Announcement of IDA Credit to Zambia for Smallholder Dairy Development on December 17, 1981

' ' I FOR IMMEDIATE RELEASE · . •World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 IDA NEWS RELEASE NO. 82/24 Contact: Pushpa Schwartz December 17, 1981 (202) 477-5306 IDA CREDIT TO ZAMBIA FOR SMALLHOLDER DAIRY DEVELOPMENT Milk production in Zambia will be encouraged with the assistance of a SOR 6.7 mill ion ($7.5 mill ion) credit from the World Bank's concessional lending affiliate, the International Development Association (IDA). Smallholder dairy farming is important to the diversification of Zambia's economy, which is now heavily dependent on copper. The government's immediate objective is to reverse a trend that saw, over the last 15 years, the number of commercial dairy farmers decreasing from 120 to 40, with the short-term goal of a 40% increase in milk production by 1983. Following recent increases in producer prices, commercial dairy farmers have begun to expand their herds and production facll ities, and milk production is expected to increase. • The government also hopes to stimulate production by a growing number of market-oriented "emer~ent farmers'' who are engaged in milk produc- tion. Over the longer-term, the greatest potential for milk production 1 ies with the traditional smallholders, who account for the bulk of Zambia's fresh milk output, mostly for subsistence and sale at the village level. Under the development project, costing a total of $11.7 million, the use of modern dairy-farm techniques will be encouraged among smallholders in the Southern and Central Provinces. Surveys have determined that a suf- ficient number of farmers are interested in the project. However, bec~use changing traditional methods of production poses problems and uncertainties, the project is designed as a limited two-phase pilot operation. The first phase will include the districts of Menze and Mazabuka in the Southern Pro- vince. If the response from farmers is satisfactory, the project activities will be extended to Kabwe District in the Central Province. About 1,800 smallholder families are expected to participate. Over six years, the project's objectives will be to establish a dependable milk collection service, to improve animal husbandry and veterinary ser~ices, to establish a breeding farm to produce crossbred dairy cattle, and to provide credit to smallholders for estab1ishment of dairy farms. The IDA credit of SOR 6.7 million to the Republic of Zambia is for • 50 years includino 10 vears of orace; it will be interest-free but carries a service charge of 3/4 of 1% a year to cover IDA administrative costs. The credit will be committed when funds become available. NOTE: IDA credits are denominated in SDRs (Special Drawing Rights), which are valued on the basis of a 11 basket 11 of currencies. The U.S. dollar equivalent of the SOR amount of the IDA credit reflects the exchange rates existing at the time of negotiation. FORM NO. 1121 (5-76) T E CHN I CA L DAT A PROJECT: COUNTRY: TOTAL COST: Smallholder Dairy Development Zambia $11.7 million (inc1uding $0.2·million in taxes an~ duties) • IDA FI NANC ING: SOR 6.7 million ($7.5 million), on standard IDA terms OTHER FINANCING: Government of Zambia, $3.4 million Farmers, $0.6 million IMPLEMENTING ORGANIZATION: Ministry of Agriculture and Water Development Mulungushi House P. 0. Box 50197 Lusaka, Zambia It is designed to increase dairy production and raise PROJECT DESCRIPTION: farm incomes in the Mazabuka, Monze, and Kabwe Districts 9f the Southern and Central Provinces, by increasing the use of modern farm techniques bi·i~illholders and improving milk marketing services. It will provide credit t~ small- ~_ga 'bO"Tuii-h.a.nd~!}=-1.P.POrt development. of...~_J~r~ed i r:19.. farm, _i.mp.royg~ent o{\;1nim~T _tiµsband.ry -.Y.~t-~r!nary ~ervt~es, and establishm.e,:1t of mi_lk collect_ion s~rvices. _ ...• PROCUREMENT: Contracts of $100,000 or more for the purchase of vehicles, spare parts, machinery, equipment and supplies, about $0.8 million in aggregate, will be awarded under international competitive bidding. Domestic ~~~~.n.uJac:turers'will be gra~tecf"a preference of f5%, or ttie existing 'ra~t~:Qf.·.~uty ~ver the_ cost of imports c.i.f., whichever is lower. Purchases of vehicles, machinery, equipment, and supplies costing less than $100,000 will be based on local competitive bidding in accordance with government procedures. Cattle for the Chi samba ranch, expected to cost $0.6 million, will be purchased at regularly scheduled public sales in adjacent bountries, with additional purchases from suitable sources after advertising. Since civil works (mainly buildings, water supplies, road maintenance, land clearing, and pasture improve- ments}, which are expected to aggregate about $1.4 million, will be too small and scat- tered to attract international interest, the work wi11 be carried out under contracts awarded ~fter local competitive bidding (in which foreign firms could compete}, or by force account. CONSULTANTS: The Project Management Unit will require an internationally recruited project manager with livestock experience, and a financial co~troller. ECONOMIC RATE OF RETURN: ESTIMATED COMPLETION DATE: 17% 1988 - 0 - •