Honduras - Agricultural Credit Project

Document of FILE COPY The World Bank FOR OFFICIAL USE ONLY Report No. P-1836-HC REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF HONDURAS FOR AN AGRICULTURAL CREDIT PROJECT May 6, 1976 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Currency Equivalents US$ 1.00 2 Lempiras L 2,00 = US$1.00 Fiscal Year January 1 - December 31  FOR OFFICIAL USE ONLY INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF HONDURAS FOR AN AGRICULTURAL CREDIT PROJECT 1.. I submit the following report and recommendation on a proposed development credit to the Republic of Honduras for the equivalent of US$14.0 million on standard IDA terms to help finance an agricultural credit project. The proceeds of the credit would be relent to the Central Bank of Honduras for 18 years, including 10 years of grace with interest at two percent per annum. PART I - THE ECONOMY 2. A report entitled "The Economic Position and Prospects of Honduras" (Report No. 339a-HO) was distributed in May of 1974. An economic mission visited Honduras in October 1975, and a report on the current situation and prospects is in preparation. The preliminary findings of the October mission are summarized below, and a country data sheet is attached as Annex I. Development Prospects 3. The long-run growth rate of the Honduran economy has been modest: real GDP per capita grew at less than 1 percent per year between 1950 and 1974. With a per capita GNP of US$300 in 1972 (World Bank Atlas), Honduras is the poorest country in Central America and the majority of the population lives on a subsistence income. A major reason for the poor growth performance is the continued dependence of the economy on the production and export of a few agricultural commodities, especially bananas, and thus on fluctuating world market and weather conditions. This was illustrated dramatically when substantial hurricane damage to the banana plantations in September 1974 reduced banana export volumes in 1975 to about half the level of previous years. At the same time the recessicn in the developed world affected beef and lumber exports, and rising oil prices led to a severe deterioration in Honduras' terms of trade. In early 1975, an emergency basic grains program designed to offset the consequences of the hurricane destruction failed, largely because of a drought. The result has been two years of recession, with real GDP stagnant in 1974 and down 0.5 percent in 1975. This document has a restricted distribution and may be used by recipients only il the performance of their official duties. Its contents may not otherwise be djsclosed without World Bank authorization.  - 2 - 4. There are many reasons for the continued dominance of bananas in the Honduran economy. The resource base is small. Known mineral deposits are not extensive. Land suitable for agriculture does exist in limited amounts and the country has sizeable forest resources, ht because of a serious lack of basic infrastructure, and of deficient development policies in the past, these resources have remained underutilized. Some progress has been made during the last two decades, especially in the area of trans- port development, but the mountainous topography of the country has made the expansion of the road network slow and costly. This limits the size of the domestic market and hampers industrial development. Honduras' participation in the Central American Common Market (CACM) in the early 1960's was an attempt to gain access to a larger market for its industry, but the process was halted by the conflict with El Salvador in 1969. How- ever, even while the expanded protected market of the CACM lasted, Honduras did not receive the expected benefits, as it was unable to compete with its neighbors in attracting new investments or developing new industries. A further obstacle to economic development in Honduras is the severe scarcity of entrepreneurial talent and the low productivity of the labor force. Over 50 percent of the adult population is illiterate and nutrition and health standards are very deficient. 5. The agricultural sector has accounted for about one-third of GDP in the 1970's and, as discussed further in Part III below, there is considerable potential for improving utilization of resources and the productivity of the agricultural sector, but uneven land distribution and frequent underutilization of the larger holdings have retarded increases in productivity and resulted in considerable peasant unrest. The Government recognizes that a correction of this situation is vital for the future stable development of the country and, although hampered by a shortage of competent personnel, it is making serious efforts to address the problem. It began substantial land redistribution in 1973 under Decree Law 8. This was followed by Decree Law 170 in-1975, which established the operating regulations for the comprehensive agrarian reform program necessary for long-run improvements in agricultural productivity.Peasant organizations, however, are demanding a quick as well as effective agrarian reform process: failu-e to accommodate their needs on the part of the Government could cause renewed rural unrest and seriously undermine private sector corfidenc Thus far, however, this has not happened and the private sector is financing a major expansion of sugar production. Four new sugar mills are scheduled to come on stream in 1977 and 1978. 6. The state forest corporation (COHDEFOR) has made some progress towards the further development of the country's substantial forest resources. COHDEFOR is now preparing a project in the Olancho, the area with the country's largest forest reserve, for timber milling and industrialization and for a pulp and paper plant. Decisions are scheduled for mid-1976 regarding the imple-  -3- mentation schedule, the selection of a foreign partner and the financ'ing package. In addition, several projects are being prepared for processing installations for rough-sawn lumber; it is expected that these will stimulate the development of intermediate and end-product industries such as furniture and molding. Forest management work is being unde'rtaken through eight district offices and negotiations are underway with Canada for assistance with this and other forestry activities. Balance of Payments 7. The balance of payments situation deteriorated sharply during 1974 and 1975, mainly as a result of the combined effects of weakening terms of trade, the world recession, the September 1974 hurricane, and the drought in 1975. Inflows frcm foreign grants, the IMF Oil Facility, the Venezuelan Investment Fund, along with borrowings from bilateral and international lending agencies financed the bulk of the deficit during these years. There were also sizeable increases in private capital inflows, especially short-term capital, but these were largely offset by factor payments abroad. Balance of payments management is expected to continue to be difficult during the next several years. Net international reserves were equivalent to about six weeks' imports in December 1975. Given present expectations, sizable resource gaps in the balance of payments are projected for the period 1976-81 owing to large import requirements and only moderate export growth. During 1976-81, the growth of banana exports will largely reflect recovery from the 1974 hurricane, and increases in the volume of the other major exports, coffee, beef, and wood, are expected to be modest. However, anticipated increases in the prices of wood, beef, and coffee would lead to a moderate improvement in Honduras' terms of trade after 1975. Other exports are also expected to grow, and sugar may become a significant export item by 1980 if the planned production increases are realized on schedule. The projected recovery of banana exports and the anticipated increase in sugar, beef, and wood exports will depend, however, on improvements in managerial capacities and efficiency as well as on orderly progress in the agrarian reform program. Public Investment and External Debt 8. The Government plans to improve the economic growth outlook over the medium term through an ambitious public investment program, which would at the same time alleviate major bottlenecks to long-term development. Large invest- ments are planned in communications, roads and power, and in the area of export production: lumber mills, a pulp and paper plant, a tourism project, and agricultural projects and a sugar mill. Because consumer goods already account for-only a small share of imports and cannot be reduced without hard- ship, 'i'mports will be growing fairly rapidly as the public investin;ent program is realized. The financing of the projected resource gaps will require substan- tial capital inflows and the bulk of the foreign capital requirements will have to be met through public borrowing. In the past, Honduras has managed to keep its external debt service ratio fairly low, because foreign loans were  almost all on concessional terms. It is important that the country continue to borrow on reasonably soft terms lest the planned public investment program result in an excessive debt service burden in the future. Even if Honduras is successful in obtaining most of the financing it needs for its investment program on terms similar to those offered by the international lending agencies, the debt service ratio is still likely to rise from about 5 percent in 1?75 to at least 15 percent by the early 1980ts. Because Honduras will continue to dep7end on exports of a few commodities with volatile price prospects, and because, historically, natural disasters have sharply reduced the volume of exports every few years, prudent debt management will require maintenance of rather lower debt service ratios than might be considered sAfe for more diversified economies. Public Finance 9. During the last three years the public finance situation has remained sound because of improvements in tax collection, and because the growth of capital and current expenditures has been limited. Nonetheless, greater demands on the public sector for reconstruction (after the 1974 hurricane) and develop- ment expenditures have resulted in an increase of the overall public deficit from 1.5 percent of GDP in 1973 to nearly 5 percent in 1975. The Government has taken steps to improve the fiscal outlook and adopted new tax measures in December 1975 expected to raise the tax ratio from 12 percent of GDP in 1975 to about 13.5 percent by 1976. Despite the greater tax effort, however, public savings cannot be expected to finance all of the local costs of the public investment program without unduly restricting current expenditures, nor can the shortfall be financed out of domestic borrowing without generating unacceptable levels of inflation. Therefore, some local cost financing on the part of official lending institutions will be required to implement the stepped-up public investment program. External Assistance 10. The Bank is Honduras' largest creditor, holding 28 percent of the US$273.9 million external public debt outstanding -- including undisbursed -- repayable in foreign currency, as of December 31, 1974. IDA holds an additional 13.1 percent of the total. Although IDB has made loans totalling the equivalent of US$88.0 million, most of this amount is repayable in local currency, so that IDB's share of the public debt repayable in foreign currency is only 4.6 percent. CABEI accounts for 23 percent of the total, the U.S. Government for 26 percent, Venezuela 2 percent and privately held debt for 4 percent. 1I. In terms of the sectoral thrust of the lending by the principal external agencies, apart from the Bank, AID has concentrated on agriculture, education and health, the IDB on transport, power, agriculture and industry, and CABEI on infrastructure and industry. The lending of these agencies from 1950 to the end of 1975 is summarized as follows:  -5- IBRD IDA AID IDB CABEI Total Total Gross Lending 1950-1975 130.4 34.2 94.4 124.5 88.3 471.8 Gross Lending 1950-1965 25.9 12.5 26.7 27.2 8.1 100.4 Gross Lending 1966-1975 1-04.23 67.7 97.3 80.2 371.4 Sectoral Lending 1966-1975 Transport 41.2 -- -- 32.1 51.9 125.2 Power 60.3 9.5 -- -- 9.0 78.8 Telecommunications -- -- -- -- 5.6 5.6 Education 3.0 3.0 10.5 14.4 -- 30.9 Health -- -- 2.6 5.2 8.8 16.6 Housing -- -- 5.0 12.5 -- 17.5 Agriculture -- 9.2 37.5 30.9 1.2 78.8 Industry -- -- 1.5 2.2 1.3 5.0 Other -- -- 10.6 -- 2.4 13.0 PART II - BANK GROUP OPERATIONS IN HONDURAS 12. Beginning with a loan of US$4.2 million for roads in 1955, Honduras has to date received fifteen Bank loans totalling US$130.2 million and seven IDA credits totalling US$33.6 million, both net of cancellations. The proposed credit would raise the total of Bank Group assistance from US$163.8 million to US$177.8 million. 13. Execution of projects financed by the Bank Group has, on the whole, been satisfactory. Annex II contains a summary statement of Bank loans, IDA credits and IFC investments, and notes on the execution of on-going projects. 14. In the past, Bank Grouap lending was heavily concentrated on trans- port and power, where inadequate facilities hampered the developmeut of the country. The First Livestock Development Credit approved in 1970, however, marked a first step towards the diversification of our lending. Since then, there have been operations for a Second Livestock project and for a First Education Project, with the latter including as major components, primary teacher training schools, support for the national agricultural secondary school and vocational training centers.  - 6 - 15. In future lending to Honduras, we plan to support the priorities of the Government's investment program by giving increased emphasis to investment in the productive sectors and in education, while continuing to lend for physical infrastructure, where there are still substantial deficiencies to be overcome. In addition to the pr6iect now under consideration, the Bank Group contemplates undertaking other rural _evelopment projects to help support agrarian reform and productivity objectives. Bank Group support is also being considered for COHDEFOR's pulp and paper project. Honduras also has potentially excellent tourism sites which are now being studied to determine whether a project is feasible. As part of its agrarian reform program, the Government has proposed the creation of rural development centers which would provide comprehensive educational services to rural communities. Bank assistance in this effort will be considered as a possible major component of a second education loan. 16. In transport, we hope to continue to assist the Government in complet-* ing the high-41; 1inks between the main regions of the country, and a project has been appraised for the Talanga-Juticalpa highway, which would extend eastward to the Olancho Department the Tegucigalpa-Talanga highway financed under the most recent highway loan (Loan No. 896-HO of May 30, 1973). After this project. we would place emphasis on assistance in the construction of a network of feedei and access roads to support the Govermnent's agricultural programs. In addition we hope to continue our support for port expansion programs which will facilitat the growth of Honduran exports. J2he Bank made a US$35.0 million loan for a Sixth Power Project in 1975 and contemplates continuing its assistance to the power sector in the future. 17. IIC's activities in Honduras have so far included a 1964 loan and a share subscription, of US$295,000 and US$66,750 respectively, in a tannery, Empresa de Curtidos Centroamericana, S.A. (ECCASA); and a US$75,000 share subscription in a pilot promotional company, Compania Pino Celulosa de Central America (COPINO) in 1969. COPINO was established to develop an industrial project based on timber from the Olancho Forest Reserve, but a series of obstacles to project development arose and efforts to go forward with it were virtually halted in 1971. The Government's intention regarding a role for COPINO in the COHDEFOR forest industries project remain to be determined. PART III - THE AGRICULTURE SECTOR 18. While agriculture is the most important economic sector in Honduras, its growth has been slow in recent years. Crop yields in Honduras are generally low, and efficiency in livestock production and forestry is only now beginning to improve under the stimulus of externally financed programs. In addition to the7land tenure problem, crop productivity suffers because improved seeds  - 7 - are not widely used and fertilizer use and pest and disease control are minimal. 19. The major exception to this pattern is bananas which are produced efficiently by the two major foreign fruit companies, Standard Fruit and United B&ands, in the Aguan and Sula valleys respectively. Bananas are the country's major agricultural product, and in the period 1972-74, they provided about 35 percent of total export earnings. However, because of relatively high cost levels in Honduras and market uncertainty, rehabilitation by United after the 1974 hurricane has been slower than expected, and Standard Fruit has relinquished its holdings in the Aguan Valley rather than rehabilitate. As a result, pre- hurricane production levels are not expected to be reached again until 1979/80. 20. Following bananas, coffee, forestryj and meat production together contribute about 42 percent to value added in agriculture, and are important export items representing 16 percent, 14 percent and 7 percent respectively, of total exports over the 1972-74 period. Performance is improving somewhat for these products, but unstable export markets over the past few years have tended to offset the gains in production efficiency. All other agricultural production, including sugar, cotton, grains and tobacco together, represent about 7 percent of exports. The production of corn, the basic crop of small farmers, has been static, growing only 1 percent in the 1965-72 period, and the production of beans, the other major food crop and an important source of protein for the poor, declined in the same period. The Rural Sector and Agrarian Reform 21. Little is known about the income and asset profile of the rural poor. It is probable that about 60 percent of the rural population have annual per capita incomes of less than US$100 with about half of this group living on less than US$60 per year. Census figures for 1965 (now being updated) indicate that there are about 180,000 farmers occupying about 2.4 million ha. Land is unevenly distributed, with 68 percent of farms below 7 ha (average 2.5 ha) and occupying only 12 percent of total farm land. Farms over 350 ha. number about 7,000 (about 0.4 percent of total farms) and occupy about 28 percent of the farmed land. Many of the small crop farms are on marginal land or in marginal areas ill served by roads, markets or other facilities. Conversely, many of the larger farms are dedicated to livestock production, although they are on land where intensive cropping could be practiced. Under the temporary Decree 8 program, which constituted the first serious effort to deal effectively with this problem, the Government distributed 76,200 ha. to over 23,000 families from the beginning of 1973 to the end of 1974. The compre- hensive reform program instituted by Decree Law 170 in 1975 proposes the distribution of over 300,000 ha. to 62,000 families in the 1976-79 period.  22. Decree Law 170 makes the Agrarian Reform Institute (INA), establish- ed in 1961, responsible for carrying out the reform. In addition to redistri- buting land, INA is responsible for the formation and training of peasant groups who will receive agrarian reform land. The agrarian reform settlements, known as "Associative Ehterprises', will be operated by groups of peasants on a cooperative basis. 23. The law provides an adequate legal basis for making land available to the rural poor as well as stimulating the development of the on-going conmer- cial farm sector. Allowable maximum farm sizes range from 100 ha. in irrigation districts to 2,000 ha in the least developed areas of the country. Areas less than the indicated maximums are subject to expropriation if (a) within six months of the date of the Law the land is not operatdd directly by the owner (b) within three years (January 1978) the farm is not exploited in accordance with the efficiency standards contained in the law; or (c) the land is in excessively fragmented units. Lands which are totally unexploited are subject to immediate expropriation. At the end of three years, owners of partially or inefficiently exploited lands may retain at least 50 ha, or double the amount of the efficiently exploited area, whichever is larger up to the maximum imposed for each region. Land in bananas, sugarcane, African palm, coffee, pineapple,- citrus and tobacco are not subject to expropriation as long as efficient production is maintained. 24. The Agrarian Reform law is intended to promote a change in land tenure that will result in expanded agricultural production and higher incomes for the rural poor. Both economically and politically, the Government regards it as its most important program; however, its implementation will be difficult, and substantial investment will be needed to ensure its success. Beyond the diffi- culties that have been encountered as a result of oppostion from large land- holders, the authorities are only beginning to confront the problem of providing the variety of farm services required for agricultural development, such as credit, extension, education and technical assistance in the area of production, marketing and cooperative management. Public Sector Institutions 25. The principal insitutions, in addition to INA, that are responsible for implementation of the Agrarian Reform and other government agricultural programs are the National Development Bank (NDB) (discussed in paragraph 28 below), the Ministry of Natural Resources (MNR) and the recently formed Honduran Banana Corporation (COHBANA). Both the latter two institutions have serious staffing problems due to the shortage of qualified personnel in Honduras, and the difficulty of attracting them to public service in view of low Government salary scales.  - 9 - 26. The MNR is responsible for providing extension services for the agrarian reform program. It also has small research and seed development programs. The MNR has received some external technical and financial assis- tance to support these programs and to improve its general administration and planning operations. Further assistance,particularly in the areas of improved seed development and extension will be necessary if the Ministry is to be capable of providing adequate service for the agrarian reform program. INA has, with external technical assistance, greatly improved its ability to develop and support agrarian reform settlements since 1973, as demonstrated by the Decree 8 effort. However, its programs to develop new settlements and to train campesinos in farm management and administration must be strengthened if it is to carry out an expanded agrarian reform program. 27. COHBANA, which is responsible for development and marketing of banana production, was created in 1975 and is now fully staffed. Although it plans eventually to;be involved in all aspects of the banana industry, its major responsibility at present is the redevelopment of the Isleta banana plantation. Isleta was expropriated by the Government after Standard Fruit decided not to repair the damage caused by the 1974 hurricane and continue its operation. An agrarian reform settlement has been created on Isleta and COHBANA is administering the development of the plantation with financial and technical assistance provided under the Second Livestock Project (see paragraph 39 below). Agricultural Credit 28. Tne NDB is the most important source of agricultural credit in Honduras, and has primary responsibility for providing credit for agrarian reform settle- ments and cooperatives since they are not served by the commercial banks. As of December 31, 1974, NDB loans to agriculture totalled about US$48.0 million, which represents about 55 percent of all lending to agriculture in Honduras. Over half of the NDB loans were long-term credit for investment. The NDB is one of the few sources of such financing, which is in short supply in Honduras. The NDB has had a slow and cumbersome loan approval process, and a very poor loan collection record. Substantial technical assistance in recent years from the IDB and USAID has resulted in some improvement in performance. This improvement qualified thO NDB for inclusion as a participating bank under the Second Livestock project, and it has initiated sub-lending operations. Five technicians were recruited for-farm plan analysis, loan supervision, and debt recovery for sub-loans under the Second Project, and this seems to be speeding loan processing. Further improvement should be achieved under the proposed project, since the technical staff for the project will be expanded to fifteen. With continued technical assistance from AID and IDB, the prospects for strengthening overall NDB performance in the future are good.  - 10 - 29. Up to the end of 1973, most medium to large commercial farms outained credits from overseas or from the country's ten private commercial banks or used their own resources. Smaller farmers were udually clients of the NDB. The commercial banks are soundly run and several are wholly or in part owned by overseas interests. Forty to fifty percent of their lending in recent years has been for agriculture; however, the great majority of their agricultural loans, except for those which have been made under the First and Second Livestock projects, are short-term production credits. The banks pay 5 percent to 6 percent interest on time deposits and generally charge 11 percent f-or agricultural, industrial and export loans. Medium and long-term commercial bank credit will have to increase significantly in the next few years if the private sector is to achieve the production levels established in Law 170. Development fotential in Agriculture (a) Livestock 30. The cattle industry in Honduras has been increasingly important in recent years and the potential for development is great. Official preli- minary figures from the 1974 Agricultural and Livestock census indicate a national herd of 1.7 million although the actual figure could be as much as 2 million. The 1965 census lists 58 percent of all cattle on farms of less than 65 ha., 22 percent on medium size farms (65 to 300 ha.) and 20 percent on farms over 300 ha. 31. Beef production has increased steadily,from 19,000 tons in 1965 to 41,000 tons in 1971, and exports during the 1965-74 period increased from 8,000 tons (19565) to a peak of 28,000 tons (carcass weight) in 1973. As a result o 9 the large growth in the export market for fresh beef, seven modern export-oriented slaughterhouses have been established. In 1971T and 1975 exports and prices declined significantly, and while gradual recovery is expected, export volumes are not projected to reach 1973 levels avain until at least 1979. Over the next few years, beef prices are expected to increase; however, dual purpose beef/dairy farming is expected to be more profitable than beef breeding operations alone. Beef and milk production are ordinarily combined in Honduras since most of the milk produced in the country comes from predominantly beef-type animals that are milked once a day. Poor nutrition has limited productivity, but in spite of this; milk production has risen from 138 million liters in 1965 to 196 million in 1974. This increase has not been sufficient, however, to keep pace with rising demand, and imports of milk in dry form increased from 14 to 25 million liters of fluid milk equivalent in the 1965-74 period. With improvements in pastures and in dairy farming practices there is a potential for substantial increases in domestic milk production with corresponding reductions in imports.  (b) Crops 32. Because of low productivity levels, the possibilities for expansion of crop production appear substantial even though the natural resource endowment is not one which is easy to exploit because of mountainous terrain and limited precipitation in some areas. The structural change that would result from the implementation of the agrarian reform should improve the prospects for the development of the agriculture sector, as land which is now used for-extensive livestock operations would be put to more productive use. Most agrarian reform settlements as well as private farms are likely to combine cattle with crops such as rice,bananas, or sugarcane in the Atlantic zone and maize and sorghum in the Pacific. Such mixed crop/livestock operations are economically attractive, and common in Honduras as indicated by the fact that one half of all cattle are raised on relatively small holdings. 33. A wide variety of crops might be grown (e.g., melons and vegetables are now being grown in the Pacific under a project which is attempting to develop commercial crops for export); however, two crops where special efforts to improve production are necessary are bananas, which will continue to be Honduras' major export product in the near future, and rice where there are good prodspects for large scale expansion, both as a basic grain for the domestic market and for export. Marketing and Prices 34. Farm products are marketed largely through private channels, both for export and domestic consumption. For export products, mainly bananas, beef, coffee, cotton, there exist well organized and relatively efficient marketing systems. Bananas are handled by the fruit companies, coffee and cotton by the producer cooperatives,and beef by the packing plants licensed for export sales. 35. The export packing houses are the main outlet for beef cattle, since few live cattle are exported because of Government controls. Animals are bought by the packers through commission agents and are trucked direct from farm to packing-house. The packers also tend to dominate the market in feeder cattle. They purchase stock from farmers in the breeding areas and transport them to fattening areas for finishing. The market power of the packers (exercised in part by holding buffer stocks in fattening areas) has enabled them to keep prices to producers low. Honduras' producers received, as an average for an 800-pound steer (363 Kg.), US$0.32 per kilogram in 1974 and 1975, while prices in the rest of Central America ranged upward to a high of US$0.53 per Kg. in Guatemala. Since most packing house fattening ranches exceed the maximum farm size limits of the agrarian reform, they are now likely to be expropriated, and smaller operations should become increasingly active in  - 12 - this profitable area. This may tend to reduce packing house control over prices. 36. Basic grains and other major food products which move mainly in the domestic market go through many channels, and a large (but unknown) number of agents participate in collection and 'wL.olesale distribution. The grain buying stations of the NDB; which is the public institution responsible fox marketing farm products, and NDB retail outlets are playing a small but increasing role in food marketing. A Basic Grains Commission made up of the President of the NDB, the Minister of Economy, the Minister of Natural Resources, and two representatives of the private sector sets the minimum prices to be paid at the buying stations of the NDB, the maximum selling price of NDB sales to wholesalers and retailers, and the NDB transportation charges. In addition, the Directorate of Internal Commerce of the Ministry of Economy has the authority to control the prices of a few basic commodities,including sugar, basic grains, milk, eggs, coffee and meat. For meat , however, price controls have not been implemented. Since Government authority to control prices and market products is relatively recent and has been exercised sparingly, there is little evidence that price controls have yet had much impact. At present, it appears that the prices of most products are adequate to provide a reasonable return to producers. (d) Performance Under Previous Agricultural Projects First Livestock Development Project (197-HO) 37. IDA Credit 179-HO for US$2.6 million, which became effective on October 5, 1970, was fully committed by ppril 1973 and was totally disbursed in January 1975, almost a year before the closing date of December 31, 1975. Medium- and long-term loans were made to farmers bo develop beef and dairying, provide working capital for cattle fattening, and supply technical assistance. Implementation and execution of the Project were satisfactory and Project ob- jectives were generally achieved. Second Livestock Development Proiect (434-Ho) 38. The Second Livestock Development Project (IDA Credit of US$6.6 million) continued development of the livestock industry, which commenced under the First Prolect, and also provided financing for two abattoirs. This Project became effective in January 1974, but, due principally to the uncertain invest- ment climate during the period when the agrarian reform progran was being for- inulated as well as a decline in export demand for beef as a result of world m.rket conditions, it is now running behind schedule. In addition, the size of individual sub-loans has been higher than estimated at appraisal due to the reluctance of commercial banks to lend to smaller ranchers. As of March 31, 1976,_aboutL 61 percent of the credit had been committed.  - 13 - 39. On March 10, IDA approved the use of US$1.0 million in uncommitted Second Project funds for the urgent rehabilitation and improvement of the Isleta agrarian reform settlement which was damaged by Hurricane Fifi. (President's Memorandum of February 27, 1976). It was agreed that Second Project funds would be made available since many campesinos were settled there and it was important that rehabilitation proceed promptly. It is expected that with this change, together with an improvement in the invest- ment climate now that Government policy has been defined through passage of the agrarian reform law and issuance of supporting regulations and implementation guidelines, Second Project funds should be fully committed by September 1976. The balance of the financing for Isleta is included in the proposed Credit. PART IV - THE PROJECT 40. A report entitled "Appraisal of an Agricultural Credit Project - Honduras" (No. 1044a-HO), dated May 6, 1976, is being distributed separately. The main features of the Credit and project are summarized in Annex III. The project was prepared by the Central Bank Project Unit (PCU), with the assistance of staff from the MNR, INA, the NDB and the National Planning Council (OONSUPLAIN). The project was appraised in October 1975. Negotiations were held in Washington on April 19-23, 1976. The Republic of Honduras was represented by a delegation led by Lie. Porfirio Zavala, Minister of Finance. 41. The project has been designed to take into account the priority being given to the agrarian reform program, and it will include, therefore, credit to agrarian reform settlements created under Law 170 and operated by groups of peasants, as well as to private farmers. Because the agrarian reform program is relatively recent, it is difficult to predict what per- centage of the credit under this project might go to agrarian reform settle- ments. No attempt has been made, therefore, to allocate credit between private farmers investing to comply with the efficiency requirements of the agrarian reform law and reform settlements; however loans will be made for the types of operations .likely to be undertaken by agrarian reform settlements such as combined livestock and crop, dual purpose beef/dairy operations. The proposed project also includes a large and important tech- nical assistanoecomponent (about 30 pernent of total project cost) designed to strengthen the agrarian reform program and its supporting services. 42. Project components are as follows: (1) On-farm investment for:. a. 215 forty-ha. dual purpose beef/dairy units; b. 40 fifty-ha. beef fattening units; c. 20 fifty-ha. irrigated banana units; d. 20 fifty-ha. irrigated rice units; and e. combinations of the above and other crops, such as corn, and beans, based on models to be developed by the Project Unit.  The number of units for different produdts represents the best estimate of the likely distribution of credit; however, there will be flexi- bility t6 finance whatever products sub-borrowers want to produce, provided the project administration unit determines the feasibility of the farm plan. The sizes of the units were selected as a convenient basis for preparing farm models and do not necessarily indicate the actual size of the farms to be financed, since units (including units of different products) could be combined in a single farm plan. (2) The continued rehabilitation and improvement of the Isleta agrarian reform settlement- Of the US$2.3 million cost of rehabilitating and providing the neces- sary technical assistance for the 2,000 ha. now being farmed, US$1.0 million is being made available from the Second Livestock Credit as approved by the Executive Directors on March 10, 1976. (R 76-18). The balance of the US$1.3 million would be financed under this Credit. As in the case of the financing under the Second Credit, because of the limited capital of the beneficiaries, 100 percent of the cost, net of local taxes, of irrigation system rehabilita- tion and expansion, farm and transport equipment, a packing shed, other equip- ment and facilities would be covered, as well as the balance of the technical assistance. (3) The financing of agro-industry including: a. Two rice mills; and b. Four food processing industries (e.g. milk, meat, egg packing, feed mills). (4) Financing of equipment for private contractors including two well drilling rigs and four heavy equipment units to strengthen services available to private farmers for land clearing and irrigation development. (5) Provision of the following technical assistance and other types of institutional support: a. Ministry of Natural Resources - Fifteen man-years of foreign specialists (including related expenses for equipment, etc.) in the field of rice and oil crop research, production extension techniques and training and crop seed production, certification and multiplication. In order to attract the best qualified local personnel, who would be trained by the foreign specialists, the salaries of counterparts for these specialists would be increased under the Project by 50 per- cent (Section 3.05 of the draft Credit Agreement). The Government has agreed to maintain salaries at the increased level thereafter. Project preparation studies to be select- ed by the Government (subject to IDA approval), from a group of five potential projects which have been identified would be financed as a basis for future rural development projects.  - 15 - b. INA - Visual aid equipment, and transport and heavy equip- ment, central and mobile equipment repair shops for development of new agrarian reform settlements, and 5 man-years of specialists in training for the organiza- tion and management of agrarian reform settlements. c. Pan American Agriculture School of Zamorano - Financing to increase the teaching staff and purchase equipment in order to expand its training program for Honduran technicians and campesinos. d. Central Bank Project Unit - Financing for equipment for the Unit's operation. Project Administration 43. The Central Bank which has administered the first two livestock projects in competent fashion would administer this Project. The Project Commission, which was established by decree to supervise and set policy for the previous livestock projects, would continue in this role. It will also serve as a coordinating body, since it includes representatives from the Government agencies participating in the Project (the Central Bank-- Chairman, MRN, Ministry of Economic Affairs and Commerce, INA, the Planning Council, and the NDB), as well as the participating banks and the National Cattleman's Association. In conjunction with this Project, membership would be revised to include representatives of COHBANA and the campesino organizations in Honduras h4. As in the previous livestock projects, this project would be managed and executed by the Project Credit Unit (PCU) of CB, headed by a Project Director acceptable to IDA, supported by an adequate technical and administrative staff and logistic facilities. The PCU will be initially enlarged from four to eight technicians to give better geographical coverage, and to diversify expertise to include cropping as well as livestock activities. 45. The PCU would review and approve on technical, financial, and economic grounds all sub-loan applications for on-farm lending, agro-industries and financing of heavy machinery prepared by participating banks (PBs). In addition, it would advise the NDB and other PBs on the appraisal and implementation of sub-projects. All Honduran banks and financial institutions would be eligible to participate, subject to approval by CB and the signing of Project Alministra- tion Agreements which would specify operational, lending, accounting and other norms and procedures. PBs would be required to employ qualified technicians for sub-loan analysis and supervision. NDB would employ technicians experienced in handling loans to small farmers and to cooperatives or other groups formed under the Agrarian Reform Law. The total of about 15 additional technicians that would be require would be available locally.  - 16 - 46. Sub-loans would be presented by PB for rediscount in the Central Bank. Those of US$100,000 or less would require only the approval of the Project Director; however, sub-loans for more than that figure and all those for agro-industries would require approval by IDA. Grants to institutions for the purchase of equipment, technical services and studies would be-made pursuant to contracts between CB and the institutions concerned on terms and conditions acceptable to IDA. The terms of reference, conditions of employ- ment and contract terms for consultants to be employed under the Project to assist MRN, Isletas, INA and PAS would be approved by IDA. Cost Estimates and Financing 47. The total cost of the project is estimated at US$20.0 million. A detailed breakdown of costs is given in Annex III. On-farm development, the largest component of the project, represents 34.5 percent of total project costs, technical assistance 32.0 percent, agro-industries and heavy equipment 8.0 percent, Isleta rehabilitation and improvement 3.5 percent, and contin- gencies 22 percent (Physical contingencies are calculated at 5 percent; price contingencies are based on the following price escalation: 1976 -- 9 percent; 1977-79 -- 8 percent; 1980-85 -- 7 percent.) The proposed Credit of US$14.0 million represents 70 percent of total project costs, and will finance all foreign exchange expenditures amounting to US$11.7 million plus US$2.3 mil- lion of the project's US$8.3 million local cost. The balance of financing for the project would be provided by sub-borrowers (10 percent), PBs (15 per- cent) and the CB (5 percent). Local cost financing is justified for the reasons discussed in paragraph 9 above. On-Lending Arrangements 48. The Government will bear the exchange risk and on-lend to the CB under a Subsidiary Agreement. Under the Firs and Second Projects the CB received IDA funds at 2 percent for a term of 20 years including 10 years grace. These terms were necessary to cover the CB's administrative costs and, allow a sufficient margin to the PBs to cover the cost of technical assistance. It has been determined that for the proposed project the loan term to the CB could be reduced to 18 years, which would be sufficient to cover the 3 year sub-loan commitment period and the repayment period of all sub-loans. 49. The PBs would make sub-loans under all sub-lending categories at an interest rate of 11 percent. They would be able to rediscount with CB 70 percent of certified advances made for approved sub-projects at a redis- count rate of 6 percent. For sub-loans advances made to Isleta, the NDB would be permitted to rediscount 100 percent with CB at 6 percent. The proposed interest rate of 11 percent to all sub-borrowers is in line with rates now generally being applied within Honduras for similar loans, and w,xould represent a real interest of 3 percent, assuming a continuation of the 1975 inflatLon rate of 8 percent. The Central Bank will on-lend to the PBs for 6 to 12 years including 2-5 years grace, which are the same terms at which th-e PBs will make sub-loans.  - 17 - 50. The proposed 11 percent interest rate to sub-borrowers and the re- discount rate of 6 percent with CB would give participating banks a margin of 5 percent, which is one percent more than they were allowed under the First and Second Livestock projects. This proposed increase of one percent would cover the additional costs PBs would incur for enlarged technical staffs. The PBs would provide short-term loans and working capital for sub-borrowers at 11 percent interest from their own resources. The Project would not differentiate in lending terms between individual small farms, agrarian reform settlements, or commercial producers, as all are treated equally under Agrarian Reform Law 170, nor would it set a maximum aggregate sub-loan size because of the range of farms sizes likely to be involved. 51. Since the passage of Law 170, private banks are reluctant to accept rural land as collateral for long-term loans for farm development and are demanding other guarantees, such as urban real estate. In the case of default of an existing client who has offered land as a guarantee, the banks are concerned that INA would be the only purchaser, and would pay in long-term, low-interest earning agrarian bonds, which would effectively reduce their liquidity. In order to provide adequate protection to the PBs so that they will be prepared to participate in the project, the Government has agreed to establish, as a condition of effectiveness, a system to maintain the liquidity of PBs which acquire agrarian reform bonds as a result of the expropriation of a sub-borrower's land. (Section 3.04 of the draft Credit Agreement.) Procurement 52. Because of the number of individual sub-borrowers likely to be in- volved and the variety of items to be procured, bulk purchases for farm loans would not be feasible. Capital items would, therefore, be purchased from local sources most of whom act as agents of foreign suppliers who are generally well represented0 Competition is good and spare parts and service facilities are adequate. The same procedure will apply to the procurement for the agro- industries component of the Project, since this would also involve purchase of a variety of items by individual sub-borrowers. Sub-borrowers for heavy machinery would have their own preferences regarding standardization and equipment, so that these purchases would again be made through commercial suppliers. 53. For the purchase of machinery, equipment and vehicles for Isleta and under the category of technical services, the CB would issue instructions to package items for bulk procurement under international competitive bidding (ICB) according to standard IDA procedures. However, items that cannot be grodped in packages of at least US$35,000 and would not in the aggregate exceed the equivalent of US$200,000 would be procured in accordance with the borrower-'s normal procedures which are acceptable to IDA.  - 18 - Disbursement 54. Project funds would be disbursed over a period of five years for a. 70 percent of amounts disbursed for sub-loans for livestock and crop farms, agro-industry loans and heavy machinery loans. *. 100 percent (net of local taxes) of amounts disbursed for rehabilitation and investment sub-loans for Isleta. c. 100 percent of the cost of training and technical services; d. 100 percent of the foreign cost of directly imported equipment for INA, PCU and MRN, or 85 percent of their local cost (representing the estimated foreign exchange component); and e. 95 percent of incremental salaries of MNR counterpart personnel during the first two years, and 66 and 33 percent respectively in the third and fourth years of project implementation. 55. Disbursements against sub-loans other than for Isleta would not be made until the applicable Project Administration Contract between the CP and the PB is executed. ibr the Isleta sub-project, disbursements would not be made until the overall Isleta development plan is approved by IDA, the Project Administration contract between the CB, the NDB and COHBANA is executed, and the conditions for effectiveness of the amendment to the Second Livestock Project (i.e., the contracting of technical specialists and the conclusion of a marketing agreement for Isleta bananas) are fulfilled. Disbursements for the technical assistance programs would not be made until applicable technical assistance contracts between the CB and the executing agency are signed. (See Development Credit Agreement, Schedule 1, Section 4.) Project Benefits 56. The Project will assist the Government of Honduras in its efforts to feed a growing population, and to pursue its socio-economic objectives of land reform and improved income distribution. The Project also focuses on products which have a direct foreign exchange earning potential, such as bananas and beef, or which would substitute for imports, such as rice and milk. 57. The overall economic rate of return is estimated to be 41 percent. The economic rates of return for the different components were found to be: 35 percent for dairy/beef operations; 40 percent for beef fattening; 24 per- cent for bananas; 50 percent for rice; 39 percent for Isleta; and 50 percent for rice mills. The wage rate for labor has been taken to be equal to the market wages paid to unskilled workers, since there appears to be a shortage of labor during harvest months, creating upward wage pressures at the farm level. Prices used were farmgate prices for rice and milk and average f.o.b. prices for beef and bananas. The calculations exclude sales taxes and import duties on imported investment items and sales taxes on locally produced items.  - 19 - 58. The annual farm value of incremental production of bananas, rice, beef and milk would be about US$h.5 million per year at full development (1975 farmgate prices), which would represent annual foreign exchange earnings or savings of about US$9.6 million (including value added in processing, transportation etc.). '59. The Project would provide additional on-farm employment for about 2,900 low income people. Off-farm employment in agro-industries or supporting services would directly employ an additional 100 persons. 10th their dependents there would thus be some 17,600 labor beneficiaries. There would be considerable, but unquantifiable benefits in professional training and institutional strengthenihg through the Project's support for the Project Credit Unit of the Central Bank, INA, the Ministry of Natural Resources and the NDB. PART V - LEGAL INSTRUMENTS AND AUTHORITY 60. The draft Credit Agreement between the Republic of Honduras and the Association, the draft Project Agreement between the Central Bank of Honduras and the Association, the Recommendations of the Committee provided for in Article V, Section 1 (d) of the Articles of Agreement, and the text of a draft resolution approving the proposed Credit are being distributed to the Executive Directors separately. Conditions of disbursement applicable to specific project components are referred to in paragraph 55 of this report. A special condition of effectiveness would be the establishment by the Central Bank of an acceptable system to maintain the liquidity of PBs which acquire agrariah reform bonds. (See paragraph 51 above.) 61. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 62. I recommend that the Executive Directors approve the proposed Credit. Robert S. McNamara President Attachments May 6, 1976   ANNX I Page I of ij pages TABLE 3* HONDURAS- SOCIAL INOICATORS DATA SHEET LAND AREA (THOU NM?). ..... ....-...-. -............... . . . . . . . . . . . .4.HONDURAS RErERENCE COUNTRIES (19?0) T3TAL 112.1 NOSY RECENT ARABLE .. 198 1970 ESTIMATE PARAGUAY DOMINICAN 1FF. COSTA 9ICA" GNP PER CAPITA CUSA)19. 27. 32.300 300 560 -4.... _-- POPULATION-AND0 VITAL STATISTIES PO'ULATION (HID-TR. MILLION) 1.9 2.5 2.7 2.2 (.1 1.7 POPULATIOM DENSITY PER SQUARE KM. 17.0 22.0 25.0 6.0 83.0 34.0 'ER SQUARE Kg. ARABLE LAN . f . . 232.0 VCRUDESAIRTIC RAEPER THOUSAND A44. 0 49.0 45. 0/a 45.0 40.0 33.0 CRUDE DEATH RATE PER THOUSAND 30.0 17.0 14j.0 T- 11.0 6.0 Y.0 ENrANT NOATALI?V RATE (/THOU) . . 118.0 67F.0 50.0 L. 62.0 LIE EXPECTANCY AT BIRTH (VRS) . 49.0 52.0 59.0 6. a.o GROSS REPRODUCTION RATE[. 3.4 3.3 3 .2 3.5 3.4 POPULATION GROWTH RATE (I) TOTAL 3.0 2.7 2. 7 2.5 2.q 1.3 JRSBAN 0.3 7. 9 5.10 3.4 5 . 4 .? URRAN POPULATION (I Of TOTAL) 23.0 32.0 31.0 36.0 4.0.0 46.0 AGE STRUCTURtE (PERCENT) 0 TO 14 YEARS 4r.8 46.7 45.7 46.4 47.5 49.0 IS 10 64 YEARS 49.? 50.9 52.1 50.4 49.4 48.0 65 YEARS AND OVER 2.1i 2.4 2.2 3.2 3.1 3.0 AGE DEPENOENET RATIO 1.0 1.0 0.9 3.0 1.0 I.1 EC)NOMIC DEPENDENCY RATIO 1.6& . a 1.5 Ai 1.5/b &a 1.9 1.6 /a FAMIILY PLANNING- ACCEPTORS (CUMULATIVE, THOU) . 17.4 80.1 . 32.7 30.2 uiSERS (1 Or MARRIlED 1308NE) . . EMPLOYMENT TOTAL LABOR FORCE (THOUSANO)D 570.0 800.0 860.0 750.0 1200.0 540.0 LA80R FORCE IN AGRICULTURE (1) 67.0 b5.0 66.0 5 3.0 44. 0 43.0 UNEMPLOYCD CZ Or LABOOR VORCEJ 6.0 6. 0 .. IeA1.0 lb 3.0 /k INCOME DISTRIBUTION I IF PRIVATE INCOME REC-O 8Y- HIGHEST Sl OF POPULATION .. 32.9 lb . 0.01kb 26.3 AIGHEST 201 OF POPULATION b. 5.3 ..62; : LOET 201 OF POPULATION .. 1.6 A-, a4' LOWEST 401 0F POPULATION . 6.4 t2.4. 12. DISTRIBUTION Of LAND OWNERSHIP -------q.4........ I OWNED BY TOP 101 OF OWNERS . 57.-3 ... 62.7 z OWNED BT SNALLEST 101 OWNVERS .. 0. ... .8 HEALTH AND NUTRITION PO'ULAT ION fREM PHYSICIAN .. ITS0.0 /c 3710.0 Li2340.0 /g 2100.0 163 0. POPULATION PER NURSING PERSON 2190. 1 . 2070. o4- 233 0.0 /, 3930.0 169o0.0 POPUJLATIaR PER HOSPITAL BED 390.0O, La 57.0.o ago.o 4/ 20.0 350.0 250.0 PER CAPITA SUiPPLY Or - CALORItES (l Or REQUTREMENTS) 84.0 96.0 94.0 121.0 91.0 110.0 'ROTENW (GRAMS PER OAY) 51.0 58.0 56.8 74.0 50.0 63.0 -OF WHICH ANIMAL AND PULSE 21.0 /d 25.0 . 41.0 29.0 35.0 DEATHf RAVE A/THOU) AGES 1-4 14.0 1 0. 0 9.0 6.9 6.0 6.0 EDUCAT ION ADJUSTED ENROLLMENT RATIO 'RIMARY SCHOG.. 61.0 91.0 81.0 93.0 Ld 107.0 112.0 SECONDARY SCHOOL 6.0 10.0 18.0 17.0 19.0 29.0 TEARS Or SCHOOLING PROVIDED (FIRST AND SECOND LEVEL) 12.0 12.0 12.0 12.0 12.0 11.0 ROCKY tONAL CNROLLHEMT (I OF,SECONDARY) 24.0 18.0 ..6.0 5.0 10.0 1k AOJLT LITERACY RATE CZl 47.0o. 52.0 79.0 51.0 89.0 HOUSING PE SONS PER ROOM (AVERAGE) 1.8 . .. .I OCCUPIED DWELLINGS WITHOUT PIPED WATER CZ) 88.0 /e . 60.0 ACCESS TO ELECTRICITY (1 OF ALL DWELLINGS) 15.0... AUq4L OWELLINGS CONNECTED 10 ELECTRICITY (1) 2.0... CIANSJHP TION RADIO RECEIVERS (PER THOU POP) 68.0 57.0 56.0 71.0 38.8 71.0 PASSENGER CARS (PER THOU POP) 3.0 5.0 6.b 7.0 10.0 23.0 ELECTRICITY (flWH/TR PER CAP) 52.0 120.0 145.0 91.0 226.0 591.0 NEWSPRINT (KGIYR PER CAP) 0.4 1.0 0.7 1.7 1.0 6.2 SEE NOTES ANA DEFINITIONS ONi NEVERSE  ANNEX Page 2 of I pages Un1e,s otheruiee noted, data for 1960 refer to ay~ year hot.een 1959 ardI 1961, for 1970 bet,aee 1968 and 1970, end for Ihunt Recant Entlooate beL.een 1971 and 1973. -1Cooto Rico boo been oei-ted a.5 o bjective country for Ilonduroc because both coontrien r amoall, Open econOnico, dependen. on agricultural uportoa and both bove special trade relationshipo ith other Ceotral Anerican cowatri.s. Yet, Coota Rica hoo achieved a ouch higher otandard of liotg and a more even distributton of the benefits of development than IHunduras. HONDUIRAS 1960 g Ratio of population onder 15 end 65 and over co total labor force; /b 1963, including midwi-e and jsistmtt nurses; ~j1962; /d 1961-63; Piped water inside. Ratio of pepulatiun under 15 and 65 and over to total labor forte; /b 1967-68, households, /c Registered, cot all practicing in the countcy. NoSy' RECOIlT ESTIMATE, /a. IBRD Misoli- estimate; _/b FaLim - iof la-o ne 5ad6 &dvrt o1Ib .. LI. 197L. puaceudr1an65adoetottlabrac; PARAGUAY 19L /a Ral.i of population under 15 and 65 and over to total loabr force; b Houoseholds; Lc Coverage of data unknown; /d Including primary -uoning schools; e Registered only. DOMIINICAN hEP. 19?0 /a Recent miosion estimate 1n subetantisIly higher; Lb Santa Dlomingo only; /c Soots Domningo, orban household3. COSTA RICA 1970 /a Ratio of population under 15 and 65 and over to total labor force; /b Opec uuecpioy,set; /c Excluding teacher trai,- ing. R2, Marib 77, li/i, DEFINrITONS OF SOCl%t rNDICATORS teed Ares (thou ho7) ~~~~~~~~~~~~~~Population Per noraioapeso PoPulation divided by snumer of peacti- Total - Total surface ares cspri.ing land Lare aod inland waters. eing -lte and female graduate nurses, `treened` or "certified" nor.sa. Arabie I oticstetmt f lend are s ed tonporarily or peanasottly end ...eillarypronlwttaing r prin. for c-ltv-tio-. marae. oket sod bitches gardees or to Ie. fallow. Popustmon, Per hospitsI bed - Popuistion divded by o.sbr of honpite1 beds avaislebl is public and Private geners1 and spacialiced hoapi- msr er apia (S9 I- ONP percaplIteotoa es t -aket prio.... ..lo- Lal sod reh.bIlitstiin centere; eseludee nursing bones and establish- lated by san converoion method as World Rank Atlas (19 72-74 basis). merits for custodial and preventive care.. Per aooita ep af calories ft of requlcrneto) Compoted fron _______________t_t________ snePrgy squivelest of set food supplies avaiabl int country per KUpola tbonm1-id-yar.- ilitin) - A. of July first: if not available, avrage capita per day; aveilebje supplies comprise dosesti. production. of two red-year estimates. inports less exports, and ehoeges io stack; net supplies exclude snt.ol feed, seeds. qanoctitie used In food prM.e-ing end Ionsas iopultondnet p.r asuare ! - Mid-year ppalatimo par square kilo- in distribution; requIrmonets were otimated by PAO based on physi- me,tar (10.0.becta,re) Of totsl% C5 Ltgi at eds fornoenst activity mid heal1th considering environ- Poplaio density e Par ar -o rable teed -Cmputed,ssshv fosenetaI ceperstrs., bdy weghts ag and sea distributions of arable lond only. population, od allowing 10% for ..aste at household level. Per capita supply of protein (grams pe a)- Protein content of per yita; stocistica ~~~~~~~~~~~~capita net supplyo odprdy net supply of food is defined a. r,,ds b1ir`h rte1 prrasd- csilv bitsprhoadofi-above; requirements for all countries established by USAD EcOoneic year poplactin;i.usuallytfive-ysac.. rvocges ending in 1960. 1970 sod RO..e.rch Seryl.e. provide far a oliani all1-ane of hi gran of 1975 for developigcoustrie. total pruteio per day. and 20 gram of animal end pulse protein, of Cr-de death rote Per thous-and - Aen...l deaths per thoosand of mid-yea which tO gram should be animal protein; these standards are love papultclno; usu ally five-year a-rages ending is 1960, 1970 aod 1975 than thoac of 75 grams of total protein and 23 grams of animal pro- fu evlpng -oomtrins. te in as am average for the world. proposed by FAO in the Third World lc[ vte7tllt rae /thou) - Acoca l deaths of icfant. .nder on yea od ovy of age yer thacaund live bIrths. Per capita Protein upply frm animal and pulse - Protein supply of food tile -pe-t-ny at birth (yrs) - Iverege number of years of life remin- derived iron eniml and pulses in grams per day. ing at birth, usually five- yesr averages ending in 1960, 1970 and Death rate (/thou) ages 1-4 - Ansoa doaths per thmseand in age group 1-i 1975 fa_ d elpic aate. years to childree in this aga group; soggested as an indicator of Crc,. rep..d..tbo rar Avereg ukrof live daughters a wans wilt naotritio.n bear in her norno reproductIve period If she experiences prenoot age- upe-lfic fertilityraes; ....sIly five-year everages ending In 1960. Edac..tian 1970 end 1975 for developing conres Adjusted ereilmant ratio - primary school - Enroi11anL of all age. so lonuIal-co irouth rare (. - total Compound annual growth rats. of nid- percentage of primalry school-age populationI; inrl,,dcu ehilqren aged; y-ar popolation fur 1950-A0, 1960-7i, end 1960 to meat recent year. 6-11 years but adjusted for different lengths of primary edanetion Popuotu gothrte il - -rb-, - C-sputed like growth rate ef totl1 for counstries with universal education, enrollmnut nay e-ceed lOOt population different dafluititne of urban areas may affect cmpers- since some pupiis are below or shave the officil school age. bIlt ofdta amog couutrieo Adjusted enrollment ratio - secondary school - Copat ed a. shove; second- trhon pop.1.tbon (. of total1) - tia of urban tu total population; ary edoncian requires at least Four years of approved primary Icatru-- different. definiti~nc of urban aresa say affect comparability of dats tion; providea general, vocationu.l or teacher training instructios foe cog co,rie pupila of 12 to 17 years of age, correspondenc.e courees are generally Ace, -tr- n- (percent) -Children (i-li Years), workiog-ose (15-A4 years), secluded. arid retired (A5 years ucd o-e) as perc-ontgee of aid-year population. Years of a hoolina provided (first and second levels - Total years of Ace epenencyrati - ttie of population under 15 and 65 and over to sodig atecondary levs1, vonatione1 intuton may he partially ths fae 5 through 6A. or completely exeludad. 'hnoi dvof degncy ratio E ai fpopulation under 15 sud 65 and over Veatimanl -enrotlmet ft of eecodary - Vanational inatitutiona include vtelbor force in agegroup of 11-64 years. tecboicel, Indus trial or ote rgrams shich operate Independently family planniug -acptors ic-nultiv., thou) Coutaltive somber of or os dopartnents of secondary institutions. -,eeptota of birth--ctroI devices uod.r anepices of Isatio..al family Adult literacy rar.t. Literate adults (abla to read and write) as PI.arnig program since inception. percentage of total adult population aged 15 years and Iovr. Fa-ily"P plaui - curo ( . o mrried women) - Percentage of married wome ofchild-bhears age (11-44 years) who use bi rth -control devices RousIng en all mrrcnod -one in -ma, age group. Parson per roo faver.ge) - Average nasker of persons per room in occupied conventional dwellings in urban areas; dwIltisgs exclde non-p-rasnt Eolo_Ynrct otrutures end unanoupied Parts. Total labvr force (thc-uad) - Economi.ally acti-e persons, including Or..anied dwellns without piped wateri)- Occupied conveotiona1 d-ell- an_ed forcos and nemployod bu t -oclding housewives. tudenta, etc.; I.gs in urban and rravl areas vitbout inside or outside piped water d.flnitloos in.s-ariou- -outrica are not cpotpable. facilities as percentage of all occupied dwellings. Lohur force . agric-lture (7.) - igrina1turo1 labor forcc (in farming. Acce!s to 1eletricity ft of all dwellinea) - Convenional dwslliini with f-rttry, hunting and fishing) as perco..ttg. of total labor fore, electr Icity in living quarters sa percent of total dwellings In urban IUntWc-ed _% of labor fac)- U..plcyod orc usually defined an persona and rural area.o who re abl.ensd willing to take a Jab. oat of a. Job on a given day, Rural d.eltlois connected to electricity it - Computed as above for r,,eicored out of a Jab, and ...eking work for a specIfied inioom rural dwellings onY. ycr,od nor Innti n, weeb.may. not he coparable bnt-eeo coutriea due to "dIffer t def Int'ivn of uvpIoyd and sourc of data. e.g., Conuoptiun emplov_ct afftcv lal ..., oPI.lesrey,Icompuloory uncoploymont Radio receiver (per thou pap) - All types of receivrer far radio broad- inu,,roccr cas~~~~~~~~~~~~~~~ts to general public per thousoed of population; seclu.des on- liceseed receivers in countriesaund In years when registration of It_Loro dlruiritniln -Percentage If private incomn (both in cash sod radio sets wa in effect; date for recen.t years my not be comparable k'r ) z-ic