Announcement of 6.6 Million Dollars Credit for Livestock Development in Honduras on October 11, 1973

FOR IMMEDIATE RELEASE - - • INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET. N.W .. WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA.Press Release No. 73/79 ·subject: $6. 6 million credit for live- October 11, 1973 s tock development in Hondur.as The International Development Association has approved a credit of $6.6 million to Honduras, in support of a second livestock development project. The credit will help to increase Honduras' beef and dairy production in order to raise the level of domestic consumption and diversify exports. As such, it will support major objectives of the Honduran Government's agricultu.ral development program. Agriculture is the largest sector in the country's economy accounting for roughly 35% of GDP. Agricultural exports represent 80% of merchandise exports. About 75% of • the population lives in rural areas, and 657. of the economically active people are en- gaged in agriculture. The new livestock development project will extend and enlarge the first one, also assisted by IDA with a $2.6 million credit approved in January 1970. The second project will make funds available for the expansion of cattle and pig industries, including credit to farmers, construction of municipal slaughterhouses, and technical assist- ance. As administering agent for the project, the Central Bank will re-~.~r'.ici to farmers through commercial banks and will lend directly to municipalities ::. .jr slaughter- house construction. Under the first project, credits helped to meet the needs of mainly larger farmers. In this second project medium and smaller producers are likely to predominate. It is expected that the IDA funds will be allocated about equally between dairy and beef farmers~ /more • Note: Money figures are expressed in US dollar equivalents. IDA Pan. No. 73/79 - Honduras--Livestock Dev. Proj. - 2 - At full development., the project will resul·~ in improved husbandry practices., • increased cattle herd., higher productivity., and .in·tensification of land 1..rne. The benefits to the balance of payments of Honduras are expected to be $2.5 million a year., and the annual net incomes of participating farmers are expected to increase from an average of less than $500 to about $3.,000. It is estimated that about 730 farms will receive financial support for on- fann investment for pasture development., fencing, water facilities., breeding stock and stock handJ.ing facilities. Beneficiaries of the credit program will be some 300 smaJ.l and medium-size dairy farms of 75 to 125 acres, 200 beef breeding and fattening farms with an average size of 270 acres., 200 beef breeding farms with an average size of 1 1 000 acres., and 30 small pig breeding units with about 25 sows each. In addition, the IDA credit will help to finance the construction of three small rmm.icipal slaughterhouses in different parts of the country, and one mediUlll- size slaughterhouse ins~~ Pedro Sula. A larger municipal abattoir in Tegucigalpa w-ill. be improved. Four specialists will provide technical assistance to farmers and to livestock technicians employed by participating banks. Training facilities will also be pro- vided to project staff. • Total investments required by the project have been estimated at $ll million. The IDA credit will cover 60% of total project costs~ 1..ncluding all foreign ex- change expenditures estimated at $4o5 million. The participating cormnercial banks will cover 18% of the costs, the sub-borrowers 16%., and the Central Bank the re- maining 6%. The Goverrune:n:t will on-lend the IDA funds to the Central Bank for 20 years., including 10 years of grace., at 2% annual interest. For on-farm development., the Central Bank will ITlaAe loans to participating banks for 8 to 12 ye.:irs., in- cluding 2 to 5 years of grace, which will be the same terms the banks will lend to farmers. Interest to be paid by participating banks will be 5% and by farmers 9%. For investment in abattoirs., the Central Bank will lend to nru.nicipalities at 9% for 10 to 12 years, including up to two years' grace. The IDA credit will be for a term of 50 years., including 10 years of grace. It will be interest free, but it will carry a service charge of 3/4 of 1% to cover IDA 1 s administrative costs. • ' • October 11, 1973 TECHNICAL DATA PROJECT: Second Livestock Development Project COUNTRY: Honduras TOTAL COST: $11.0 million IDA FINANCING: $6.6 million, 50 years, 10-year grace period, interest free except for 3/4 of 1% service charge to cover IDA's administrative expenses. OTHER FINANCING: Central Bank of Honduras, farmers and municipalities. IMPLEMENTING ORGANIZATION: Central Bank of Honduras. PROJECT DESCRIPTION: Financing of on-farm investments for pasture development, fencing, • watering points, breeding stock, and stock handling facilities for approximately 730 livestock farms; construction of three small municipal abattoirs, one medium- size municipal abattoir in San Pedro Sula, and the improvement of one large muni- cipal abattoir in Tegucigalpa; and provision of four specialist livestock ad- visors to assist farmers and the livestock technicians employed by the participating banks, and training of project staff. PROCUREMENT: Procurement for farm development items will be carried out through local conunercial channels since international competitive bidding would not be appro- priate because of the diversity of items and small size of individual purchases. Grouping of orders for abattoirs would be impractical because they are widely dispersed throughout the country and their size; capacities and timing of con- struction vary. For the small abattoirs each costing about $45,000, at least three bids would be sought before awarding a contract, for either civil works or for equipment. For larger facilities, tenders would be published locally, submitted to known international suppliers, and all official representatives in Honduras of countries lik~ly to be interested. ESTIMATED COMPLETION DA'rE: December 19Y8 - L) - • Note: Money figures are expressed in US dollar equivalentso