Morocco - Middle Atlas - Central Area - Agriculture Development Project

Document of The World Bank FOR OFFICIAL USE ONLY S i Report No. 3628-MOR KINGDOM OF MOROCCO STAFF APPRAISAL REPORT OF THE MIDDLE ATLAS - CENTRAL AREA - AGRICULTURE DVELOPMENT PRO. December 7, 1981 Europe, Middle East and North Africa Projects Department Agriculture II Division 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 - Dirham (DH) US$1 = DH4.80 DH1 - US$0.208 WEIGHTS AND MEASURES 1 millimeter (mm) - 0.039 inch (in) 1 meter (m) - 39 inches (in) 1 kilometer (km) - 0.62 mile (mi) 1 hectare (ha) - 2.47 acres 1 square meter (m2) - 10.76 square feet (sq ft) 1 cubic meter (m3) - 35.31 cubic feet (cu ft) 1 liter (1) - 0.264 US gallon (gal) 1 hectoliter (hl) - 26.4 US gallons (gal) 1 kilogram (kg) - 2.205 pounds (lb) 1 metric ton (m ton) - 2,205.00 pounds (lb) 1 bar - 14.666 pounds per square inch (psi) 1 kilometer per hour (km/h) - 0.6 mile per hour (mph) GOVERNMENT OF THE KINGDOM OF MOROCCO FISCAL YEAR JANUARY 1 - DECEMBER 31  FOR OFFICIAL USE ONLY ABBREVIATIONS CLCA Local Agricultural Credit Bank (Caisse Locale de Credit Agricole) CNCA National Agricultural Credit Bank (Caisse Nationale de Credit Agricole) CRED Regional Commitment and Expenses Controller (Contro^leur Regional des Engagements et Des Depenses) DPA Provincial Dlrectorate of Agriculture (Direction Provinciale de itAgriculture) FAO Food and Agriculture Organization (Organisation pour l'Alimentation et l'Agriculture) FEC Municipal Equipment Fund (Fonds des Equipements Communaux) FERTIMA, Government Fertilizer Distribution Agency (Socifte Marocaine des Fertilisants) INRA National Institute for Agricultural Research (Institut National de la Recherche Agronomique) MARA Ministry of Agriculture (Ministare de l'Agriculture et de la Reforme Agraire) RCD Rural Construction Directorate (DER - Direction de l'Equipement Rural) RCO Provincial Rural Construction Office (SER = Service de l'Equipement Rural) SONACOS National Agency for Seed Marketing (Societe Nationale de Commercialisation des Semences) UNDP United Nations Development Progran (Programme de Developpement des Nations Unies) USAID United States Agency for International Development (Agences des Etats Unis pour le Developpement International) This document has a restticted 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.  I a  KINGDOM OF MOROCCO STAFF APPRAISAL REPORT OF MIDDLE ATLAS - CENTRAL AREA - AGRICULTURE DEVELOPMENT PROJECT Table of Contents Page I. INTRODUCTION 1 II. THE AGRICULTURAL SECTOR CONTEXT 1 A. Place of Agriculture in the Economy 1 B. Agricultural Performance 2 C. Agricultural Planning and Sectoral Resource Allocation 3 D. Sector Issues Relevant to the Middle Atlas Agriculture Development Project 4 E. Bank Involvement in the Agricultural Sector 7 III. THE PROJECT AREA 9 A. Location, Climate, Land and Water Use 9 B. Population and Social Organization 9 C. Land Tenure, Land Use and Ownership 10 D. Production 11 E. Agricultural Support Service 12 F. Infrastructure 13 G. Existing Development Actions and Constraints 14 IV. THE PROJECT 17 A. Project Objectives and Approach 17 B. Description of Project Components 17 C. Status of Studies 22 D. Project Costs 22 This report is based on the findings of an appraisal mission in April 1981, composed of Messrs. N. Imboden (Mission Leader, Economist), S. Darghouth (Rural Engineer), J. Doolette (Agriculturalist), J. Hall (Livestock Expert), and C. Holloway (Consulting Forester).  E. Financing 23 F. Disbursements 24 G. Procurement 25 H. Environment Impact 26 V. PROJECT IMPLEMENTATION 27 A. Project Implementation Strategy 27 B. Project Management 29 C. Monitoring, Evaluation, Accounts and Audits 34 VI. BENEFITS AND JUSTIFICATION 36 A. Production 36 B. Marketing 37 C. Prices 39 D. Beneficiaries, Benefit Distribution and Nutritional Impact 41 E. Cost Recovery 42 F. Economic Analysis 44 VII. MAJOR AGREEMENTS REACHED AND RECOMMENDATIONS 47 ANNEXES Annex I Project Costs and Disbursements Table 1: Project Costs 49 Table 2: Estimated Schedule of Disbursements 52 Annex II Procurement Procedures 53 Annex III Selected Documents and Data Available in Project File 54 MAPS IBRD 15865R1 IBRD 15866R1 IBRD 15898R  KINGDOM OF MOROCCO STAFF APPRAISAL REPORT OF THE MIDDLE ATLAS - CENTRAL AREA - AGRICULTURE DEVELOPMENT PROJECT I. Introduction 1.01 The proposed Project would help implement an integrated agro-sylvo-pastoral development strategy for the unevenly utilized resources in five communes of Morocco's mountainous Middle Atlas region. The Project would aim to (i) increase the production of basic commodities (meat and cereals), and hence improve the standard of living of the rural population; (ii) develop underutilized forest resources through rational management ana exploitation, ana integration of wood and forage production; and (iii) develop the resources of collective rangelands by rational range and livestock management. The Project was selected because of (i) the importance to Morocco of its forest and range resources, which account for about 40% of Morocco's total land area, and the urgency of reversing the rapid degradation of these resources; (ii) the necessity of developing the, existing timber and fuelwood resources to reduce Morocco's increasing imports of timber and energy; and (iii) the need to develop employment opportunities and ,income generating activities in Morocco's traditionally neglected mountain areas. The proposed Project would support the Government's agricultural sector strategy of increasing agricultural self-sufficiency and reducing social and regional income disparities by creating employment in aepressed areas (para. 2.07). 1.02 Th- eroject area of more than 500,000 ha has been sel- ed because (i) it represents conditions and development potential found throughout the extensive Middle Atlas region (approx. 5 million ha); and (ii) it has natural resources, existing pilot actions, well-understood technical issues and a population aware of the development constraints. The Midelt and Azrou areas are contiguous, covering the high value cedar forests and the surrounding collective range and cropland, all of which are exploited in an integrated manner by the tribes (para. 3.03). The Moulay Bouazza region is geographically separate. Its production system, integrating cropland, forest range and highly degradea forest lands is representative of many areas in Morocco. 1.03 The Project was identified in the spring of 1979 by an FAO/CP identification mission following recommendations of a World Bank economic mission and agricultural sector work. It was prepared by a multidisciplinary team of central and regional Moroccan staff under the guidance of the Livestock Department of the Mlinistry of Agriculture and with the assistance of FAO/CP. II. The Agricultural Sector Context A. Place of Agriculture in the Economy 2.01 Morocco's 20 million population (1980), which is growing annually at 2.9%, is 60% rural. GDP growth rate increased to 7.3% per year in the  period 1973-77 through high levels of investment but a disequilibrium developed with an increasing debt service ratio. An initial stabilization program reduced investments and imports at the cost of reduced GDP growth ana increased unemployment. In 1980 the Government adopted a structural adjustment strategy aiming at narrowing the external resource gapwhile accelerating growth through (i) import reductions, (ii) export promotion, and (iii) improved sectorial investment allocations. 2.02 Agricultural output has grown at an average annual rate of 2.4% for the last 15 years, a lower rate than in other sectors and less than the population growth rate. Hence the relative contribution to the economy is declining, and since 1974 Morocco has been a net importer of food. Absolute job numbers in agriculture are increasing although the share of agricultural employment in the overall labor market (40%) is decreasing. 2.03 Agriculture contributed about 13% to Morocco's GDP (1978-1979), down from about 20% at the beginning of the seventies. Crop production contributed 62%, livestock 35%, forestry and fishery about 3% to the agricultural GDP. Agricultural exports accounted for about 36% of total exports in 1977-79 down from about 58% in 1971-1973. Fruit and vegetables account for about 46% of all agricultural exports. Agricultural imports have doubled in volume and tripled in value over the last ten years, but the proportion of agricultural imports to total imports has decreased from about 30% in 1971-1972 to 26% in 1978-1979. Wheat, oils and sugar account for about 2/3 of total agricultural imports. B. Agricultural Performance Distribution of Agricultural Resources 2.04 Morocco has a total land area of 50 million ha of which 7.4 million have soils and climate suitable for cropping; 21 million ha in semi-arid or mountain regions are suitable for grazing only and forest covers 5.1 million ha. Of the arable area, which is largely privately owned, 760,000 ha were irrigated in 1979. Of the 7.4 million ha under cultivation, 4.5 million are in cereals, 0.5 million in pulse crops, 0.4 million under fruit trees, and 1.6 million ha are left fallow each year. The state owned forest estate includes 0.4 million ha of forest plantation, 4.7 million ha of natural forest and woodland and 2.7 million ha of esparto grass land. Livestock production is primarily extensive, based on grazing of natural pasture land and of state owned forest. These grazing lands, which are generally collectively utilized, are overstocked and low yielding due to poor management. Natural regeneration of forests is seriously hampered by indiscriminate access of animals. Intensive livestock production, although growing rapidly in irrigated and high rainfall areas, still accounts for only a small part of national milk and red meat production. Agricultural Performance 2.05 Performance has varied between products, zones and sectors. Development in the rainfed sector has stagnated and crop yields have progressed only marginally; cereal, olive and meat production show no long run improvement and the production of pulses has declined. Low overall  -3- yields and production are largely the result of using poor farm technology, limited investment in the rainfed sector, lack of a coherent price policy and absence of effective Government support services. By contrast, in the irrigated sector, crops for which modern farming techniques, support services, guaranteed and remunerative prices and markets have existed, progress has been rapid. Forest production is limited. Industrial timber production covers about 25% of the country's requirements, shortages are particularly acute for sawlogs and mining timber; more than 50% of cork and 80% of pulp are exported. Moroccan forest also provides more than 10% of national livestock forage supply. C. Agricultural Planning and Sectoral Resource Allocation 2.06 Achievement of more rapid agricultural growth and reduction of the food trade deficit are the major issues facing the agricultural sector in order (i) to lessen the drain on the balance of payments caused by sharp increases in food imports; and (ii) to improve the living conditions of the rural poor. Addressing these issues will require a major change in strategy and policy to (i) increase investments in the rainfed subsector so as to improve the productivity of agricultural practices; (ii) modify pricing policies to reduce uncertainties and provide incentives to farmers to increase production particularly in rainfed areas; (iii) improve agricultural support services; (iv) promlote rational land use by adapting the land tenure to modern farming requirements; and (v) promote agricultural exports. The Proposed Five-Year Development Plan (1981-1985) 2.7 Th, Gbveinment's objectives in -Hr'u,lture are: (i) increased self-sufficiency by increasing production of staple food in the rainfed areas, and by intensifying production of industrial crops (sugar, vegetable oils, cotton) in the irrigated area; (ii) increased exports of off-season vegetables and fruit; (iii) reduction of social and regional income disparities by creating employment in depressed areas and by channeling increased investments to poverty areas; and (iv) improved marketing of production through increased processing of products and through improved marketing. 2.08 To attain these objectives the Government proposes: (i) to increase public investment in agriculture and reallocate investments within subsectors and regions to favor the rainfed subsector and regions suffering from underinvestment; (ii) to favor projects which are directly productive, shorter term, and less capital more labor intensive; (iii) to increase the effectiveness of public investments and policy by strengthening planning and evaluation capacity; (iv) to follow a price policy which will ensure equitable returns to the farmer and stimulate domestic production of imported products; (v) to promote rational and intensive use of resources by revising the Investment Code and by adapting land-ownership systems; and (vi) to strengthen support services. 2.09 The proposed Project would contribute to the Government's effort to reallocate investments within Agriculture in favor of the livestock and forestry subsector. In particular, the Project would help implement management systems for the development of rangeland and agricultural support services for mountainous areas.  -4- D. Sector Issues Relevant to the Middle Atlas Agriculture Development Project Agricultural Price Policy 2.10 The Government intervenes into the price structure of produce and production factors through regulation of supply and through subsidies. Public marketing enterprises purchase durum wheat, barley, and maize at official support prices. The prices of bread wheat, most industrial crops, and milk are fixed by Government. Subsidies are provided to wholesalers and processing industries to maintain low fixed retail prices for flour, bread, sugar, vegetable oil, and milk as well as for fertilizer and seed of high yielding varieties. Additional subsidies are provided directly to farmers to encourage the use of farm machinery and other farm investments. Agrarian Reform Cooperatives and Farmers' Associations receive special investment incentives. The Government has begun corrective measures by increasing prices of agricultural products and by a correction in the exchange rate (para. 2.11). 2.11 The Government attempts to guarantee a high enough producer price to entice production, and yet maintain low retail prices for consumers. This policy has been successful for milk and sugar. For cereals the official prices had not kept pace with the increases in production costs. However, over the last few years the Government has readjusted the prices of the major products: official cereal prices (fixed or support prices) have increased by over 100% during the last 4 years while prices for industrial crops (sugar, cotton, oilseeds, etc.) have kept pace with increases in production costs. It is considered that the new price structure for different products is sufficiently attractive to stimulate increased production and are in line with projections for international prices (Annex XIX of Project File). 2.12 In order to stimulate the use of modern inputs, and to offset the penalty on agriculture caused by the unfavorable structure of effective pro- tection, Government subsidizes farm inputs, notably seed of cereal varieties, fertilizers, water and credit. Subsidies for cereal seeds amounted to DH 16 million (US$4 million) for about 33,000 t (1978/79). The amount of fertili- zer subsidies varies with the fluctuations of world market prices. In 1980 subsidies amounted to about DH 130 million (US$32 Million) or about 22% of the economic cost of fertilizers. Water charges for irrigation are very low and do not cover operation and maintenance costs. Corrective measures have been taken by the Governmment (para 2.23). Interest on loans to small farmers (7.5%) are below the inflation rate (11% in 1979/80). The Agricultural Investment Code provides for subsidies for farm investments such as pure bred cows (20%), animal sheds (20%) animal drawn equipment (30%) and for fruit plantations (up to 50%), and special subsidies for farm cooperatives. The impact of price intervention on the agricultural sector is not completely understood, although the evidence suggests that agriculture and export industries are penalized overallll. A study on the effects of subsidies is underway and financed under the Loukkos Project (Loan 1848-MOR). /1 This is the result of the study on prices, subsidies and resource management executed as part of the Bank's economic missions. The results are confirmed by Project analyses which consistently show a higher economic rate of return for farm budgets than their corresponding financial rates.  Land Tenure 2.13 Land tenure in Morocco does not suit the requirements of modern farming. Private land ownership in Morocco is skewed, with about 75% of the farm families owning 25% of the land having 5 ha or less. The 1.9 million farms are excessively fragmented into 11.6 million parcels with average parcels of 0.64 ha which is too small for efficient farming. Absentee landlords who hold land for speculation either do not cultivate it, or have it cultivated by tenant farmers who have no security of tenure. Collectively owned land, representing about 30% of total cropped and grazing land, is mismanaged, as collective members lack an incentive to undertake improvements. These land tenure problems have restricted the use of modern production techniques and agricultural credit. Tenant farmers are reluctant to invest and the agricultural bank (CNCA) does not provide credit for collective land. The Government of Morocco attempts to address land tenure issues through the Investment Code and through land reform measures. The proposed Project would address the issue of collectively owned rangeland through the implementation of a new strategy for developing collective lands (para. 4.02). Poverty 2.14 About 85% of the rural population in Morocco is dependent on rainfed agriculture and about 45% of Moroccan families live at, or below, the rural absolute poverty level ot US$270 (1980) per capita. The zones of poverty are predominantly in mountain, forest and arid areas of Morocco. To address the poverty problem, projects are' needed that introduce more appropriate farming methods, improve land tenure, develop pasture land and forest production, control erosion, integrate livestock and crop production and that provide access for small farmers to advice, credit and services through the organization of farmers. The proposed Project would be the Government's first attempt to develop the agro-sylvo-pastoral resources of Morocco's Middle Atlas areas through a participatory development approach based on a dialogue with the traditional social units. Livestock and Range Development 2.15 Animal production is very important for small farmers both as a source of protein and as an instrument for wealth accumulation. Traditional livestock production which is associated with crop cultivation through stubble and fallow grazing, is heavily dependent on the forage resources of range and forest lands which supply about 1/2 of the forage needs. Range productivity is declining due to overgrazing and mismanagement. Productivity of traditional livestock is low due to (i) inadequate nutrition and poor health; (ii) their genetic characteristics; (iii) inefficient herd composition due to their use for wealth accumulation rather than production; (iv) lack of shelters and water points; and kv) lack of incentives to produce milk due to inadequate milk collection. 2.16 The Government neglected the livestock subsector during the last development plan period by allocating to it only 4.3% of agriculturai  -6 investments while the sub-sector contributed 35% of the agricultural GDP. The investments emphasized intensive production on irrigated lands and in high rainfall zones. 2.17 The range has not received adequate attention from Moroccan authorities even though past experience (the Aarid perimeter and the Ranch Adarouch) has demonstrated the technical possibilities for improved range management (paras. 3.24,3.25). In the absence of a development strategy, attempts to generalize these experiences have been piecemeal and with little success. 2.18 The new Development Plan (1981-1985) recognizes the importance of livestock within agriculture, and of the range within the livestock subsector. The share of livestock investments in total agricultural investments would more than double (11%) and over half of the livestock investments would be in the traditional grazing areas. Based on past experiences the Government has elaborated a strategy for the improvement of rangeland based on the organization of the local population and the integration of agro-sylvo-pastoral resources. The proposed Project would implement this new strategy. Forestry Development 2.19 The National Forest Policy enunciated by the Government in 1976 requires conservation of resources, increase in productivity to satisfy most of the country's requirements for forest products by the year 2000, and maintenance and improvement of cover to reduce soil erosion, protect water *catchments and arrest the encroachment of deserts into agricultural land. Development of Morocco's forestry resources has been slow and the major constraints to development include; (i) paucity of inventory data and the low percentage of potentially productive forest under management; (ii) low productivity of much of the natural forest and inadequate support for reforestation; (iii) slow progress in soil erosion control and water catchment protection; (iv) lack of operational programs and experience in the management of stock, grazing in forest areas resulting in damage and overgrazing in many Moroccan forests; (v) absence of data and experience in long-term integrated pest management in forest areas, notably for defoliating insects; and (vi) weakness of infrastructural support, notably in roads, buildings and vehicles. The Government is taking two major steps towards a more rational utilization of the presently underutilized forestry potentials. These are (i) doubling of forestry's share of agricultural investments to 8% ot that alloted to agriculture; (ii) defining a strategy for sylvo-pastoral development. The proposed Middle Atlas Project, by contributing to the management of Morocco's natural forest and by promoting integration of sylvicultural and pastoral activities, would be an essential part of Government's attempt to address the sectorial constraints. The issue of forest plantation establishment would be addressed by a Forestry Project being developed concurrently. c  -7- Agricultural Extension 2.20 Agricultural extension is organized through 225 work centers. Most of the effort of extension agents is directed to distributing inputs to farmers, collecting agricultural statistics, and enforcing regulations. Extension agents have not been very successful at diffusing new technology for these reasons ana also due to: (i) their frequent lack of practical farming experience and communication skills; (ii) weak research-extension linkages; (iii) lack of systematic s6heduling of activities; and (iv) lack of responsibility, accountability, authority and a proper incentive system. All of these resulted in a combination of poor staff efficiency, low status, low pay, and low morale. A reform began in July 1980 with the establishment of a Directorate of Extension Service and with the definition of a reform program consisting of (i) the establishment of homogeneous extension regions with locally adapted extension objectives and messages; (ii) integration of research, extension and training; and (iii) mobilization of extension agents by increasing their accountability and by establishing an incentive system. Before widescale adoption, these correctional actions would be field-tested in representative zones, of which the zone of the proposed Project would be one. Agricultural Research 2.21 Morocco's agricultural research is unuertaken on 68 research stations and in 20 laboratories. Major research themes are plant improvement, plant protection, genetic improvement of livestock, pastoral development, and food technology. Although some positive results have been achieved, in particular in the development and production of new cereal varieties, the results are insufficient. The major constraints are: (i) insufficient attention to a farming systems approach; (ii) lack of adequate human, physical and financial resources; (iii) inadequate institutional set up, administrative procedures ana low salaries; (iv) insufficient coordination between researchers; and (v) insufficient communication with farmers and little verification of recommended practices in farmers' fields. To overcome these constraints the Government created a semi-autonomous National Institute for Agricultural Research (INRA) in December 1980, responsible for coordination of agricultural research and its execution. The Institute is presently establishing a Master Plan for agricultural research. The proposed Project, by integrating research with extension and by subcontracting problem oriented research topics to INRA, would contribute to the implementation of the national research program (para. 5.12). E. Bank Involvement in the Agricultural Sector 2.22 The Bank's agricultural sector strategy in Morocco supports the Government's objectives and strategy in agriculture defined in paras. 2.07 and 2.08. Bank group lending for agriculture in Morocco began in 1965 and, to date, 14 projects have been undertaken and supported by US$505.0 million in Bank/IDA funds (US$24.0 million in IDA credits). They include five irrigation projects: Sidi Slimane (FY65, completed), Sebou I (FY70, completed), bouss Groundwater (FY75), Doukkala I (FY76 completed) and Doukkala II (FY77). There have also been four agricultural credit projects  -8- (FY66, FY73, FY77, and FY79), an agro-industries and flood control project (Sebou II, FY74), three rainfed agricultural development projects (Meknes FY75, Fes-Karia-Tissa FY78 and Loukkos FY80); and one export oriented project (Vegetable Production and Marketing Project, FY79). 2.23 Performance of Bank-financed projects has generally been satisfactory. Performance in irrigation projects has been good once initial problems of land distribution, organization delays in construction and in acquisition of irrigation equipment had been overcome. Inadequate cost recovery is the major issue. The implementation of a recently decreed increase of irrigation water cnarges by about 100l will contribute to the solution of the cost recovery issue. A completion report for the Sebou I project was submitted on April 29, 1981. The report stresses the project's success in institution building and in providing infrastructure to achieve increases in the production ot irrigated crops. It also stresses the importance of extension, the timely allocation of funds for O&M, as well as the collection of water charges due and the completion of land reform as a remaining challenge to ensure achievement of the investments's economic and financial potential. Performance of the four agricultural credit projects has been good. OED reports for three of them are available (Report 2543, June 15, 1979, Report 3248, December 23, 1980)/l. These reports stress the contribution made by these loans to agricultural development, their success in establishing an efficient credit institution and the successful expansion of credit to small farmers. They also stress the importance of agricultural price policy, extension and input distribution for improved economic and financial performance of the credit loans. These issues are being addressed through Bank sector work. The Fourth Agricultural Credit Project has recently run into liquidity problems due to Government's tight credit policy and the 1980/81 drought which resulted in rescheduling of farmers' debts. Adequate measures to deal with these temporary problems are being taken. In the rainfed subsector, the first project (Meknes FY75), experienced considerable implementation delays due to land redistribution problems, poor preparation of project components, over-optimistic assessment of implementation targets, and inexperience in the organization and management of rural development projects. Th' Fes-Karia-Tissa Agriculture Project was designed to minimize organization and management problems encountered with Meknes and is performing well. The Loukkos project, which has recently become effective, has already made a good start. 2.24 Lessons from the above projects have been considered in the design of the proposed Project. Start-up delays, which have been experienced by most projects in Morocco, would be minimized because of (i) the close involvement- of the Moroccan authorities in Project preparation; (ii) the participation of the population in Project design; and (iii) the nomination of key personnel and the availability of first year designs and work plans. Project management issues would be properly addressed because of (i) the integration of Project management into the existing structure of support services; (ii) the involvement of the local authorities, who are responsible for the coordination of public services, in Project preparation; and (iii) the /1 The First Agricultural Credit Project was reviewed in OED's Report on Agricultural Credit Programs, Background Paper No. 4.  -9- establishment of regional coordinating committees under the chairmanship of the Governors. These committees have proven their usefulness in the Fes-Karia-Tissa Project. III. The Project Area A. Location, Climate, Land and Water Use 3.01 The Project area consists of forest, range and agricultural lands totalling about 516,000 ha and covering five communes in two provinces (Ifrane, Khenifra) in the Middle Atlas region-/l. In addition the Project would cover about 66,000 ha of contiguous forest in the communes of Irklaouen and El Hamma m2. The area can be divided into three zones: (i) the low altitude zone comprising mostly private agricultural land covering about 175,000 ha (34% of Project area); (ii) the middle altitude zone mostly collective rangeland which comprises about 187,000 ha (36% of project area); and (iii) the high altitude zone comprising state owned cedar and holm oak forest and forest rangeland (about 154,000 ha or 30% of Project area). Elevations range from about 800 m to 2,500 m and the precipitations increase with altitude and northern exposure from 300 to 1,000 mm. Dry, hot summers in the plains and cold, harsh winters in the mountains limit the length of the vegetative period resulting in seasonal deficits of animal feed. In general, the soils are shallow and, in the Azrou area, very stony, and limit the use of modern agricultural practices. The Project area is within the watershed basins of the oueds Beht, Oum-er-Rbia, and Guigou in the Ifrane Province and within the Moulouya Basin in the Khenifra Province. The flows of these rivers are subject to marked seasonal variations. The Azrou area has substantial surface water resources and about 10,000 ha are presently irrigated. The availability of water resources is a serious constraint to the agricultural development in Khenifra (para 4.16). B. Population and Social Organization 3.02 Population density is relatively low and varies from 9 to 32 per km2 due to the large area of forest and range where residence is illegal. Out of 110,000 people, 80,000 or 12,800 families depend on agriculture. Relatively low population growth (2% compared to 2.9ko average for Morocco), a very young population (up to 50% of the population is less than 25 years old), and a resulting low proportion of active population (about 30%) all indicate important outmigration. -Reasons are poverty, seasonal underemployment, few development activities, and low level of services. Poverty and underemployment are particularly pronounced in the Midelt area. /1 The five communes are Timahdite and Ain Leuh (Ifrane Province, Azrou Circle) Itzer, Boumia (Khenifra Province, Midelt Circle), and Moulay Bouazza (Khenifra Province, Khenifra Circle). /2 El Hamman is in Khenifra Province and Irklaouen in Ifrane Province.  - 10 - 3.03 The social organization is tribal with tribes, fractions or subfractions (according to commune) each possessing a territory comprising (i) private crop land, (ii) collective grazing land, and (iii) rights to graze state forest land. In the past, to adapt to the availability of forage the groups migrated with their animals from the low elevation grazing areas in the winter to the forest and mountain pastures in the summer. A traditional committee of representatives of each group (jemaa) has been responsible for the management of collective land. This traditional system has become less effective in the last 50 years because (i) population pressure caused low elevation grazing lands to be taken for cropping; (ii) Government policy of protecting the forest from grazing reduced the grazing area available to each group; (iii) the association by tribal rightholders, with capital from outside, increased the number of animals dependent on range. Thus the seminomadic mode has given way to a more sedentary exploitation. The lowlands are used for crops while the rangeland and forest grazing areas are exploited during the longest possible period, leading to overgrazing of rangeland and degradation of the forest. C. Land Tenure, Land Use and Ownership Land Tenure 3.04 The proportion of state, collective and private land in the Project area is as follows: % of Land Area Ain Leuh/Timahdite Itzer/Boumia Moulay Bouazza Total State Land 28 15 62 30 Collective Land 55 37 - 36 Private Land 17 48 38 34 State land is forest and grassland; collective lands are mainly range, but include some cropped area. Most private land is arable, although some is range. State land is well delimited and the tribes have the usufruct of the grassland and dead wood for domestic purposes. A large part of collective lands in the Azrou area has been delimited, but this is not the case in the Midelt area, where the boundaries between collective range and private land are often disputed. The large majority of private land is not registered and mostly derived by the customary law of prolonged peaceful occupation of collective land. Existing legislation now prohibits further appropriation of collective rangeland. Land Use 3.05 In the forest area of 220,000 ha, cedar is the most valuable species. It occupies about 51,000 ha, at elevations above 1,500 m. Holm oak covers 125,000 ha in all areas throughout the range of cedar, in mixture with it, and below. There are approximately 7,000 ha of pine and eucalyptus plantations, mainly at low elevations. 3.06 The grazing area amounts to about 300,000 ha of whichi about 85,000 ha are forest lands, 28,000 ha open grasslands in the forest and 187,000 ha collective rangeland.  - 11 - 3.07 The agricultural area of about 175,000 ha is mainly used for cereals (54%). Fallow amounts to about 40% of the area. Forage and an occasional spring crop uses the remainder. Irrigated land accounts for about 12% or total area: fruit trees and vegetables are grown in the lowland, while potatoes are an important cash crop in high elevations. Due to water limitation, however, most irrigated land is under cereals and only partly irrigated. Land and Animal Ownership 3.08 The overall average farm size is 14 ha ranging from 7 ha in the more procuctive Azrou area to 22 ha in Midelt. Land distribution is skewed with the smaller farms only viable if the major part of their income is from livestock. Almost 70% of the herds accounting for 30% of the livestock are in herds of less than 100 animals. The relationship between land and livestock ownership is as follows: Farm Size % of Farmers % of Area % of Livestock Midelt Area Small ( (6.7 ha) 75 23 42 Large >(67.6 ha) 25 77 58 Moulay Bouazza Small Z. (7.4 ha) 61 32 43 Large