Document of The World Bank FOR OFFICIAL USE ONLY fliJl Report No. 2695-PH PHILIPPINES RAINFED AGRICULTURAL DEVELOPMENT (ILOILO) PROJECT STAFF APPRAISAL REPORT February 20, 1980 Projects Department East Asia and Pacific Regional Office 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 Currency unit - Philippines Peso (P) P 1 = US$0.135 US$1 = P 7.40 WEIGHTS AND MEASURES 1 ha = 2.47 acres 1 km = 0.62 miles '1 sq km = 0.386 sq mi *1 m = 3.28 ft 1 sq m = 10.76 sq ft I cu m = 35.31 cu ft 1 M c m = 810.7 ac ft 1 mm = 0.039 in I kg = 2.2 lb 1 cavan rice = 50 kg 20 cavans rice = 1 m ton FOR OFFICIAL USE ONLY ABBREVIATIONS AND GLOSSARY AMC = Area Marketing Cooperative BAEx - Bureau of Agriculture Extension Barangay - Village BBR = Bureau of Barangay Roads BHS = Barangay Health Station BNS = Barangay Nutrition Scholar BPI = Bureau of Plant Industry BPW = Bureau of Public Works BS = Bureau of Soils CCC = Cabinet Coordinating Commitee on Rural Development CPO = Central Project Organization FACOMA = Farmers Cooperative Marketing Association FMT = Farm Management Technician FSDC = Farm Systems Development Corporation FNRI = Food and Nutrition Research Institute HMT = Home Management Technician IRRI = International Rice Research Institute MLGCD = Ministry of Local Government and Community Development MOA = Ministry of Agriculture MOH = Ministry of Health MOI - Ministry of Industry MPH a Ministry of Public Highways NCP = Nutrition Center of the Philippines NEDA = National Economic and Development Authority NEP ? National Extension Project NFAC = National Food and Agriculture Council NGA = National Grains Authority NIA = National Irrigation Administration NMPC = National Media Production Center NNC = National Nutrition Council NSDB - National Science Development Board PCARR = Philippine Council for Agricultural Resources and Research PDAP - Provincial Development Assistance Program PMPC = Provincial Media Production Center PMS = Project Management Staff PTC-RD = Philippine Training Center for Rural Development RB = Rural Banks RHU = Rural Health Unit RYDO = Rural Youth Development Officer GOVERNMENT OF THE PHILIPPINES FISCAL YEAR January 1 - December 31 CROP YEAR July 1 - June 30 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contenst may not otherwise be disclosed without World Bank authorization. PHILIPPINES: RAINFED AGRICULTURAL DEVELOPMENT (ILOILO) PROJECT STAFF APPRAISAL REPORT TABLE OF CONTENTS Page No. 1. BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . 1 General .............................. 1 The Rural and Agricultural Sector. . .1 Government Objectives and Strategy . . . . . . . . . 2 Componenit Subsectors . . . . . . . . . . . . . . . . . . . 2 Technology for Rainfed Agriculture . . . . . . . . . . 2 Irrigation . ... ........ .. . . . . . . . 4 Extension . . . . . . . . * . . . .. . . . . 4 Research ........... . . . . . . . . . . . 5 Training . ..... . . . ....... 5 Agricultural Credit. . . . . . . . . . . . . . . . . . 6 Agricultural Marketing and Storage . . . . . . . . . . . 6 Human Nutrition - Conditions and Services. . . . . . . . . 7 2. THE PROJECT AREA . . . . . . . . .. . . . . . . 8 Agriculture Production ......8 Climate . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Land Resources . . . . . . . . . . . . . . . . . . . . . . 11 The Irrigation Situation and Potential . . . . . . . . . . 12 Experience with the Kabsaka Project. . . . . . . . . . . . 12 Rural Institutions and Programs in Iloilo. . . . . . . . . 13 Extension Services . . . . . . . . . . . . . . . . . . . 13 TCraining . ..-. ... .. .. .. .. .. .. . . .. 14 Research Services. . . . . . . . . . . . . . . . . 14 Seed Production and Distribution . . . . . . . . . . . . 15 Credit Institutions. . . . . . . . . . . . . . . . . . . 15 Marketing Institutions . . . . . . . . . . . . . . . 16 Nutrition in Rural Areas . . . . . . . . . . . 17 Existing Infrastructure and Future Needs . . . . . . . . . 17 Roads . . . . . . . ....17 Storage, Processing and Shipment Facilities. . . . . . . 19 3. THE PROJECT. . . . . . . . . . . . . . . . . . . . . . . . . 20 Project Identification and Preparation . . . . . . . . . . 20 Project Objectives . . . . . . . . . . . . . . . . . . . . 20 Project Formulation. . . . . . . . . . . . . . . . . . . . 21 This report reflects the findings of a Bank mission which visited the Philippines in April/May 1979. The mission was composed of J. English, G. Ablasser, R. Carriere, M. R. Tarafdar, B. Woods (Bank), E. Reusse (FAO) and R. Baskett (consultant). Mr. Ablasser returned to the P'hilippines in October 1979 for follow-up discussions. - ii - Page No. Project Description. . . . . . . . . . . . . . . . . ... . 22 Detailed Features. . . . . . . . . . . . . . . . . . . . . 22 A. Agricultural Production Services . . . . . . . . . . . 22 B. Adaptive Trials . . . . . . . . . . . . . . . . . 25 C. Water Impounding and Irrigation Systems. . . . . . . . 25 D. Grains Storage and Shipment Facility . . . . . . . . . 27 E. Training . . . . . . . . . . . . . . . . . . . * 27 F. Human Nutrition. . . . . . . . . . . . . . . . . . . 29 G. Project Preparation . . .. . . . 30 H. Project Mlanagement Support . . . . . . . . . . . . . . 31 Status of Studies and Design . . . . . . . . . . . . . . . 31 Implementation Schedule . . . . . . . . . 31 Cost Estimate. . . . . . . . . . . . . . . .. . .. 31 Financing Plan . . . . . . . . . . . . . . . . . . . . 32 Procurement . . . . . . . . . . . . . . . . . . . . . . . 33 Disbursement . . . . . . . . . . . . . . . . . . . 34 Accounting Practices and Audit . . . . . . . . . . . . . . 35 4. PROJECT IMPLEMENTATION AND EXECUTING AGENCIES. . . . . . . . 35 Project Organization . . . . . . . . . . . . . . . . 35 Beneficiaries Participation. . . .. . . . . . 36 Project Implementation . ...... . . . . . . . . . .. 36 Staffing . . . . . . . . . . . . .. . . . . . . . . 40 Agricultural and Other Services. . . . . . . . . . . . . . 40 Operation and Maintenance . . . . . . 41 Monitoring and Evaluation. . . . . . . . . . . . . . . . 41 5. AGRICULTURAL PRODUCTION. . . . . . . . . . . . . . 42 Cropping Calendar. . . . . . . . . . . . . . . . . . . . . 42 Cropping Patterns.. . . . . . . . . . . 43 Crop Yields and Production . . . . . . . . . . . . . . . . 44 Animal Production. . . . . . . . .4. . . . 54 Input Coefficients, Requirements and Prices. . . . . . . . 47 Farm 2Iechanization . . . . . . . . . . . . . . . . . . . . 47 6. MiARKETS, PRICES, FINANCIAL ANALYSIS AND COST RECOVERY. . . . 48 Market Prospects .o. .. .... 48 Miarket Prices.. . . . . . . . . . 48 Farm Incomes . . . . . . . . . . . . . . . . . . . . . . . 50 Cost and Rent Recovery . . . . . . . . . . . . . . . . . . 50 7. BENEFITS AND JUSTIFICATION . . . . . . . . . . . . . . . . . 53 Project Benefits and Beneficiaries . . . . . . . . . . . . 53 Fiscal Impact. . . . . . . . . . . . . . . . . . . . . . . 53 Foreign Exchange Effect. . . . . . . . . . . . . . . . . . 54 - iii - Page No. Employment Effects . . . . . . . . . . . . . . . . . . . . 55 Impact on Food Availability and Prices . . . . . . . . . . . 55 Environmental Effects . . . .............. . . 55 Derivation of Economic Prices . . . . .. . . . 55 Economic Analysis and Rates of Return . . . . . . . . . . . 56 Sensitivity Analysis and Risk . . . . . . . 59 8. AGREEMENTS REACHED AND RECOMMENDATION. . . . . . . . . . . . . 61 ANNEXES 1. Tables 1-12 2. Accounting Procedures of Government Agencies 3. Tables 1-9 4. Tables 1-5 5. Documents in Project File CHART World Bank - 20657 IIAP IBRD 14461 PHILIPPINES RAINFED AGRICULTURAL DEVELOPMENT (ILOILO) PROJECT 1. BACKGROUND General 1.01 The Government of the Philippines has requested Bank Group assis- tance in financing a project to promote agricultural production in nonirri- gated areas in Iloilo province in the Western Visayas Region. The main thrust of the project would be the extension to farmers of multiple cropping techniques and increased input use. Further project components would include small water impounding schemes and measures to improve nutrition. Together these activities are directed towards increasing farm income, improving rural health and reducing rural unemployment in rainfed lowland areas in Iloilo. The Ministry of Agriculture (MOA) would have overall responsibility for imple- menting the project. 1.02 Although several other Bank projects in the Philippines provide some support for agricultural production in rainfed areas, this would be the first project primarily aimed at improving rainfed agriculture on a larger scale. The MOA was responsible for coordinating the preparation of the project, with assistance from the Bank. Major contributors to project preparation were staff of the provincial government and of the various participating ministries located in Iloilo. The Rural and Agricultural Sector 1.03 Some 31 million people or 70% of the Philippine population live in rural areas where social services are poor, economic activities limited, agri- cultural productivity often low and underemployment high; about 60% depend directly on agriculture. The rural population is growing at 2.7% per year, reflecting a natural increase of about 3.2% and an annual rate of migration to the cities of 0.5%. 1.04 Agriculture is the predominant sector of the Philippine economy, accounting for about 30% of GDP, slightly more than 50% of total employment, and 55-60% of the foreign exchange earnings. Nearly three-qua,rters of the land under cultivation is devoted to grains production, notably rice and corn; other principal crops are rootcrops, sugar, coconuts, abaca, pineapple and tobacco. 1.05 After recovering from highly adverse weather during 1972-73, the sector grew remarkably well at about 5% p.a. between 1974-78, and significant growth is also expected in 1979. The high rate of growth was particularly buoyed by record rice and corn harvests in 1976 and 1977 resulting from government-sponsored production credit programs, better weather, and expansion and improvement of irrigation. More favorable producer prices in the mid- 1970s provided added stimulus. 1.06 Structurally, Philippine agriculture is overwhelmingly small scale. The national average landholding is about 3.6 ha. Most of the nonmarginal -2- lands, especially in the lowland areas, are under cultivation, hence, agri- cultural development and improvement of farm incomes critically depend on increased productivity of the already cultivated lands. Because of the small average farm size, animal production consists predominantly of backyard enter- prises. It is estimated that more than 80% of the pork and 70% of the beef consumed in the Philippines come from animals raised in the backyard. Back- yard animal production is characterized by poor husbandry and management which, given the generally inferior types of animals, result in low produc- tivity. Government Objectives and Strategy 1.07 Government's agricultural strategy emphasizes food production, agri- cultural diversification, reforestation and stronger linkages between agricul- ture and industry. Key components of the development strategy are agrarian reform and rural infrastructure development, improved credit programs aimed at food and feedgrain self-sufficiency, and malnutrition prevention programs. Progress has already been achieved with this strategy as is evident from increased farm production and a more favorable growth rate of rural family incomes compared to incomes of urban families. Nonetheless, of the 15 million people in the lower 40% of the income scale, 12 million are found in the rural areas, i.e., 39% of the rural population are poor compared with 23% of urban. 1.08 A major thrust towards achieving the objective of increased produc- tion has been irrigation development, and nearly one-half of the country's irrigation potential has already been realized. Improved technology for rice cultivation has considerably raised the production potential of the irrigated areas, and appreciable progress has been made towards full exploitation of this potential. With the achievement of self-sufficiency in food grain pro- duction, development priorities are now beginning to shift away from major irrigation projects. This trend is reinforced by the fact that irrigation development is likely to become increasingly expensive as more marginal areas are included. Also, irrigation generates highly localized income effects while the majority of the rural poor live in areas without irrigation potential. 1.09 In contrast to the rapid pace achieved in irrigation development, economic growth in rainfed areas has been proceeding slowly, mainly for lack of suitable technological innovations. Recognizing this constraint, Govern- ment, in the early 1970s, initiated research efforts in rainfed agriculture which, generally, have produced mixed results, but have included a significant breakthrough in multiple cropping (para. 1.10). The proposed project is intended to promote this new technology which is expected to greatly improve the prospects for the development of rainfed lowland areas with suitable climatic conditions. No comparable technological base exists at present for yield improvement in the rainfed upland areas where corn is the major crop. The development of the upland areas therefore remains problematical, though some diversification opportunities do exist. Component Subsectors 1.10 Technology for Rainfed Agriculture. Of the estimated 11 million ha of cultivated land in the Philippines, approximately 1.2 million ha, or 10.9%, - 3 - was irrigated in 1978. This represented about 47% of the total area with irrigation potential. A large proportion of the 8.2 million ha of cultivated land without irrigation potential is in upland areas where agricultural pro- ductivity is relatively low. Productivity in the rainfed lowlands is gene- rally higher than in upland areas but varies considerably from region to region depending on the amount and distribution of rainfall. Although some rice is also grown in upland areas, the predominant crops there are maize and other nonrice crops; all crops other than rice are thus common,ly called "upland crops" in the Philippines. 1.11 Traditionally, rainfed areas sown to rice are cultivated once a year during the peak rainy months and are idle during the rest of the year. In an effort to intensify land use by increasing the number of crops; grown per year, the International Rice Research Institute (IRRI), has been testing, in cooperation with national research institutions in the Philippines, cropping patterns that allow rice farmers in some rainfed areas to harvest up to three crops per year. Out-of-station (field) research sites of IRRI and the Bureau of Plant Industry (BPI) are located in three provinces of the Philippines, one of which is in Iloilo, and these are used to test promising cropping patterns on experimental plots in farmers' fields which are jointly managed by farmers and researchers. Results from these experiments can be divided into three main categories, namely: (a) development of new varieties suitable for multiple cropping; (b) modification of the rice culture to use water more efficiently; and (c) modification of upland crops culture to fit the rice paddy. 1.12 Crop improvement activities specifically directed to the special needs of multiple cropping have resulted in new rice varieties that possess characteristics such as short maturity of less than 110 days, nonsensitivity to photoperiod, excellent seedling vigor to withstand poor seedbeds, tolerance to shading, and tolerance to heavy rainfall at harvest. 1.13 At present, rice is transplanted on puddled land that is prepared when the land is under water. While this process is advantageous in terms of good weed control and in reducing man and animal power requirements, its major drawback is the need to submerge the paddy before land preparation, a process that is very wasteful in terms of water and time. 200-250 mm is needed for puddling and usually a farmer has to accumulate more than a month of rain before he can start seedbed preparation. To remedy the problem, puddling is avoided altogether by preparing the land during the dry months and broadcast- ing dry seed just before the first monsoon rain or germinated seed after the onset of rain. Chemicals or hand methods may then be required for weed control. Some new varieties are more suited to these techniques than the traditional ones, and, where the monsoon lasts more than five months, a second rice or upland crop may be grown on the same land without irrigation. 1.14 Submerged paddy soils, especially the heavy types, are difficult to convert into a well aerated seedbed suitable for upland crops. To overcome this difficulty, the IRRI and UPLB have been testing a production technique by which upland crops are directly seeded into moist and unculti- vated puddled soils of the rice paddies. Generally termed as minimum tillage, the procedure consists of draining the paddy just before harvest, - 4 - cutting the rice straw close to the ground, and immediate drilling (seedling) of the succeeding crop near the base of the newly cut rice straw. These crops can then take advantage of the remaining rainy season and residual soil moisture. Corn, sorghum, mung and soybeans have shown good potential under this culture. 1.15 With the new varieties and the new cultural practices, it is now possible to grow two or three crops per year in purely rainfed rice paddies. Some of the more commonly used patterns are: (a) rice-rice-upland crops; (b) upland crops-rice-upland crops; (c) rice-upland crops; and (d) upland crops-rice. The first two patterns are most suited for areas with short dry seasons while the third and fourth are suited for areas with shorter rainy months. Lighter soils that have better surface drainage are more suited for upland crops either before or after the main rice crop. Areas that have good access to the market can grow more of the high profit upland crops, such as cowpeas, green corn, and other vegetables while in the less accessible areas the grain crops, such as corn, sorghum and the grain legumes which are easy to store and to market are better suited. 1.16 Irrigation. The development of irrigation has been an important part of Government's strategy to increase the country's food crop production; since 1960 the irrigated area increased by an average annual rate of about 2.4%. About three-quarters of all irrigated area is currently located in Luzon, while the remainder is equally divided between the Visayas and Mindanao regions. With the development of the existing unused potential by the end of this century, the relative share of Mindanao will have risen to about 30%, while that of Luzon will have stabilized around 60%. Of the total irrigated area of 1.2 million ha, about 35% represents gravity systems, 49% communal systems, and 16% pump irrigation and other systems. The potential for the development of the generally very small, multipurpose water impounding schemes has been tapped only to a relatively small degree, primarily by large indivi- dual farmers. The agency responsible for the construction and operation of large irrigation systems is the National Irrigation Administration (NIA), a government corporation with which the Bank has collaborated on a number of projects. NIA works closely with the Farm Systems Development Corporation (FSDC) which is responsible for assisting smallholders in the formation of viable groups for the purpose of operating communal irrigation systems. In its efforts to design a national program for reducing soil erosion, the Bureau of Soils (BS) has recently proposed the construction of some 600 small water impounding schemes. Implementation would be under the overall direction of the newly formed small water impounding management (SWIM) committee. 1.17 Extension. About 15 government ministries and agencies provide varying forms of rural extension. The MOA, however, is primarily responsible, through its five line bureaus, for the dissemination of technical information - 5 - in the fields of crop and livestock production, home management, nutrition and rural youth development. W4here staff of other agencies are involved in similar activities some overlap does occur. In most cases, however, informal agreements exist concerning their respective roles. Extension services for coconut, sugar, tobacco and cotton are provided by special commodity-specific agencies most of which are supervised by MOA. 1.18 Within the MOA there are about R,600 technical staff, 90% of whom have tertiary level degrees. Both the ratio of extension workers to farm families and the level of basic academic training of extension workers in the Philippines are favorable relative to other countries in Asia: however, the effectiveness of the extension service has been held back by: (a) workers' lack of training in extension methodology; (b) a shortage of equipment and facilities for field level training and demonstration: (c) inadequate mobility of extension staff owing to a scarcity of vehicles- (d) inadequate links bet- ween research and extension which are handled by separate MOA bureaus; and (e) unclear lines of command between the national, regional and field levels. A major effort has been initiated by the Ministry, with Bank support, to reor- ganize and strengthen the extension service. Tn particular this includes! (a) the establishment of a more unified extension service and closer coordina- tion between research and extension! (b) provision of vehicles, communication, and demonstration and training equipment* and (c) implementation of a staffing and training program to increase the number of trained extension staff including the provision of additional subject matter specialist positions and livestock extension technicians. 1.19 Research. The standard of agricultural research in the Philippines is relatively high. 7or the past 40 years, the IJniversity of the Philippines in Los Banos (UPLB) has been internationally recognized as a center for tropical agriculture training and research. It has been strengthened through three Bank education loans as well as various other sources of aid. Its capacity was further strengthened by the establishment of the International Rice Research Institute, adjacent to the university complex. Furthermore, the agricultural research done at TJPLB, IRRI and the various MOA and private research stations are coordinated and evaluated by the Philippine Council for Agricultural and Resources Research (PCARR). Major functions of PCARR are the formulation of research programs and the packaging of technology for promotion by the extension service. Likewise, the National Nutrition Council, together with ministries and such agencies as the National Media Production Center, the Nutrition Center of the Philippines and the Food and Nutrition Research Institute (FNRI) are particularly competent in drawing up nutrition technology packages suitable for national programs. 1.20 Training. The agricultural education and training system, at the higher level, consists of about 46 colleges giving degree courses in general agriculture, Is in forestry, 21 in animal science, and 4 in veterinary medi- cine. Within this system, the UJniversity of the Philippines offers the best quality instruction. At the postsecondary level, more than 60 schools gradu- ate about o00 technicians each year in poultry or pig husbandry, farm mechanics and forestry. Middle-level training in animal disease and protec- tion has been started only very recently. Systematic and coordinated programs -6- for effective training of extension workers and farmers also had not been developed in the Philippines until recently. Beyond this, however, training tends to be seen as essentially a classroom activity and not as an essential part of, or supplement to, experience gained on the job. Particularly at the local level this limits the effectiveness of the existing training effort. 1.21 Assisted by the Bank-supported Fourth Education project, the Govern- ment is now in the process of establishing an improved agricultural education system comprising (a) apex institutions at the national level; (b) one agri- cultural college with high standards in each of three major regions, sur- rounded by selected colleges and agricultural high schools serving as vocational/technical training centers; (c) experimental agricultural high schools; (d) postsecondary two-year technician training programs; and (e) systems of training extension workers and farmers leaders. The latter is to be accomplished through the establishment of the Philippine Training Center for Rural Development (PTC-RD), initially consisting of a National Training Center at UPLB, five Regional Training Centers and five Farmer Training Centers. However, none of these are to be located in Western Visayas. 1.22 Agricultural Credit. The period 1970-73 was one of highly adverse weather causing a substantial fall in rice production. To counteract the decline in crop production, the Government launched massive supervised credit programs in 1973, notably Masagana 99 for rice and Masaganang M4aisan for corn. The programs succeeded in reaching a large number of small-scale farmers as well as in boosting total production. However, after only a brief period, these programs experienced a sharply declining trend with regard to the number of borrowers and loans granted. 1.23 Poor loan repayment has been the major cause of this decline, partly due to crop losses caused by natural calamities but also due to the over- stocking of the credit delivery and recovery system in pursuit of emergency production targets dictated by the 1970-73 crisis. Credit was extended generously to borrowers ill-equipped to use it effectively. Borrowers in arrears are disqualified from further borrowing and rural banks with high arrears are similarly disqualified from rediscounting seasonal crop loans made by them to farmers with the Central Bank under generous terms. Now that rice production is no longer a critical issue, Government policy is shifting more to selective lending, according to the debt repayment capacity of the would-be borrowers, coupled with more rigorous technical and farm management support to ensure better use of the resources available to the farmers. Selective restructuring of loans and an ongoing program of rehabilitation for rural banks will gradually requalify many borrowers and lenders to avail themselves of additional Central Bank credit facilities. 1.24 Agricultural Marketing and Storage. Traditionally, the marketing and storage of food crops and livestock have been functions performed by the private trading sector. This is still largely the case for livestock and for crops other than cereals, while an increasing share of the marketing of foodgrains, feedgrains and pulses has been assumed by the National Grains Authority (NGA). The private trading sector is a complex system of market -7- intermediaries who interact in the buying, transport, storage, processing and financing of agricultural commodities. Storage facilities are owned primarily by millers as independent warehousing activities have become financially less attractive in recent years due to government control of marketing margins. 1.25 Participation in marketing by producer organizations is relatively minor, although Government is supporting the formation of cooperatives. The oldest type of such organizations are the municipal Farmers Cooperative Marketing Associations (FACOMAs). These are relatively loosely organized cooperatives, originally registered, supervised and financed by the Agricul- tural Credit Administration (ACA), which own warehousing and milling facili- ties and operate with a minimum of government supervision. Of more recent origin are the Farmers Associations (FAs), which have been promoted by the MOA, primarily to strengthen the farmers' voice in matters of common interest and to facilitate group actions where appropriate; FAs perform some marketing functions, especially retailing, but rarely own extensive facilities. The present cooperative concept, under the auspices of the Mfinistry of Local Government and Community Development (MLGCD), consists of a two-phase approach to the formation of marketing cooperatives. First, farmers are to join Samahang Nayons, which are small precooperative groups intended to instill in farmers cooperative thinking and familiarize them with cooperative practices./1 After a certain period and meeting specific conditions, a number of Samahang Nayons are expected to group together to form an Area Marketing Cooperative (AHC). 1.26 The National Grains Authority originally was established to imple- ment Government's grain policies, both through industry regulations and through market intervention, the basic premise being that NG.A would not dis- place the private sector. NGA has acquired storage, milling and transport facilities and been given sufficient working capital, both through direct Government appropriation and a line of bank credit. It also has a monopoly on import and export of grains. Although it was originally anticipated that NGA would be able to stabilize prices with a market participation of 10-15%o, the national average participation rate has been higher in recent: years. Human Nutrition - Conditions and Services 1.27 Until 1974, the Philippines did not have a clearly defined policy on nutrition that was supported by the highest levels of national leadership. Although initial efforts had been made to coordinate nutrition activities, there still remained the task of organizing a system to oversee program imple- mentation from the national to the barangay levels. The simultaneous estab- lishment in 1974 of the National Nutrition Council (NNC) and the Nutrition Center of the Philippines (NCP) expressed in concrete terms the Government's /1 Cultivators participating in land reform programs are required to be memlbers of a Samahang Nayon. concern for an integrated nutrition program and its resolve to marshall effectively the technical expertise and financial resources of the public and private sector. The Ministries of Agriculture and Education are the main agencies responsible for promoting the preventive and technical aspects of the Philippine Nutrition Program, while the Ministries of Health and Social Services (MSS) are concerned with monitoring and remedial activities. Supporting these activities at the village level is a cadre of specially trained workers, known as Barangay Nutrition Scholars (BNS), of which there will be one stationed in every barangay in the 1980s. 1.28 Malnutrition is widespread in the Philippines and poses a recognized national problem of major social and economic significance. The most common types of malnutrition found are (i) energy-protein malnutrition, (ii) iron- deficiency anemia, (iii) vitamin A deficiency and (iv) iodine deficiency. Food consumption surveys report an average deficit of about 16% for calories and 5% for protein, but these figures do not take into account distributional inequality, both among and within households. Repeated attacks of diarrhea and other infections or infestations play a major role in the onset or aggra- vation of malnutrition and the high rate of sudden deaths among the young. Over half the population have hemoglobin levels indicative of iron-deficiency anemia, which lowers productivity, increases susceptibility to infectious diseases and adds to the risk of maternal mortality and below average birth weight. Parasitic infestation is also prevalent, with ascaris infection being the most widespread. This parasite can aggravate anemia and results in reduced utilization of ingested calories. 2. THE PROJECT AREA General 2.01 The project area for agricultural development and marketing includes all the lowlands of Iloilo province, excluding irrigated areas and Guimaras Island; the nutrition component covers selected areas throughout the province. Some agricultural trials would also be conducted in Mindanao. Iloilo is a province in the Western Visayas region, which also includes the provinces of Capiz, Aklan, Antique and Negros Occidental, and is located in the south- eastern part of Panay Island. It has a total land area of 532,397 ha, repre- senting 26.3% of the total area of Western Visayas and 1.8% of the total land area of the country. The province has 46 municipalities, with Iloilo City as its capital, and 1,785 barangays. Its population is approximately 1.4 mil- lion, of which 72% is rural and 28% urban. Literacy is high and approximately 71% of farm operators finished elementary school, 12% high school and 5% college. Only 12% did not have any formal schooling. Agricultural Production 2.02 About 319,000 ha or 60% of Iloilo's land area is under cultivation as shown, broken down by major crops, in Table 2.1. Nearly half of the culti- vable area is upland cropping where water cannot be collected in paddies, but - 9 - upland rice may be grown as well as many other crops. Rice is by far the most important crop grown and with the large area together with good yields, Iloilo now is the major rice-producing province in the country. Less than 50,000 ha is irrigatied, and an area of 100,000-120,000 ha produces rice under rainfed conditions where rainfall water is impounded in paddies. Of this area, 60,000 ha (about half of the rainfed rice area) which includes the bulk of the farmers who have the resources to adopt the technology, but have not yet done so, would be included in the project. 2.03 The project area has traditionally grown one transplaLnted long- season rice crop per year in the wet months. As a result of the IRRI/BPI outreach site results and the Kabsaka project (para. 2.14), some farmers have started early dry or wet seeding practices with their first crop of rice in order to allow time for a second crop or rotations with corn, sorghum, mung, peanuts or vegetables. On some areas reported under the Masagana 99 program in 1977, first crop yields averaged 4.6 tons/ha with irrigation and 3.6 tons/ha in rainfed areas, although overall provincial averages were below these levels. Second crop yields were 3.4 and 2.4/ha, respectively. Yields in recent years under the Outreach and Kabsaka programs have been even more encouraging. The great majority of farmers in the irrigated and rainfed rice areas use high yielding varieties (HYVs). Nitrogen rates used are not optimal but are adequate for 3.5 ton/ha yields. All farmers recognize the need for herbicides when dry or wet direct seeding methods are used. 2.04 Other annual crops grown in the rainfed areas are green corn and corn for grain, mung and (near markets) several vegetables and melons. Hybrid sorghum has recently been introduced and is grown on a few hundred hectares. It is yielding 1.8-2.0 tons/ha - about 60% more than grain corn, with poten- tial for even higher yields. Mung yields are low at 0.4 to 0.5 tons/ha. 2.05 Farmers in the rainfed areas rely mostly on animal power for land preparation but small hand tractors are being introduced rapidLy. Large tractors are now being made readily available for dry season tillage by con- tractors idled by the sugar acreage reductions but, with the price of fuel increasing, their costs are becoming almost prohibitive. The portable IRRI type mechanical threshers are being manufactured locally and their numbers are increasing in the area. Mechanization will be important to the rapid expansion of multiple cropping. 2.06 Although actual figures for Iloilo province are not available, several thousand head of backyard livestock are being raised under various projects. It is estimated that of the total number of livestock in the province, 10% are cattle, 27% hogs, 43% goats and 20% carabao. Poor husbandry and inferior animals in these enterprises result in low productivity. Substantial improvement in animal yields and returns to the backyard animal raisers can be achieved by providing better technical guidance, improved stock, and production credit on more adequate terms. Livestock marketing in Iloilo is well-developed with regular shipments out of the port to Manila and other provinces. - 10 - Table 2.1: AREA OF MAJOR CROPS IN ILOILO PROVINCE, 1976 Hectares /a Rice Irrigated lowland 40,910 Rainfed lowland 128,920 Upland 5,640 Corn 23,100 Coconut 36,450 Abaca 437 Sugarcane 40,430 Mung 1,210 Root crops 7,880 Vegetables 18,950 Bananas & other fruit trees 14,990 /a Excluding Guimaras Island. Source: Bureau of Agriculural Economics. 2.07 According to the 1970 census estimates, about 56% of farmers in Iloilo province were full or part owners, and 42% tenants. Land reform bene- ficiaries would participate in the Project. The average farm size in the province is estimated to be about 2 ha. Climate 2.08 Iloilo has a humid tropical climate which is characterized by a temperature regime whose monthly average ranges from 25.50C in January and 27.30C in March. Relative humidity ranges from 74.8% to 84.8% (monthly mean). Day-length changes by only 1 hour and 10 minutes in a 12-month period. The province is south of the typhoon areas of the Philippines, and of the yearly average of 7.5 typhoons that hit the country, less than 0.6 per year pass Iloilo or south of the province. November and December are the most likely typhoon months. 2.09 The province has a yearly rainfall that usually exceeds 2,000 mm and a distribution pattern that has at least five-to-six months with more than 200 mm _ rain. About 70% of annual rainfall comes in the wet months. The northeastern areas have eight or more wet months /2 and are wetter compared to the southwestern areas which have five-to-six wet months. Although the eight or more wet months per year in the Northeast are more favorable for more /1 Approximately 200 mm of rain/month is needed for rice and the term wet is used in this report for those months averaging more than 200 mm rain. /2 See Annex 3, Tables 1 and 2. - 11 - intensive land use, two or three crops per year have been successfully grown at Oton and other southern towns. The onset of rain, normally in May can vary from late April to exceptionally late June and late monsoonal rains can be erratic, both of which cause some problems with double cropping. Land Resources 2.10 The potential for more than one rainfed rice crop and multiple cropping in a given rainfall situation depends highly on thte soil texture and the landscape position. These latter two factors may strongly modify the effects of climatic factors and the water regime in a given location or field. The north central portion of Iloilo province is mountainous sloping off towards the ocean to the south, east and west into a series of small hills 90-180 m in height and mini-valleys. Streams and valleys f:Lowing from this hilly area have formed alluvial plains before emptying into the ocean. Except for the large plain surrounding Iloilo City, they are small in area. The plains tend to have heavier soils with the water table nearer the surface and receding with the onset of the dry season less rapidly than in higher elevations. Drainage is a problem in low plateaus and lower portions of the plains where there is little vertical drop between paddies. Water in side slopes which are terraced or bunded and do not exceed 8-10% slope can be accumulated or drained only during the rainy season but one crop of rice followed by an upland crop can be grown. There is a decreasing "Flood Status" (at least 1 mm of standing water) frequently during the rainy season when pro- gressing from the plains to the higher elevations. High yielding first rice crops or single rice crops can be expected in all landscape positions in Iloilo. 2.11 The soils of the project area are slightly acid except for the fine textured clays of the alluvial plains. These are neutral or slightly alka- line. Except for small areas of one minor soil type, the soils of the project area have high cation exchange capacities ranging from 22-85 meq. They are moderately to slightly deficient in phosphorus and variable in potash avail- ability with some soils in the Sara area reported to be quite low but others adequate. As stated above, all soils can produce rice but the lower landscape plains with heavy textured soils are best suited. These areas, especially near Iloilo City, produce vegetables quite well also. The lighter soils at the higher landscape positions are well suited to upland crops and are easier to till. Santa Rita and Umingan series are the most fertile and as seen below, comprise 60% of the project area. 2.12 The distribution of soil types by series in the project area is estimated by the Bureau of Soils to be as follows: - 12 - Santa Rita clay 40 Umingan Fine sandy loam 20 Alimodian clay loam 16 Sara sandy loam 10 San Rafael loam 8 Barotac loam 6 100 The Irrigation Situation and Potential 2.13 NIA has completed six irrigation systems in Iloilo (29,600 ha) of which four (24,700 ha) are now under rehabilitation under the Jalaur Irriga- tion Project (Loan No. 1367-PH). There are also 26 communal irrigation projects under NIA/FSDC covering an area of 4,800 ha, and 636 pump schemes with an area of 7,000 ha. Fifty-nine other communal irrigation systems, covering an area of 2,800 ha, are privately owned and operated. In addition to the present Lrrigated area of 44,200 ha, NIA plans to develop 13,000 ha through the construction of a multipurpose storage dam in an extension of the Jalaur River Project and 4,000 ha in the northeastern part of the province along the Asue River. Since the potential irrigable area in the province is about 70,000 ha, there is little further potential to develop additional irrigation by any large-scale project after completion of the proposed expan- sion. There are, however, a large number of potential sites for small-scale water storage in smaller valleys in the low hills surrounding the central plain and in the northern hills. These dams would have limited storage capa- city but would provide supplementary water supplies to adjacent areas which generally are at too high an elevation to be served by major irrigation systems and in which elevation and medium water holding capacity of soils results in an above average risk of drought stress to a second rainfed rice crop planted iri September. Experience with the Kabsaka Project /1 2.14 Kabsaka is an agricultural production intervention program whose primary aim is to increase the intensity with which limited land resources are to be cropped. This program is particularly relevant for Iloilo where almost all arable lands are now under cultivation and population density is high. To hasten the adoption of more intensive crop production technology, Kabsaka provides participating farmers with: (i) technical support through a qualified agricultural technician; (ii) production credit not only for rice but also for other annual crops; and (iii) an assured market for all farm products. /1 "Kabusugan sa Kaumahan" which means bounty in the farm. - 13 - 2.15 Kabsaka was started by BAEx in 1974 in Santa Barbara as an applied cropping system research effort conducted jointly with IRRI, PCARR and BPI. Starting with two farmers in a 2,000 sq m area, a production of 1.9 tons for the first crop, or an equivalent yield of 9.5 tons/ha was obtained, thus generating keen interest from surrounding farmers. In the second year, nine farmers covering 25 ha participated with as high a productivity as the first year. By 1978, prime responsibility for the effort was assumed by BAEx, and the majority of the farmers in the project site (317 farmers covering 465 ha) were participating in the program. In 1979, the program is being extended to two other areas in the province, and some 600 farmers are participating. The most successful pattern has been an early rice crop that is dry seeded just before the first monsoon-rain in late April or early May, followed by a wet seeded rice in early September and then a legume in early JanuLary. Rice yields have averaged more than 3.75 ton/ha/harvest. 2.16 In addition to substantiating the potential for increased produc- tivity, Kabsaka has also brought into focus some attendant problems that go with increased productivity. Some of these are: (a) possible labor shortages during the months of August and September when the first rice crop is being harvested and the second crop is being seeded (para. 5.17); (b) grain drying during the first rice harvest (para. 2.37); (c) marketing of large quantities of grain, some of low quality, that are harvested during the wet months (para. 4.08); (d) higher probability of crop failure, especially on the second crop which is planted later than the traditional crop (para. '5.09 and 7.15). Experience with Kabsaka clearly shows that solutions to these problems are essential if the program is to be expanded to cover the whole province. Rural Institutions and Programs in Iloilo 2.17 Extension Services. The MOA has a staff of 600 in Iloilo Province of whom 445 are engaged in field activities. BAEx and BPI (431 field staff) are engaged primarily in crop extension. Staffing is heavy allowing a ratio of 150-250 farmers per technician. This ratio is deceptive, however, because of the commodity orientation of the services which fragment farm-level effort. Thus, a rice technician under Masagana 99 advises only rice farmers and a corn technician under Masaganang Maisan only corn farmers. The BA][ has 32 field staff whose major effort is directed at disease control, quarantine and regulatory functions and a more limited program of breeding stock improvement and local market development. Extension effort in livestock iis limited and the link between livestock and crop services weak. 2.18 In contrast to the single crop focus of existing agricultural production programs, a reorientation has been initiated under the National Extension Project (Loan 1626-PH), which will assist farmers in all aspects of their production activity. Thus, a farm management technician will advise his farmer cooperators not only on rice but on all crops and animals to be raised on the farm. The existing field level technicians are being reorganiZed. At present both BAEx and BPI have field level staff dealing primarily with crop work. These two staffs are being combined. In addition to organizational changes, the National Extension Project provides vehicles, equipment, offices and training for the extension services and will improve extension methodology. The project has been under implementation since - 14 - mid-1979 and a number of regions, including Western Visayas, have already received vehicles and some staff training; implementation of organizational changes are expected soon, pending decisions at the highest levels in Government. 2.19 Training. Field extension staff of MOA are required to hold a B.S. degree in general agriculture. The primary source of staff is the University of the Philippines at Los Banos (UPLB) which is pre-eminent amongst over 50 colleges in the country giving first degree courses in general agriculture and 21 in animal science. Three of these institutions are located in Iloilo--the University of Iloilo; the Central Philippines University and the Iloilo National College of Agriculture at Lambunau, but these, at present, make only a limited contribution to staff training in the province. Responsibility for in-service training of staff is largely centered in Manila and most in-service programs are carried out at UPLB and IRRI. There is no MOA officer in Iloilo qualified in training with responsibility for training analysis and planning work, and much in-service training tends not to be well tailored to local needs as national programs, however well conceived, are often difficult to adapt to local situations when participants are taken to national or regional centers rather than being trained closer to their work environment. However, specialized technical staff have been appointed at provincial and regional levels in BAEx recently and they have an increasing training role. The National Extension Project (Loan 1626-PH) will add more SMS and introduce systematic training of junior field staff. 2.20 Responsibility for farmer training is fragmented between the many agencies involved in rural extension work and adult education programs sponsored by the Ministry of Education. Farmer training by ]3AEx in recent years has followed a "master farmer approach" whereby successful farmers are selected by extension staff to attend formal training courses with the intention that they provide a model for others to follow, but the numbers involved have been relatively small and their impact limited. There is, however, a growing recognition of the need for rural programs to move towards greater transfer of responsibility for the planning and achievement of rural development goals to the rural people themselves. Support to rural communi- ties to help them initiate their own improvements are planned through pro- grams of the Philippine Training Center for Rural Development (PTC-RD) in the IDA financed Education IV Project, Loan 1374-PH. These, and other, initia- tives are at present proceeding on an ad-hoc basis and there is clearly a need to establish manpower development priorities and clear responsibilities for training and to improve training and management capabilities at local levels. The strengthening of the existing system of Action Committees at barangay and municipality levels through training and guidance to improve their performance could be of great importance in promoting development. All this requires a concentration of input which is largely beyond the scope of national programs. 2.21 Research Services. New technological packages for extension to farmers are developed by research institutions both at the provincial and national level. In the province of Iloilo itself, BPI, BAEx and BAI cooper- ate with national and international research institutions in conducting adaptive research for crops and animals in the different municipalities of - 15 - the province. Examples of these activities are the multiple cropping trials in Oton and Tigbauan where the BPI and IRRI test the productivity and profitability of new cropping patterns in 15 to 30 farms under the joint management of researchers and farmers. Kabsaka (para. 2.14) is another cooperative work of BAEx, PCARR, NFAC and IRRI where a new production package is tested on a commercial scale in a selected barangay. Regular experimental and adaptive research work is undertaken at BPI's four experiment stations in the province. In the livestock sector, the demonstration trials on goats, swine and cattle at Miagao are a joint activity of the provincial and national staff of the BAI. 2.22 Seed Production and Distribution. At present, most of the seed requirements of Iloilo are supplied by BPI and the Iloilo Seed Growers Asso- ciation (ISGA). BPI, with its Iloilo Seed Farm at Santa Barbara, produces the basic vegetable seeds and the Visayas Rice Experiment station at Taro, Iloilo City the required foundation seeds of rice, corn and sorghum. The seed production area is 4 ha at the Seed Farm and 45 ha at the Experiment Station. The basic seeds are distributed to the Iloilo Seed Growers Association for multiplication, supervised by 13 BPI Seed Inspectors. Seed samples are analyzed at BPI's Regional Seed Testing Laboratory, located at Visayas Rice Experiment Station. 2.23 The Iloilo Seed Growers Association had 58 members in 1978, who had approximately 1,000 ha in seed production. Since it has no storage facilities of its own, the ISGA has to rely on commercial warehouse space, where seeds frequently get adulterated with nonseed palay. Seed distribution to farmers is mainly through 23 accredited municipal seed dealers who are under the supervision of ISGA and BPI Inspectors. While the seed production and distribution system in the province is relatively well developed, it is inadequate to meet current and future needs and personnel, facilities and procedures need to be strengthened. Medium-term financing for seed storage is available under the Grain Processing II project (Loan 1269-PH). 2.24 Credit Institutions. The present total agricultural credit require- ment in Iloilo province is estimated at P 357 million, about half of which is met by informal credit. All the major credit agencies purveying rural credit in the Philippines are represented in the province. There are 38 rural banks, two branches of PNB, and one each of ACA, DBP and LBP. One of the rural banks is a cooperative bank with 130 member Samahang Nayons (SN) organi- zed in 1975. Seven rural banks are approved for Integrated Agricultural Financing (IAF) credit; under the IAF scheme, a single loan is made to farmers covering all crops falling into a given 12-month period. There are also several Commercial Banks which provide credit for marketing but generally not for smallholder agricultural production. The PNB and rural banks cater to the bulk of the production credit requirements of the farmers in the area which are provided mainly under Masagana 99. In line with nationaLl experience loans under this program have fallen sharply because of poor recovery and consequent farmer ineligibility. Poor recoveries have made some of the rural banks ineligible for rediscounting from the Central Bank. This, in turn, has led to denial of credit facilities even to prompt repayers of some of the rural banks - 16 - as the latter do not have enough resources of their own to continue rural lending without the assistance of CB. Seven rural banks in the province were in such a situation in May 1979. The efforts currently underway to divorce BAEx staff from credit recovery work will have staffing implications for the banks which point towards a greater need for bank staff training. Ample credit resources are currently available in the local banking system, which has access to the proceeds of several World Bank loans (Fourth Rural Credit, Loan 1399-PH; Second Livestock, Loan 1225-PH; Small Farmers Development (Land Bank), Loan 1646-PH; and Grain Processing II, Loan 1269-PH). 2.25 Marketing Institutions. The private trading sector is the dominant force involved in the marketing of agricultural commodities in Iloilo. Although NGA has a high profile in the rice trade, its quantitative share of total trade is small. In 1978, it purchased only 15,000 tons out of a total provincial production of about 480,000 tons. Total commercial. sales were about 240,000 tons. Since 1975, it has been purchasing and storing palay and by May 1979 had approximately 60,000 tons in storage in the province. Available commercial storage, i.e., that in warehouses and at rice mills, is estimated to be approximately 80,000 tons. In addition to its own storage NGA has rented a significant share of privately owned storage and is now utilizing approximately 75% of total available capacity in the province. This has placed a significant strain on private traders who must now operate with storage equivalent to only about 8% of annual purchases. 2.26 NGA's tentative plans and uncertain future role in the sector during the mid-1970s inhibited investment in the province by the private sector. Lack of unused storage capacity reduced the ability of NGA and private trade to purchase at harvest periods and forced increased storage by the farmers and intermediaries. In particular, incentives to traders to purchase from areas with poor road access had been reduced and sharp price discounts applied when palay offered was of low quality, particularly because of high moisture content. NGA increased exports in 1979 and 10,000 tons were expected to be shipped from Iloilo by midyear. At that time, further shipments were deemed necessary to free storage capacity and allow markets to operate effectively. NGA is currently completing a major storage and milling facility and plans two more for completion by 1981. These will provide an additional 35,000 tons of storage and 30,000 tons of annual milling capacity. 2.27 There are various farmer organizations performing marketing func- tions, but their impact is small. Although 1,500 farmers associations exist in the province, only about 400 are active and only a few engage in commodity trading and storage activities. There are six FACOMAs operating in the pro- vince with varying success. The business volume of these is relatively small, although they enjoy considerable farmer support in the areas where they operate. Lack of working capital and of general Government support has reduced the number of FACOMAs functioning in recent years and has handicapped the development of those still surviving. 2.28 The Samahang Nayon movement promoted by MLGCD is fairly widespread in Iloilo, although it has not advanced far beyond the initial stages and progress is very slow. By 1978, 695 SNs, with about 27,400 farmer members, had been organized, of which 94% had been registered. Their activities in - 17 - marketing have been minor. In 1974, the First Iloilo Area Marketing Coopera- tive, Inc. was formed and presently has 4,130 farmer members belonging to 116 member SNs. The total farm area served by this AMC is 6,660 ha, covering 11 municipaliLties and palay production originating from this area was 23,000 t in 1978. It operates a small rice mill in Santa Barbara, owns storage for some 800 t and two trucks, and engages in palay and fertilizer trade. The Second Iloilo AMC, with 83 member SNs in 14 municipalities is currently in formation. 2.29 Local livestock marketing in Iloilo is relatively well developed in some parts of the province, with seven operational markets located in Jordan, Janiuay, Leon, Miagao, Cabatuan, Calinog and Passi. One more is under construction in San Joaquin and six others are being proposed to cover the north and northeast. Live cattle are transported regularly tc' Manila by ship. However, with the rapidly growing livestock population, continuing improvements in livestock marketing and processing are essential. 2.30 Nutrition in Rural Areas. The most prevalent illness of nutri- tional importance is diarrhea. For Iloilo province, excluding Iloilo City, tentative estimates point toward 429,000 cases of young-child diarrhea per year with an annual mortality of over 2,500 children under six years of age. Some 48% of the Ilongo population is anemic. The apparent adequacy of iron intake suggests that the widespread anemia occurrence may be related to poor iron absorption or utilization and iron loss as well as dietary factors. The intake of Vitamin C, which enhances iron absorption, has shown a decrease of 21.5% over the decade 1965-75. Hookworm, which could in part explain the anemia prevalence, was found in 12.5% of the population. 2.31 All of Iloilo's 43 municipalities have an organized Municipal Nutrition Council and a Nutrition Action Plan. Almost all barangays have an organized Barangay Nutrition Council. By mid-1979, some 50 BNSs had received training and were in position. Plans call for the training of 200 more BNSs over the next two years. These BNS work mostly under the teclhnical guidance of Home Management Technicians (HMTs). Iloilo would receive the full complement of HMTs (one per municipality) allocated from the Bank-assisted National Extension Project. One major new program is the Panay Unified Services for Health (PUSH) which aims at improving the health status of the residents of 600 low-income barangays in Panay Island, 300 of which are located in Iloilo. With a USAID-assisted budget of US$9.7 million, the project envisages over a five-year period to recruit, train and equip 600 Barangay Health Workers; to construct or improve 280 deep wells, 1,200 shallow wells, 5,400 open-dug wells and 40,000 water-sealed toilets; to establish village drugstores; to supply 100 Rural Health Units; to equip four provincial health laboratories; and to provide nutrition and family planning outreach services. Existing Infrastructure and Future Needs 2.32 Roads. The province of Iloilo has a total road length of 3,310 km. Table 2.4 shows the existing roads in the province by type and administration. - 18 - Table 2.4: EXISTING ROADS BY TYPE AND ADMINISTRATION ILOILO PROVINCE, 1978 /a Administration Concrete Asphalt Gravel Unsurfaced Total ------------------ (road length in km) ---------------- National 117.39 132.66 367.19 - 617.24 Provincial 10.36 7.11 759.27 39.37 816.11 Municipal 77.58 25.42 289.75 126.80 519.55 Barangay - - 271.25 1,085.00 1,356.24 Total 205.33 165.19 1,687.46 1,251.17 3,309.14 Percentage (6.20) (4.99) (50.99) (37.82) (100.00) /a Excludes the city of Iloilo and subprovince of Guimaras. Source: Provincial Development Staff, Iloilo. 2.33 Provincial roads are built by the Provincial Engineer's Office (PEO), which is responsible for maintenance. Since 1974, through the Provincial Development Assistnce Program (PDAP), USAID has been providing financial and technical assistance to develop planning, implementing and equipment capabilities for provincial roads. About 70% of provincial and barangay roads are considered to be in fairly bad condition. About 25% of 1,988 barangay roads are not yet linked with major transportation routes; the roads are constructed to low standard, are barely maintained and have temporary bridges in varying stages of disrepair. Of 270 bridges of 7,755 m more than 50% are temporary. Barangay roads are constructed and maintained by the Ministry of Public Highways (MPH). The Bureau of Barangay Roads (BBR) was established under the MPH under Presidential Decree No. 702 in 1975. Though inadequate, Government allocates P 2,500/km annually for maintenance of barangay roads. During floods, most of these barangay roads suffer drainage congestion and, due to lack of maintenance, become impassable. Dislocation of transportation frequently impedes movement of agricultural production. Equipment needed for road maintenance in Iloilo, both under MPH (BBR) and the PEO, is inadequate. The Iloilo PEO initiated a loan of P 32.55 million for the purchase of 158 units of construction, maintenance and support equipment in a five-year acquisition schedule, with delivery starting in 1979. 2.34 Since ongoing road improvement efforts are not sufficient to meet the needs of the province, Iloilo has been included in the Rural Roads project, implementation of which is expected to start in the fall of 1980. Under that project, for which external assistance is likely, rural roads and bridges in the Project area will be improved. Institutions maintaining the roads also will be strengthened. Since implementation of the Rural Roads project and this project would be concurrent, poor roads would no longer pose a serious constraint. - 19 - 2.35 Storage, Processing and Shipment Facilities. The total existing storage capacity in the province is estimated at 80,000 t in mid.-1979. Of this, 64 warehouses in 26 locations with a capacity of 49,300 t, or 68% of total capacity, represented private commercial storage. The remainder is owned by NGA which also had ten buying stations in Iloilo. NGA's purchase and storage policy placed considerable strain on available storage capacity in 1978/79 (para. 2.26). As of the end of 1978, there were 1,092 rice mills in the province, of which 93 were of the cono type and 999 were mobile "kiskisan" units. NGA operated 2 owned and 14 leased mills, and the rest were operated privately. The capacity is adequate to meet existing demand, although operations are hampered by storage difficulties. 2.36 It is estimated that over the period of development of the Project, annual paddy production in the province would have increased by 100,000 tons (or 21%), of which 57,000 tons would be generated by the Project. NGA is constructing two new facilities with a milling capacity of 30,000 tons/year and storage capacity of 32,000 tons. It is anticipated that private sector milling capacity will be increased by extension to ten existing rice mills and construction of five new mills, which with a modest increase in local kiskisan mills will be adequate to meet needs during the project: period. Storage facilities linked to these mills and an increase of 10% storage capa- city on farms, i.e., baskets, small huts, etc., will be adequate to meet local needs. Financing for postharvest facilities, including storage, is available under the Grain Processing II project (Loan 1269-PH). 2.37 The Project would increase the level of production of palay during the August-September period by about 110% from 80,000 t to 166,000 t. This is generally the wettest part of the monsoon when problems of drying and market- ing are to be expected. Given the degree of uncertainty which exists as to the extent of these problems and the high costs of mechanical drying it is anticipated that drying would be largely carried out manually. However, there are indications that about 30 driers would be installed by the private sector with a total daily capacity of 60 tons per day. NGA already has plans to install 3 continuous driers with a daily capacity of 50 tons at its new facilities. This combined capacity is 15% of the expected supplies during the peak drying season and sufficient to meet immediate Project needs while technical and financial alternatives are being further investigated. 2.38 The Project would result in incremental annual production of 20,000 tons of pulses and other grains. Much of this output would be marketed through the same channels as for rice. Since this incremental output would amount to about 8% of the present commercial sales of palay and its market period would not directly overlap with palay marketing, it is anticipated that the local imarketing system would be able to handle this quantity without difficulty. Eight municipalities are planning to initiate livestock markets supervised by BAI. The Project would provide supervisors for these markets (para. 3.11). Shipments of livestock to other islands (principally Luzon) would be by existing private steamer. An additional vessel is being considered by the existing carrier and would not be funded by the Project. - 20 - 2.39 The Philippines is beginning to export rice on a somewhat regular basis using the ports of Manila, Iloilo and Cebu. The quality of rice currently exported is relatively poor and the price received therefore low. Facilities for assembling 5,000 ton lots for export shipment in Iloilo City are inadequate. There is no warehouse near the port with adequate capacity and rice for shipment is assembled from a number of locations. Delays, caused by the need for rebagging grain, are frequent. There is a need for an adequate bag storage facility, preferably adjacent to the existing port, with standardization and bagging equipment. 3. THE PROJECT Project Identification and Preparation 3.01 A national program to promote multiple cropping as a means to raise farm productivity was initiated in May 1971 by the National Food and Agricul- ture Council. With support from IRRI, pilot areas covering 60,000 ha were selected, including a whole province (Pampanga) and 18 municipalities from 11 other provinces (para. 1.11). Iloilo and another pilot province and some additional municipalities were added later. In Iloilo the testing of cropping patterns began in 1974 in three municipalities, and a specialized pilot exten- sion service, called tlKabsaka," was established in 1976 (para. 2.14). The results were encouraging and the possibility of formulating a project based on multiple cropping technology in rainfed areas was discussed between the Bank and the Government early in 1977. An identification mission visited Iloilo in November 1977. The Agricultural Project Preparation Unit of the Ministry of Agriculture, assisted by provincial government staff, completed a draft report by September 1978. A Bank mission visited the Philippines in October 1978 to assist in the preparation of the Project. Project Objectives 3.02 The Project represents the beginning of a multiple cropping techno- logy which may eventually prove to be the most effective means of raising the agricultural productivity of lowland areas which have satisfactory rainfall but which are not suitable for irrigation. It draws on the expe- rience of the highly successful and innovative Kabsaka project initiated in a small area of Iloilo (para. 2.14), and seeks to extend the technology to all suitable areas of the province and, in the longer run, to other provinces in the Philippines which have comparable conditions. In this regard, the project offers the prospect of a breakthrough in addressing the problems of rainfed agriculture. It would support and reinforce other ongoing investments in Iloilo under the national programs to increase their impact on agricultural productivity. A central strategy in this effort to increase the intensity of land use and raise farm incomes would be to apply an approach akin to integrated area development. This approach would stress a comprehensive and balanced development in rainfed areas and facilitate the realization of a broad range of opportunities rather than merely pursuing the narrow focus of having the new technology accepted by farmers. The major elements of this strategy would be the promotion of livestock activities along - 21 - with the crop programs; the construction of scattered water impounding schemes; the improvement of marketing and transport; support for efforts to improve nutrition; the upgrading of institutions and manpower; and assistance to research and to future project preparation. Project Management would focus not only on investment activities under this project but also on the replicability of those activities in other areas of the country and their interaction with nonproject aspects of significant complementarity. Project Formulation 3.03 The Project was first conceived purely as a multiple cropping proj- ect and various provinces were considered. Iloilo was selected for the first of these in a possible series because experimental work in the field had progressed furthest in that province and a capable provincial administration enhanced the prospects for success. During the preparation stages of the project, it became apparent, on the one hand, that many of the basic precondi- tions for the successful introduction of an improved cropping technology were already in place or being developed and, on the other hand, that complementary measures were desirable or even necessary. 3.04 Already in place is an agricultural extension service that is being expanded and reorganized under the National Extension project iniitiated in 1979 (Loan 1626-PH). The rural credit system is well organized and steps are being taken to increase accessibility of funds to farmers. NGA is expanding its grain storage and processing facilities and there is a well-functioning private sector input supply and marketing system. While these elements are, or soon will be, in progress, it was apparent that additional siteps would be necessary to pull them together and enable a quick uptake of the improved technology. Implementation of such a program would require an extensive training effort for farmers, extension personnel and those in r,elated agencies, e.g., banks and cooperatives, and specific attention 'was given to this aspect. The Kabsaka program has already achieved success through organized farmer participation and it would be important to develop this feature during implementation. 3.05 Livestock activities were added to the original proposal to assure the development of balanced farming systems, to reduce farmers' financial risks, enhance the stability of farm incomes and increase production to meet growing national requirements. The resources required are not by themselves large, but rather of a catalytic nature, and are further justified by the fact that this effort is the first of its type in the Philippines. Furthermore, the opportunity was taken to attempt to improve local small-scale water resource use in lowland rice areas not accessible to major irrigation programs through construction of water impounding schemes. The testing of low-cost approaches to the solution of major nutritional problems related to iron- deficiency anemia and associated parasitic infections, and to mortality resulting from acute diarrhea also was considered desirable within the context of the project. Both water impounding and the nutrition component, if successful, are likely to be followed up on a national scale. An examination of the project area revealed serious deficiencies in accessibility and it became clear that extensive road improvements were required to assure the - 22 - orderly marketing of inputs and production. These improvements are to be included in a proposed Bank-funded Rural Roads Project. Project Description 3.06 Components of the proposed Project are as follows: (a) provision of staff support, vehicles, facilities, supplies, equip- ment and breeding stock for the agricultural and livestock extension services to facilitate the efficient transfer to farmers of improved methods of production and improvements in the production and distri- bution of seeds through the upgrading of quality control (paras. 3.07-3.13); (b) support of research and field trials in Iloilo to further improve the multiple cropping technology, and in several locations in Mindanao or other suitable areas to serve as a basis for future projects in the surrounding areas (paras. 3.14-3.16); (c) construction of small water impounding facilities and provision of irrigation infrastructure and related agricultural development in about 40 locations in the province (paras. 3.17-3.19); (d) construction of a grains storage and shipment facility (para. 3.20); (e) training of Government support staff, local bank personnel, community leaders, farmers and farm family members to achieve Project objectives for production, marketing and nutrition, and testing, on a pilot basis, of a comprehensive village development program (paras. 3.21-3.24); (f) provision of supplies, equipment, technical assistance and addi- tional staff to prevent and control anemia and to reduce the adverse effects of diarrhea (paras. 3.25-3.27); (g) provision of consultancy services for the preparation of project proposals suitable for international funding for development of rainfed areas of Western Mindanao, and of a national program of small water impounding facilities (paras. 3.28-3.29); and (h) strengthening of existing institutions at the regional and provin- cial levels to ensure efficient implementation, and provision of a management unit for the Project (para. 3.30). Detailed Features A. Agricultural Production Services 3.07 In determining incremental extension requirements for the Project it has been assumed that the staffing and equipment components of the - 23 - National Extension Project (NEP) would be implemented as planned (para. 2.18). The combined existing plus incremental resources from the two projects would thus meet the province's general extension needs plus the specific needs arising from the proposed multiple cropping and associated )4vestock pro- grams. It is envisaged that, for crops, there would be one program officer per municipality or per ten technicians, one district program officer per eight municipalities, and five specialists per district (generally a soils specialist, a rice specialist, an upland crop specialist, a vegetable specialist and a crop protection officer); there are five crop extension districts in the province. For livestock, there would be one 'Livestock development officer per municipality and three specialists per district (a veterinarian, a cattle specialist and a swine specialist); there are three livestock extension districts. Basically, this project would strengthen the approach under NEP in selected areas rather than alter it; some of the staff changes would be temporary as farmers would require less assistance after successful adoption of the new technology. The total number of personnel employed in the Project area, up through the district level, when fully staffed, i.e., in Project Year 5, are given in Table 3.1. Table 3.1: CURRENT AND PROPOSED STAFF OF MOA, ILOILO Add'tl Add'tl Current NEP for proj. Total BAEx Regional Director 1 - - 1 Regional SMS 2 1 - 3 Provincial management 2 - - 2 Provincial SMS 11 4 - 15 District supervisors - 5 - 5 District SMS - - 20 20 Municipal supervisor 52 - - 52 FMT 314 96 /a - 410 BAI Provincial management 2 1 *- 3 SI4S 3 - 6 9 Breeding station manager 3 - IL 4 Municipal supervisor 19 10 15 44 Market supervisor 9 - 7 16 Technicians 10 - - 10 Breeding station support staff 16 - 20 Regional animal nutrition specialist - - L 1 Laboratory Technicians - - 2 2 /a Seventy of the 96 additional BAEx staff are expected to be staff transferred from BPI under the National Eoxtension Project. - 24- 3.08 Crop Extension. The improved crop production technology would be introduced on a phased basis throughout the rainfed areas of the province over the five years of the project and would be the major focus of the work of the FMTs during this period. In advance of the BAEx promotion of the advanced technology of multiple cropping, demonstration plots would be established and meetings would be conducted at the plots in farmers' fields in all areas in the project area over a five-year period. These plots would be 1,000 sq m or less in size. FMTs would be directed in the presentation of appropriate field trials and provided with kits containing the necessary inputs. It is antici- pated that approximately 50% of some 70,000 farmers in the province operating under rainfed conditions would cooperate closely with the FMTs and adopt a substantial proportion of the proposed practices. The remainder have either already adopted, or are expected to adopt, some practices as a result of intermittent exposure to the extension program. 3.09 With the new additions and transfers from BPI under the National Extension Project, there would be an adequate number of FarmL Management Technicians in the province and no additional staff at that level is pro- posed under the present project. The total field staff will amount to 443, representing a ratio of about 1 per 160 farm households. To provide the necessary technical back-up, the Project would provide 20 Subject Matter Specialists. It would further provide four extension centers; simple meeting halls for about 900 villages; equipment, materials and visual aids; and a small number of vehicles for the extension and other Government staff. 3.10 Livestock Extension. At present the provincial staff of BAI is largely engaged in carrying out vaccination and artificial insemination programs, regulatory activities, the supervision of the seven municipal livestock markets, and the operation of two livestock breeding stations. Under the project, Bureau staff would be released for livestock development activity through the training of barangay level volunteers to carry out routine vaccinations. The LDOs would work through the FMTs in contacting farmers, and would coordinate with the municipal level crop extension officers to develop programs to promote the development of integrated farm operations through the expanded use of forage crops, locally produced feedgrains and crop residues. 3.11 The project would provide 15 additional field staff and four Municipal Supervisors to permit one livestock development officer per munici- pality, supervisors for the seven new livestock markets to be opened in the near future, six Subject Mlatter Specialists, and some support staff. An additional livestock breeding station, including the station manager and breeding animals, would be provided to serve the northeast of the province. An expanded animal health program would be undertaken and, in support of this effort, a small diagnostic laboratory would be developed in Iloilo City, the first such outside Manila. The laboratory would be staffed with two techni- cians. The field staff would be equipped with vehicles. 3.12 Production and Marketing of Seeds. The project would assist the Iloilo Seed Growers Association (ISGA) to provide the necessary services to - 25 - its members such that they would be able to produce all the additional seeds required. The Association would be encouraged to seek credit from existing sources for the construction of seed processing and storage facilities, and for the purchase of seed from its members who would also be eligible for credit for seed production in a manner which is similar to that for crop production. 3.13 The Project would provide funds for extension of the Regional Seed Testing Laboratory operated by BPI at Jaro, Iloilo City. An additional ten seed inspectors would be hired by BPI to augment their existing staff. Each seed inspector would follow up seed production of about 100 ha. The total cost includes salary plus allowances, motorcycles and other small equipment. Details concerning costs and phasing are shown in Annex 1, Table 1. B. Adaptive Trials 3.14 The Project would support adaptive trial work of two types, (a) by BPI at two additional locations in the Project Area (para. 3.15) to further refine-cropping systems to local conditions and to develop forage crops for these systems and (b) at several other provinces with a view to validating the feasibility of the new technology in other areas and laying the groundwork for further projects in these areas (para. 3.16). 3.15 Two sites would be established in the project area at Janiuay and Sara for the adaptive trials to be conducted by BPI. These trials would be in farmer's fields and designed to study the local adaptability of cropping systems and their economic return to farmers. They would alsco conduct demon- stration plantings of promising feed and forage crops in cooperation with BAI. The program would be supervised by an agronomist to be statiorLed at the Visayas Rice Experiment Station. He would also be provided space at the sta- tion for exploratory trials of all possible feed and forage crops useful to the backyard livestock enterprises. Each of the above sites would have a research leader (an agronomist), and the following support staff: Agricul- tural Economist, Entomologist, Plant Pathologist and Soil and Crop Fertility Specialist, and support staff. Travel expenses, supplies, materials., office equipment and vehicles would also be provided. 3.16 Adaptive trials would consist of testing the adaptability of the project cropping patterns in other provinces, primarily in Mindanao. These provinces have rainfall patterns that are as good or better than in Iloilo. Two part-time research leaders would work with full-time research assistants, cooperators and contractual employees. The staff would be provided with offices in each of the locations, office equipment, supplies, vehicles and travel ftnds. Details are shown in Annex 1, Table 2. C. Water Impounding and Irrigation Systems 3.17 The Project would support the construction of small earthen dams. The appraisal is based on 40 dams, 27 of which serving 50 ha each, 6 serving 40 ha each, 4 serving 30 ha each and 3 serving 20 ha each. However, the - 26 - actual numbers being built and the size distribution of serving area could deviate from these target figures as a result of subappraisal findings prior to implementation although the total estimated irrigable area of about 1,800 ha is considered to be the upper limit. The dams would be provided with con- crete triple and emergency spillways to pass a discharge corresponding to a rainfall of 4 in/hour. The dam would be designed for a flood frequency of 25 years. The dams would be provided with unlined main and secondary canals, and on-farm ditches and drains, according to NIA's standard per ha requirement. The drainage system would also follow NIA standards and be provided with road crossings, pipeworks and ripraps. The Project would provide heavy equipment to form one unit for the maintenance of the dams and irrigation systems; survey and office equipment would also be provided. Funds for the development of the numerous other uses of the impounded water, such as fish culture, household and animal consumption, fire protection, generation of electricity, leisure, etc. would be provided by the farmers themselves or from other existing programs. Although the dam sites usually would not be on valuable ground, adequate compensation would be provided to the farmers whose land would be affected. An assurance was obtained at negotiations that, prior to implementation, an evaluation report for systems costing P 900,000 or more would be furnished to the Bank for review and that summary data forms be furnished for the other systems. 3.18 There would'be provision for watershed soil conservation works for 400 ha out of the total catchment areas of about 4,000 ha as a pilot program. Measures for soil conservation in watershed areas that would be provided are reforestation, cover cropping, Ipil-Ipil contour bands, diversion ditches, sodding, and firebands. 3.19 Because of the nature of the terrain in narrow valleys in the low hills bordering the plains, the reservoirs would be relatively small, with a storage capacity of 150,000 cu m to 200,000 cu m. This would be insufficient to store sufficient water to provide full irrigation to 50 ha for a trans- planted dry season rice crop in the traditional manner. Consequently, farmers would apply a Kabsaka-type cropping pattern and available water would be used primarily to supplement rainfall during the main eight-month cropping season from May to December. In most years sufficient water would remain in storage to allow production of a third crop of sorghum or peanuts over about one-third of the commanded area. About 95% of the irrigable area would be cropped in each of the two seasons during the wet months, May-September; September- December, and on average 20% cropping would be obtained in the dry season December-March. The overall cropping intensity would be 205%. Details of the cropping pattern under irrigation are shown in Annex 3, Table 3, and are summarized in Table 3.2. - 27 - Table 3.2: DISTRIBUTION OF IRRIGATED AREA BY CROP SEASON Irrigable Irrigated Areas Cropping area First crop Second crop Third crop Tota
Groupe de la Banque mondiale · Staff Appraisal Report
Philippines - Rainfed Agricultural Development (ILOILO) Project
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