 1024) 4471 54112 2442 1 37 220) 2207 2207 2207 220) 220) 2207 1 207 2207 2207 2201 2201 2207 2201 2201 2207 3207W. 140.MG134 285 2144 4171 201 2421 2140 l1m 442 1340 1240 1240 1240 1140 1240 1240 3240 1240 8240 1240 1240 2240 1240 1240 1240 1240

TOTAL Mum O ISOCTAt.5421. _. 1444 -2*4 -2484 .47* -4042 154 1222 44417 3421 1*41 444 4412 4214 4407 "I0 8407 "I0 807 30 "07 4o8 407 9841 8442 8"2 484

VQ

02I

_N

O- -

20

Annex 1(Page 2 of 2)

Economic Price of Rice (for 1985)

Price FOB Bangkok (USS per ton) 151

Insurance and Freight 77

CIF Tamatavo (USS) 228

Storage and handLing 21

Transportation Tamatavo-Antananarivo 21

Correction for higher transportation cost -31SOMALAC-Antananarivo

Price Antananarivo (USS per ton) 239

(FMG per ton) 158,058

(FMG per kg) 158.06

Note: It was assumed that yields for the SOMALAC managed schemes would remain attheir 1991 levels throughout the period of analysis.Yields for the small schemes, where land planning had not been completed at thetime of the PCR mission, are expected to continue to increase until 1995 and remainat this level throughout the period of analysis.A solution will have been found to the maintenance problem.Cost data are from SOMALAC.The rate of return remains over 10% when net benefits decrease by 25%. If nosolution has been found to the maintenance problem, net benefits will decrease to thepoint that the rate of return will be 0%.

TANZANIA MADAGASCAR

4--.--- LAKE ALAOTRA AGRICULTURAL INTENSIFICATION PROJECT4w. PROIfT D'/NrENS/F/CATION AGR/COLF

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world bank document...5. the break-up of somalac's paddy purchasing monopoly - in 1988 - has...

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