Zambia - Smallholder Dairy Development Project

Document of @;9y The World Bank FOR OFFICIAL USE ONLY Report No. P-3122-ZA REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF ZAMBIA FOR THE SMALLHOLDER DAIRY DEVELOPMENT PROJECT November 20, 1981 This document has a restricted distribution and may be used by recipients only in the perfonnance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = Zambian Kwacha (K) US$1.25 = K 1.00 US$1.00 = K 0.80 GLOSSARY OF ABBREVIATIONS AFC - Agricultural Finance Company, Limited CFC - Cattle Finance Company, Limited CSB - Cold Storage Board DPB - Dairy Produce Board MAWD - Ministry of Agriculture and Water Development NAMB - National Agricultural Marketing Board NBS - National Beef Scheme PMU - Project Management Unit PSC - Project Steering Committee RDC - Rural Development Corporation ZADB - Zambia Agricultural Development Bank ZADL - Zambia Agricultural Development, Limited GOVERNMENT FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY ZAMBIA SMALLHOLDER DAIRY DEVELOPMENT PROJECT CREDIT AND PROJECT SUMMARY BORROWER : Republic of Zambia BENEFICIARIES About 1,800 smallholder families AMOUNT SDR 6.7 million (US$7.5 million equivalent) TERMS : Standard RELENDING : To (i) Cattle Finance Company (CFC): US$2.70 million at five percent per annum, for 20 years, including five years of grace, for on- lending to smallholders at 11 percent; (ii) Dairy Produce Board (DPB): US$1.25 million for milk collection services, for 20 years, in- cluding eight years of grace, with interest at 11 percent per annum capitalized during the grace period; and (iii) Zambia Agricultural Development, Ltd. (ZADL): US$1.85 million for heifer farm development, for 15 years, includ- ing three years of grace, with interest at 11 percent per annum. PROJECT DESCRIPTION: The proposed project is designed to increase dairy production and raise farm incomes in the Mazabuka, Monze and Kabwe Districts of the Southern and Central Provinces, by increasing smallholders use of modern farm techniques by smallholders and improving milk marketing ser- vices. It provides credit to smallholders, developing of a breeding farm,improving animal husbandry and veterinary services and estab- lishing milk collection services. The project would increase production of milk, beef and breeding stock. The main risks con- cern the capacities of the implementing agenc- ies to carry it out and uncertainty about far- mers participation -- their numbers and pace at which they would adopt improved dairying practices. Surveys have determined that there are sufficient numbers of interested farmers. Nevertheless, to reduce risk, this initial project is limited in scope and divided into two phases; implementing the second would de- pend on satisfactory farmer participation in the first. 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.  - ii - ESTIMATED PROJECT COSTS: Local Foreign Total -----US -000