Romania - Sadova - Corabia Agricultural Credit Project

Document of FILE COPY The World Bank FOR OFFICIAL USE ONLY Report No. 4260 PROJECT PERFORMANCE AUDIT REPORT ROMANIA - SADOVA-CORABIA AGRICULTURAL CREDIT PROJECT (LOAN 1083-RO) December 30, 1982 Operations Evaluation Department 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. ABBREVIATIONS BAFI - Bank for Agriculture and Food Industry CAP - Agricultural Production Cooperative IAS - State Agricultural Cooperative ICB - International Competitive Bidding MAFI - Ministry of Agriculture, Food Industry and Water FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT ROMANIA - SADOVA-CORABIA AGRICULTURAL CREDIT PROJECT (LOAN 1083-RO) TABLE OF CONTENTS Page No. Preface ............................................................ i Basic Data Sheet ................................................... ii Highlights .......................................................... iii PROJECT PERFORMANCE AUDIT MEMORANDUM I. SUMMARY ............................................... 1 II. MAIN ISSUES ............................................. 4 A. Integrated Dairy and Beef Fattening Component ............................. 4 B. Procurement ...................................... 6 C. Measuring Project Success ........................... 7 Annex I - Comments from BAFI ....................................... 9 PROJECT COMPLETION REPORT I. Introduction .......................... 13 II. Project Implementation ................................... 17 III. Operating Performance ................... ..............24 IV. Project Institutions and Performance ..................... 35 V. Rates of Return ................................... 41 VI. Conclusions and Lessons Learned .......................... 43 ANNEXES 1-26 MAP - IBRD No. 11176 (PCR) 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.  PROJECT PERFORMANCE AUDIT REPORT ROMANIA - SADOVA-CORABIA AGRICULTURAL CREDIT PROJECT (LOAN 1083-RO) PREFACE This is a performance audit of the Sadova-Corabia Agricultural Credit Project in Romania, for which Loan 1083 was approved on January 28, 1975 in the sum of US$30 million. The final disbursement in respect of this Loan was made on March 5, 1980. The audit report consists of an audit memorandum prepared by the Operations Evaluation Department and a Project Completion Report dated August 23, 1982 prepared by the Europe, Middle East and North Africa Regional Office based upon a country visit in April 1982 and on a final report prepared by the Borrower. The audit memorandum is based on a review of the Appraisal Report (No. 582a-RO) dated January 14, 1975, the President's Report (P-1555-RO) of January 15, 1975, the Loan Agreement dated February 6, 1975 and the PCR. Correspondence with the Borrower and internal Bank memoranda on project issues as contained in relevant Bank files have been reviewed and Bank staff asso- ciated with the project have been interviewed. A draft report was sent to the authorities concerned on October 26, 1982 and comments received have been introduced into the text or appropriately footnoted. The letter is reproduced as Annex I. The audit finds that the PCR covers adequately the project's salient features and the PPAM generally agrees with the conclusions.  - ii - PROJECT PERFORMANCE AUDIT REPORT ROMANIA - SADOVA CORABIA AGRICULTURAL CREDIT PROJECT (LOAN 1083-RO) BASIC DATA SHEET KEY PROJECT DATA Appraisal Actual or Actual as % of Item Estimate Estimated Actual Appraisal Estimate Total Project Costs (US$ million) 59.5 60.7 a - Loan Amount (US$ million) 30.0 30.0 - Date Board Approval *01/28/75 01/28/75 - Date Effectiveness 05/07/75 04/29/75 - Date Physical Components Completed 12/31/82 12/31/82 - Proportion then completed )- - - Closing Date 12/31/79 12/30/80 121/b Economic Rate of Return (%) 17 11 65 Institutional Performance uneven Agronomic Performance uneven Number of Direct Beneficiaries (1982) 3,400 + State and 2,750 + State and cooperative farms cooperative farms CUMULATIVE DISBURSEMENTS FY75 FY76 FY77 FY78 FY79 FY80 FY81 Appraisal estimate (US$ million) 0.6 5.5 11.7 18.7 26.0 30.0 - Actual (US$ million) - 3.5 14.9 21.1 25.1 27.2 30.0 Actual as % of estimate - 63.6 127.3 112.8 96.5 90.6 100.0 Date of final disbursement 03/05/80 Principal repaid to (mo./day/yr.) (US$ million) 08/31/82 3.56 MISSION DATA Date No. of Mandays Specializations Performance Types of Mission (mo./Yr.) Persons in Field Represented/d R ne Trend/f Problems& Identification 06/73 Borrower Pre0aration 11/73 Borrower Appraisal 04/74 4 28 Supervision 1 05/75 2 7 b,d 1 1 - Supervision 2 03/76 2 5 b,d 1 1 - Supervision 3 10/76 2 3 b,d 2 2 M Supervision 4 04/77 1 4 d 2 2 H Supervision 5 07/77 4 5 a,b,d,e 2 1 M,T Supervision 6 03/78 3 4 a,b,c 2 1 M Supervision 7 09/78 1 5 d 1 2 M Supervision 8 04/79 2 3 a,d 1 2 - Supervision 9 04/80 2 3 a,c 1 1 - Completion 04/82 1 10 b OTHER PROJECT DATA Borrower Bank for Agriculture and Food Industry Executing Agency Bank for Agriculture and Food Industry Fiscal Year January 1 - December 31 Name of Currency (abbreviation) Lei Currency Exchange Rate: Appraisal Year Average US$ 1.00 - Lei 20 Intervening Years Average US$ 1.00 Lei 18 Completion Year Average US$ 1.00 Lei 15 Follow-on Project: n.a. /a Includes exchange adjustment of US$1.7 million. Tb Closing date was delayed 1 year due to delays in construction of the Premix plant. 7E See PCR paras. 5.01-5.02. T_ a - agriculturist; b - agricultural economist; c - financial analyst; d - agroindustries specialist; and e = livestock specialist. /e 1 - problem-free or minor problems and 2 - moderate problems. /f 1 - improving; and 2 - stationary. T M - managerial and T - technical.  PROJECT PERFORMANCE AUDIT REPORT ROMANIA - SADOVA-CORABIA AGRICULTURAL CREDIT PROJECT (LOAN 1083-RO) HIGHLIGHTS The project was identified in 1973 at a time when Government policy was directed towards realizing the greater potential which could be obtained from the agricultural sector while also taking steps towards alleviating underemployment particularly in the rural areas. This project, which was only the second in the Bank's agricultural lending program to Romania and the first for the agricultural credit sector, was expected to fulfill both these objectives. Support would be given to finance a time slice of a ten year investment program intended to bring a 74,600 ha newly constructed irrigation scheme into full production. The scheme would create production and employ- ment opportunities in the Sadova-Corabia region which, because of its sandy soils, was one of the poorest in Romania. The Government was also concerned that the bulk of the investment chanelled into the region would be to the cooperative associations, which historically had not benefitted in investment terms to the same extent as had the state farms. The principal project investment, the dairy and beef fattening component only marginally benefitted the project area. At project completion, it was found that of the 10,308 heifers purchased from Holland, Germany and Denmark and distributed to 20 farms, only six of the farms were in the Sadova- Corabia region. Of the 7,024 heifers located outside the project area, almost 5,000 are on state rather than cooperative farms. The area under treecrops was similar to appraisal estimates, with greater numbers of cooperative enterprises benefitting than originally planned. Implementation of all other subcomponents was according to plan except the premix plant which experienced construction delays. Agricultural production reached or exceeded appraisal expectations in respect of orchard and vineyard development largely as a result of adaptive research undertaken at the Bechet Research Station which, in conjunction with project farmers, enabled a suitable technical package to be tested and employed. Technical coefficients in respect of the livestock components were below appraisal expectations, insufficient quantity and quality of forage and feed concentrates was a major factor. The feed mill and grain silo remain underutilized. The economic rate of return recalculated at project completion is 11% compared to 17% at appraisal. An estimated 2,500 permanent and 1,000 seasonal workers are employed as a result of the project, in line with appraisal expectations. The principal lessons arising from project experience include: (i) development in the Region was undertaken on a systematic basis, beginning with adaptive research, followed by construction of irrigation infrastructure, - iv - thereafter the financing of on-farm development and processing facilities, (PCR, para. 6.02); (ii) the balance between institution-building and Bank supervision has to be carefully struck; the livestock component clearly suffered in this regard. New livestock investments in Romania should be postponed until existing farms are adequately stocked and fed (PCR, para. 6.03); (iii) The Bank did not insist strongly enough that training be under- taken. This could have gone a long way in ameliorating farm management problems encountered by the project and would also have provided Romanian technicians with opportunities to analyze alternative technologies for modern- izing the dairy sector (PPAR, para. 10; PCR, para. 1.04). Points of special interest concern: - The quality of life in rural Sadova-Corabia has improved substan- tially while the population has increased, in part through reduction in migration of existing families and in part through attraction of new families to the project area as a result of increased employment opportunities (PCR, para. 5.03); - ROMAGRIMEX gained valuable experience in ICB procedures (PPAR, para. 10); - the difficulties of measuring project success when the project objectives of the Bank and Borrower were based on different assump- tions and different tools of analysis were used for selecting amongst alternative projects (PPAR, para. 21). - 1 - PROJECT PERFORMANCE AUDIT MEMORANDUM ROMANIA - SADOVA-CORABIA AGRICULTURAL CREDIT PROJECT (LOAN 1083-RO) I. SUMMARY 1. While agriculture contributed only approximately 16% to national income in 1973, the year this project was identified, it provided 30% of total foreign exchange earnings and was the dominant sector in terms of population. Over 50% of the population were located in the rural areas with agriculture providing employment for 42% of the labor force. At the time this project was identified the Government had become increasingly concerned both to increase capital investment in agriculture, primarily for irrigation to ensure against recurrent drought induced crop failures, and to alleviate underemployment. Furthermore, the Government was anxious to channel investment towards the cooperative associations (CAPs) to -restore a balance with the state units (IAS's) which previously had received priority in terms of natural resources, financial investment and supply of inputs. 2. Shortly after becoming a member of the World Bank in 1972, the Government requested Bank support for a time slice of investments planned for 1971-81 in the Sadova-Corabia region. Construction of a 74,600 ha irrigation scheme along the Danube in South-west Romania began in 1970 and was expected to be completed in time for the 1974 cropping season. The Scheme was intended to level and irrigate the Sadova-Corabia region which, because of its sandy soils, was one of the poorest in Romania. 3. The project, therefore, was based upon a ten year investment program for on-farm development and processing facilities designed to bring the Sadova-Corabia Irrigation Scheme into full production. The basic strategy of the program was to intensify cultivation of crops benefitting most from irrigation, to develop the livestock sector and to provide the necessary processing facilities for the produce of the region. The project, which was the first Bank-supported agricultural credit project in Romania, would sup- port about 40% of the investment program. Credits under the project would be extended to Cooperative and State farms to establish about 2,050 ha of orchards and 2,000 ha of vineyards. A fruit handling and storage complex would be constructed for the increased production while 15 refrigerated trucks would also be provided to transport fruits and vegetables to domestic and export markets. A leaf analysis laboratory would also be established. The project would also support the establishment of eight complete dairy farms with provision of imported heifers for four additional farms then under construction. Integrated with the dairy farms were two beef fattening farms which would purchase and fatten male calves from the dairy farms. In support of these livestock components a feed mill and silo, together with a plant to supply feedmills with pre-mix concentrates, would be established. Machinery - 2 - and equipment for farm mechanization services to cooperatives would also be financed together with technical training under a program to be approved by the Bank. 4. Total project cost, including physical and price contingencies for imported materials and equipment, was estimated at US$59.5 million, of which about US$23 million was expected to be in foreign exchange. No provision for price contingency was made on local cost in view of the negligible inflation rate prevailing in Romania. Cooperative associations would contribute the equivalent of US$1.3 million or 2% of project costs, state-owned farms and enterprises US$3.8 million or 7%,!/ with the authorities concerned contri- buting the remainder, US$24.3 million. 5. The project would be administered by the Bank for Agriculture and Food Industry (BAFI) which was established in 1968 following the renewed emphasis given to the development of the agricultural sector. BAFI's branch offices in the Dolj and Olt districts would be responsible for the direct supervision and financial control of the subprojects implemented by coopera- tives, state farms and state agro-industrial enterprises. The Ministry of Agriculture, Food Industry and Water (MAFI) would retain overall respon- sibility for project coordination and implementation which included all necessary arrangements for international procurement. 6. At full development in 1985, incremental annual production is expected to be 22,000 tons table and wine grapes, 19,600 tons of peaches, 5,100 tons of cherries and apricots, 2,570 tons of beef together with 430 heifers, 2,080 calves and 366 ML of milk. In addition, about 144,000 tons of animal feed and 110,000 tons of concentrates would be produced annually. Gross value of production was expected to increase by US$14.8 million of which about US$4.5 million was estimated exports, generating approximately US$7 million in foreign exchange at world prices. The Government attached special importance to the project as a means to alleviate underemployment and poverty in the project area. In 1973, total population within the project area was 120,000 inhabitants, principally women and older people, the families of cooperative members. The average annual income of a cooperative member in 1969 has been estimated at Lei 5,200 (US$260) or about half the national average for cooperative members. It was anticipated that the project would generate full time employment for 2,600 skilled and unskilled workers, with temporary work for about 3 months a year for 3,300 persons. It was also expected that incomes of the cooperative members would rise by at least 50%, enabling their income to approximate that of the IAS workers. The economic rate of return of the project was estimated at approximately 17%. 7. A major change during project implementation, the extent of which was not fully comprehended until completion, was in the number of dairy farms financed by the project and in the distribution of imported heifers on these farms. Quarterly progress reports supplied to the Bank by BAFI, giving 1/ Funds are, in fact, supplied from the State budget. - 3 - details of which dairy farms were being financed or provided with cattle varied throughout project implementation with farms being dropped or added as the project progressed. At completion the investment list supplied by MAFI shows greater divergence with only 6 project-financed dairy farms located in the project area and a further 14 outside the project area scattered over 7 districts. As a result, only 3,284 of the total 10,308 heifers purchased by the project have benefitted the project area, the herd sized ranged from 485-640 compared to 830 at appraisal. Of the 7,024 heifers which are located outside the project area, almost 5,000 are o state rather than cooperative farms with one alone receiving 1,100 heifers.1. 8. The area under tree crops was similar to appraisal estimates, the principal change during implementation being reduction in average farm size, at the request of the authorities concerned to allow a greater number of cooperatives to participate. At the recommendation of the sub-borrowers and the research station, a greater range of fruit was cultivated and planting densities were increased. Implementation of all other subcomponents was according to appraisal estimates with the exception of the premix plant which suffered construction delays principally as a result of shortage of labor. The plant has not yet started operating. 9. Agricultural production has exceeded appraisal expectations in terms of orchard development, while average yield for the vineyards is about 85% of projected full development estimate. Technical coefficients for the livestock components are below appraisal estimates. In respect of dairy production, the lower than expected number of heifers per farm is clearly responsible for the overall lower milk production figures. Milk yield per cow is also about 20% below appraisal estimates, in part because of decreased quantity and quality of both forage and feed concentrates. Beef fattening coefficients are also poorer than was expected, with high levels of emergency slaughter, ranging from 16-21% of total animals slaughtered. Investments in agroindustries resulted in substantially lower returns with the feed mill and grain silo both underutilized, while the technical training component was not utilized. The PCR re-estimates the economic rate of return at 11%. An estimated 2,500 permanent and 1,000 seasonal workers are employed as a result of the project. No information is available in respect of increased income. 10. Institution building was not a major objective of this project, however, BAFI staff were introduced to a new methodology of project evaluation and analysis. ROMAGRIMEX has also gained valuable experience in ICB proce- dures. Furthermore between preparation and appraisal the Bank supported the addition of a technical training component for BAFI-s agronomists, economists, livestock specialists and horticulturalists. While this issue was continu- ously pursued by Bank supervision missions, the component was not utilized and 1/ BAFI states that the important issue is the promotion of activities which will lead to herd productivity above traditional parameters. The fact that all farms to be assisted by the project have been esta- blished and show reasonable yields since inception is the main accom- plishment of the dairy subcomponent. funds were eventually reallocated. The Bank did not insist strongly enough that training be undertaken despite the farm management problems which, undoubtedly, adversely affected implementation of both the livestock compo- nents of this project. BAFI and MAFI staff have undertaken overseas training courses, through bilateral aid programs; further projects may consider co- financing with other donors in respect of training programs. These would also provide an opportunity for Romanian technicians to be exposed to a variety of technologies which would be of benefit given the Government's wish to modernize the dairy sector.!I II. MAIN ISSUES A. Integrated Dairy and Beef Fattening Component 11. Livestock is an important sector in Romanian agriculture, contrib- uting almost 42% of total output in 1974. Dairy production comprised almost 25% of livestock production. At negotiation, the loan amount was increased from US$25 million to US$30 million at the specific request of the Government of Romania in order to finance more dairy farms. 12. Despite frequency and continuity of Bank supervision missions, not enough attention was given to implementation of the livestock component, particularly when the project was, in effect, overseeing the introduction of industrialized forms of cattle production by cooperative associations more accustomed to small size herds and employing labor intensive techniques. The underlying causes of poor milk yields and beef fattening program, i.e. inadequate feeding techniques, were not pursued vigorously enough. 13. At appraisal, it was expected that BAFI would onlend to the coopera- tive rather than to state farms for the establishment of, and the provision of cattle for, 12 dairy farms. The traditional design of integrated dairy and feedlot fattening complexes was for a herd size of 200-450 heifers. The buildings were of standard design in accordance with MAFIs plans, with the mix in on-farm investment between buildings and machinery being heavily weighted towards the former. Traditional labor intensive techniques were employed. About 80% of these complexes were to be found in the cooperative sector. 14. The appraisal report did not envisage any significant change in the design of, or methods employed on, these complexes, only that the capacity would be increased to 830 cows per farm. Despite this considerable increase 1/ BAFI comments indicate that 9 Romanians employed by the concentrate plant at Craiova received training in Holland and Switzerland. Engineers from the dairy farms received 1-2 years of training in the USA financed under bilateral assistance. 2/ Cattle and Sheep Subsector Survey Romania, Volume I, Report No. 3174-RO dated May 27, 1982. - 5 - in herd size per farm, supervision missions tended to concentrate more on other issues, most notably procurement of cattle. Thus while almost US$10 million of Bank funds have been disbursed in respect of the purchase of over 10,000 imported in-calf heifers, their location and grouping were not closely monitored by the Bank or BAFI and remained uncertain until enquiries were made by the project completion mission. 15. At appraisal, it was expected that 8 new dairy farms would be financed and stocked with 830 imported heifers each. In addition, a further 4 cooperatives would each receive 830 imported heifers for dairy farms then under construction. Until the fourth Supervision Mission in April 1977, project records showed that these investments were proceeding according to the appraisal plan. The investment list then changed, with 2 farms being dropped and replaced by two others. By the time of the sixth mission in March 1978, the list was revised again, with one cooperative being dropped and three added. Indications are that the additional two farms (both of which were outside the project area) were added to offset the shortfall in numbers which would have ocurred as a result of the average herd size being reduced by the Bank from 830 to 696 cows, since total cattle to be procured remained similar to appraisal estimates. At completion, MAFI supplied a list of dairy farms which had benefitted from the project. Five project financed farms, together with one where livestock only was provided, were no longer recorded. Only 6 dairy farms remain in the project area, while 14 state farms and cooperatives outside the project area stock the remainder of the imported cattle with the majority of these being state owned. 16. Furthermore, there was little effort to confirm that the cattle were being grouped according to appraisal estimates. It was not until the April 1978 supervision mission that confirmation was requested by the Bank to the effect that each dairy farm comprised 830 heifers. BAFI submitted a revised list showing only 696 per farm, which the Bank acceded to since a "reduction to a 500 cow herd (i.e. milking herd) is expected to have an insignificant impact on the viability of the investment." This issue of the herd size was not followed up thereafter, as a consequence, at project completion, the 6 dairy farms within the project area held between 485-600 imported heifers, with only 492 cows being milked on average in 1982 compared to 556 which could be milked given the facilities available. This has adversely affected the financial returns and highlights the need for improved farm management. 17. Experience gained from this project has resulted in the introduction of modern housing and milking systems in the Livestock IV (Cattle) Project. Such a change was not anticipated in this project, and several supervision missions commented on the outmoded milking techniques where cows are kept in tie up barns and milked by bucket machines in the stalls. It was felt that these methods were too labor intensive and tended to contribute to the inci- dence of mastitis. Given, however, the fact that reduction in underemployment is regarded as a principal priority in the Sadova-Corabia region, some thought should be given to the proposed nationwide changeover to these modern large- scale units which are more capital than labor intensive. Since the region is - 6 - largely comprised of people who are not particularly mobile - in that the majority of working age males have already left the area, investigation will be required into what alternatives forms of employment or part-time employment are available to the people of this particular region if modern techniques are introduced and what would be the costs to the economy if alternative employment was not readily available.l/ The question as to what yields are obtained in very large herd sizes where heifers are inadequately controlled by the workers is also relevant. 18. The principal concern of the Bank during project implementation in respect of the dairy component centered on milk yields. Poor milk yields were attributed to low quality feed but apart from commenting on this fact, there is no indication that this particular issue was taken up by the Bank. While milk yields improved during implementation, by project completion the per cow yield remained 20% below appraisal estimates. At appraisal, it was expected that each dairy farm would have approximately 400 ha of irrigated land, 250 ha of which would be under alfalfa, the remainder fodder and maize for silage. The completion report states that only 250 ha was allocated to forage produc- tion; barley or wheat was produced o the remaining 150 ha of irrigated land instead of green feed as projected.2i Since it is apparent that field crop cultivation for animal feed is regarded as something of an innovation in more traditional parts of Romania, closer supervision of this particular aspect would have been warranted particularly when the inadequate quantity and quality of fodder could not easily be made up by concentrates, which were in short supply in the project area. At the same time, increasing fodder produc- tion in Romania would involve wider issues which are often better addressed at the national rather than the project level. 19. Through the period (1975-80) that this project was implemented, agricultural production in Romania lagged. Official production figures depict an impressive growth in output, but there has been a sharp decline in net exports of agricultural products while food shortages emerged within the country in 1980. Official Government policy requires that each district be self-sufficient in basic foodstuffs which, in irrigated areas, usually leads to sub-optimal cropping patterns. Furthermore, when shortages of inputs, particularly fertilizer, occur, they would be saved for food, rather than animal feed, production. In addition to shortages in quantity of forage available, supervision missions drew attention to its generally poor quality. Payment for forage is on the basis of volume rather than quality. Good quality alfalfa needs to be harvested just prior to the seed head emerging; if, however, the time of cutting is delayed, the output per ha in weight terms 1/ The Region states: "The concern about employment opportunities for displaced workers by mechanization of milking methods is unwarranted. The rate of mechanization of Romanian agriculture has not kept up with the migration of agricultural workers to other sectors of the economy." 2/ BAFI points out that additional fodder was made available by crop produc- tion farms. - 7 - increases but the nutritive output declines.!l The fact that State respon- sibility for field crop production is separate from that for livestock produc- tion probably also compounds this situation and is an issue which must be tackled at the central/national level. The economic benefits to be obtained from improving forage quantity and quality are considerable, however, partic- ularly given the importance of both dairy and beef production to the Romanian economy. Concentrates can substitute for poor quality forage but at consider- ably higher cost. It has been estimated that the value of total agricultural raw materials and foodstuffs imported between 1975-80 increased threefold to US$1.1 billion and that most of the increase was for feedgrains.!/ B. Procurement 20. While the total amounts expected to be procured under ICB or on the basis of international price comparisons were similar to appraisal estimates, procurement problems were of sufficient magnitude and appear to have diverted the attention of the supervision missions from the technical aspects of project implementation. While the problems did not approach the scale evi- denced in the Bank's first agricultural project in Romania,.! procurement was the primary concern and consideration of every supervision mission until almost the end of the project. Problems were diverse in nature although the most long standing concerned difficulties with Schedule 4, Section A of the Loan Agreement. This stipulated that plant and machinery for the fruit handling and storage complex as well as for the feed mills and silo should be grouped together, where feasible, and awarded on the basis of agreement between the Bank and the Borrower. This had been the subject of discussion at negotiation and, while the agency concerned unilaterally awarded contracts for the purchase of plant and equipment for these components, the Bank after considerable investigation concluded that technical integrity had been main- tained. Of the US$37.1 million of materials, equipment and livestock which was expected to be procured through ICB or competitive foreign bidding, US$16.4 million was paid directly to foreign suppliers.4/ 1/ Cattle and Sheep Subsector Survey, Romania, Vol. I, op. cit. 2/ BAFI disputes in its comments the validity of comparing area specific problems with developments at the national level. In their view, matters are much more complex and need to be subject to a more systematic ana- lytical approach. BAFI also questions the Bank's Cattle and Sheep Subsector Survey and points to the fact that the Romanian authorities have issued detailed comments which contest most of the report's conclu- sions. 3/ Romania Giurgiu-Razmiresti Irrigation Project (Loan 1082-RO), OED Report No. 3322. 4/ BAFI states that all procurement under the loan has been made with due attention to the provisions of the Bank-s Procurement Guidelines and with the Bank's agreement. - 8- C. Measuring Project Success 21. This project highlights the difficulties in measuring the success of the investment when the project objectives of the Bank and the Borrower are predicated on different assumptions and when different tools of analysis for selecting amongst alternative projects are used. The Borrower sees the primary responsibility for mobilizing resources and setting demand through production quotas resting with the State. The Bank, while expecting projects to contribute to national income, views the responsibility for generating capital to rest at the farm or enterprise level. Furthermore, since domestic prices are strictly controlled within Romania, and basically reflect produc- tion costs, the success of the project from an internal Romania accounting view is likely to be different from that obtained when shadow pricing to reflect international prices is employed. 22. The project was identified and prepared almost entirely by the Borrower. From the time, however, that the Bank was approached to finance the project, the Bank was aware of the difficulties involved in establishing measures for determining the success of the project. It was recognized that special attention would have to be given to the cost benefit analysis, ques- tions were also raised regarding the rationale for the project overall and on the efficiency of the production, processing, pricing, marketing and credit systems. 23. Discussions at appraisal, however, centered on the overall size of the loan, the interest rate at which the subloans would be onlent and procure- ment. No economic rates of return were calculated for any of the subprojects, despite the controlled pricing system prevailing in Romania. Financial rates of return were calculated but, since the Government assumes all benefits to accrue to the State rather than to an individual farm or agro-industry, this appears to be rather an academic exercise. Clearly it would have been of value to the Bank if economic rates of return for the individual subprojects had been calculated at appraisal. 24. Even if the common yardstick by which the Bank measures the success of its investments had been utilized, the basic difference in the assumptions underlying the objectives of the Bank and Borrower remain. Thus prior to appraisal, the Bank expressed the view that the timing of the processing facilities investment was not optimum and that detailed marketing information together with careful calculation of rates of return would be required. At completion, the processing facilities are underutilized, but given the Govern- ment-s policy of estimating demand, fixing production targets accordingly and then building up the necessary capacity, it is difficult to see how this policy, which differs considerably from that of the Bank, can be accommodated within the objectives of a single project. Annex I - 9 - Page 1 BANCA PENTRU AGRICULTURA SI INDUSTRIE ALIMENTARA December 9, 1982 - PRESEDINTE - Mr. Shiv S. Kapur Director Operations Evaluation Department Dear Mr. Kapur, Re: your letter of Octomber 26, 1982 concerning Project Performance Audit Report Sadova-Corabia Agricul- Tural Credit Project - Loan o83-RO We consider that the project has been successfully imple- mented being in line with the estimated investment costs and the ti- ming provided in the loan agreement. The project ensured the complex development (crop production, livestock, storage and processing faci- lities) of a poor area from the south-west of Romania, the establis- ment of modern agricultural farms to bring under operation the san- dy soils and to ensure the increase of income for the farmers in the area. The involved Bank staff as well as other specialists who pa- yed a visit in the area, before and after the project, ascertained the major changes occured as a result of the common efforts both from the Bank side and from the involved competent authorities side. The project was a model for the similar investments which have been implemented in other areas in Romania and in my opinion, the gained experience could also be shared by the Bank in other countries. We agree upon the Bank's conclusions refering to the project implementation, except the following paragraphs for which we are sen- ding enclosed our comments: 1. Audit and Final Reports Please replace the term "government" wherever appears in the text with the term,"the involved competent *uthorities", since the government established the guidelines for the whole country and the task of the project implementation was under the responsability of the involved authorities at the level of each district. 2. Para. 18 and 19 to the Audit Report We cannot agree with the extension of some comments from the project area level to the national level (fodder production, fer- tilizers, storage facilities, raising and fattening animal systems) and we propose to you to delete them from the text, since the mat- ters are much more complex, and they are not the subject of this re- port and need a more systematic approach. Also, we propose to you 0 / - 10 - Annex I Page 2 to delete the references to the Cattle and Seep subsector survey on which the Romanian authorities have issued the detailed comments which contest most of the Bank conclusions. 3. Para. 7 and 15 - Audit Report We consider that there were too many comments in relation with the distribution of purchased in-calf heifers under the project. In my opinion, the distribution of the heifers to the farms and lo- calities is not the most important matter (this being otherwise the major business of the livestock engineers), but it is the management of operation activities, so that in such an arid areas with low herds to develop livestock in modern farms, with a productivity which is higher than in the traditional style. The fact that all the farms provided in the project have been constructed and give reasonable yields since the first years, it is the main achievement for the dairy farms component, which must have been emphasized much more in the Audit Report. 4. Para. 18 - Audit Report Refering to the fodder basis we consider that there is a misunderstanding. Besides those 25o ha alloted to the dairy farms, they are also used 125-15o ha for maize silage, as well as fodders under the double crop system on the other areas from the crop pro- duction farms. There are some problems as regarding to the quality of fodders. The necessary measures have been taken up for the establish- ment of the leaf analysis laboratories in each district and we hope that this matter would be solved soon. 5. Para. lo - Audit Report and 2.16 Final Report As far as the overseas trainning of the romanian staff is concerned we would like to determine clearly that for the premix plant in Craiova which benefits by the imported technology, 9 people have been trained in Holland and Switzerland, the expenses being co- vered under the proceeds of the loan. Our livestock engineers from the dairy farms made trainning courses in U.S.A. for 1-2 years under bileteral cooperation programs. Besides,the involved staff in the project was also trained in the country in the research stations. We consider that the required professibnal training was ensured and it was not justified from the economic point of view to waste the available funds, which finally have beqn realocated. 6. Para. 2o - Audit Report and 2.17 Final Report All the procurements under the loan proceeds have been made with due attention to the provisions of IBRD Guidelines and with the agreement of the Bank. We consider inadequate the comments concerning procurements and we propose to you to revise them. These comments represent BAFI and MAFI points of view and we hope that they would be carefully considered by you. Best regadre, I.Rusinaru Pr4eident - 11 - PROJECT COMPLETION REPORT ROMANIA SADOVA-CORABIA AGRICULTURAL CREDIT PROJECT (LOAN 1083-RO) Regional Projects Department Europe Middle East and North Africa Agriculture III  - 13 - PROJECT COMPLETION REPORT ROMANIA SADOVA-CORABIA AGRICULTURAL CREDIT PROJECT (LOAN 1083-RO) I. Introduction 1.01 Project Background. On December 15, 1972 Romania became a member of the World Bank. In the spring of 1973 the first Economic mission visited Romania and subsequently issued a report entitled "The Economy of Romania" dated November 21, 1973. During the mission's stay the Government had submitted a list of agricultural projects for possible Bank financing. Among the projects were Giurgiu-Razmiresti Irrigation Project (Loan 1082-RO) and Sadova-Corabia Agricultural Credit Project (Loan 1083-RO). The Giurgiu- Razmiresti Irrigation Project was completed in May 1979 and a Project Performance Audit Report was distributed to the Executive Directors in February 1981. The Sadova-Corabia Agricultural Credit Project (located in South Western Romania - Olt and Dolj Districts) is the second agricultural (the first credit-type) project assisted by the Bank. To date Bank's total lending to Romania amounts to US$2,184.1 million for 33 projects. In the agriculture sector 15 projects (2 Agricultural Credits, 8 Irrigation, 4 Livestock and 1 Flood Recovery) for a total loan of US$976.5 million have been approved from 1975 to 1982. The findings of this report are based on a Completion Mission that visited Romania in April 1982, a final report prepared by the Borrower and project-related document available in the Bank. 1.02 The Agriculture Sector. Despite its declining share in the national income of Romania, from 17.1% in 1975 to 11.6% in 1980, agriculture continues to play an important role in the economic development of Romania. During 1976-1980 agriculture accounted for 32.5% of total labor force, 17.6% of total investment, 13.8% of the social product and 14% of foreign exchange earnings. The 1976-1980 Five Year Plan assigned the agriculture sector with the task of meeting the domestic food and raw material requirements, surplus for exports and maintain adequate reserve stock. The production results, which are influenced by myriad of factors including, the organization of agriculture, availability of inputs, weather and general agricultural policies are given below: Average 1976-1980 Agricultural Production ---------------Million----------------- Achievement Index Planned Actual Plan = 100 Cereals (tons) 21.2 19.4 92 Industrial Crops (") 10.1 6.9 68 Vegetables (") 9.0 7.3 81 Fruit and Grapes (") 3.9 2.9 74 Milk (hl) 60 48.9 82 Cattle (No.) 7.6 6.5 85 Pigs (") 13.0 11.5 88 SHeep & Goats (") 19.6 16.2 83 - 14 - 1.03 Despite the unfulfilled production targets, Romania has enjoyed a 6% annual growth rate in the agricultural sector, one of the highest in middle income countries. The potential for Romania agriculture is far greater than the actual performance of 1976-1980. Romania is endowed with rich fertile soils and ample water resources for irrigation. As of 1981 about 2.3 million ha have been irrigated and 2.6 million ha drained. 1.04 The principal constraints to increased production in Romania are four-fold. First, Romanian agricultural has suffered from inadequate supply of essential inputs such as fertilizers and other chemical inputs. In 1979/80 only 136 kg of active substance per hectare of arable land was applied compared to 312 kg in France. Often, because of Government's high priority given to foreign exchange earnings, domestically produced fertilizers are diverted to exports in spite of underfulfilments of the domestic needs. Second, natural calamaties - heavy precipitation ano droughts put major toll annually on agricultural production. It is estimated that an additional 2.7 million ha can economically be irrigated to mitigate the effects of drought and 5 million ha require drainage works. Thirdly, the rapid outflow of the labor force from agriculture to other sectors has outstripped the rate of mechanization. In 1960, about 65% of the labor was in agriculture compared to 30% in 1980. During the same period however, the number of tractors per 1,000 ha of arable land has increased by 30% and the number of harvesters showed a marginal increase. Finally, emanating partly from lack of adequate incentives, poor farm management, in both crop and livestock production, is stifling the potential for faster and higher rate of growth of agriculture. The completed project was designed to alleviate some of these constraints and contribute to agricultural production in the Sadova-Corabia region. The Government's regional development policy put an emphasis on investment package to utilize newly reclaimed sandy soil. Project Identification and Preparation 1.05 The Sadova-Corabia region covers a total area of about 80,500 ha. In 1963 MAFI established a research center in Bechet, Dolj District to carryout a range of crop yield experiments on sandy soils. Based on the results of research which demonstrated the need for irrigation, a construction contract was awarded to a British Consortium, the Taylor Woodrow Irrigation Group. In May 1974 the system was completed and handed over to the Government. The completed project evolved out of a ten-year (1971-1981) on-farm investment program for the Sadova-Corabia Irrigation Project. As mentioned earlier, the Government identified the project and requested Bank financing. The Bank's role in identification was non-existent but made some contribution to the preparation of the project. Romania's unfamiliarity with the Bank's procedures prompted the Bank to launch two intensive missions within a period of five months to assist in project preparation. Although the report lacked detailed project justifications particularly in market analysis, the Bank agreed to launch an appraisal mission in May 1974. 1.06 Project Appraisal. A four-man appraisal mission visited Romania for .about one month. The appraisal was carried out parallel with its sister project Girugiu-Razmiresti. The appraisal mission did not flag any major issue except: (a) size of the loan recommending to be equivalent to the foreign exchange cosc (direct and indirect) and (b) interest rate to - 15 - sub-borrowers, urging the Bank to accept the going interest rate of 3% charged by BAFI rather than a blend interest rate for the project which combines the Bank's lending rate of 8% and budgetary appropriation which carries zero interest rate. At the Decision meeting, a loan amount of US$21 million was agreed upon and the going interest rate of 3% for sub-borrowers was accepted. 1.07 Project Objectives. The project is part of an overall integrated plan covering 1971 to 1981 to develop mostly virgin lands in the Sadova-Corabia region. The program's broad objectives is the improvement of the welfare of people in the region through increased production. The overall integrated plan contemplated the intensive cultivation of crops benefitting the most from irrigation (69,000 ha of crops, vineyards and orcnards), the development of an important livestock sector (dairy- and beef fattening farms), and the establishment of links between production and processing activities (wineries, feed mill, cheese factory, fruit processing plants, etc.). Project production is destined for both the domestic and export markets. The project would complement the irrigation system - the area. 1.08 Project Description. The completed project was an integral part of the overall development program for the Sadova-Corabia region and intended to finance a time slice (1976-1978) of the investments planned for 1971-1981. The overall planned investments and the subprojects to be financed under the project are shown below: Subprojects Overall Investment Plan Under the Project Crops (ha) 61,407 - Vineyards (") 4,163 2,000 Orchards (") 2,444 2,050 Mulberry 891 - Dairy Farms 11 8 Beef Fattening Farms 4 2 Tractors 81 81 Refrigerated Trucks 60 15 Fruit Storage 5 1 Winery 5 Feed Mill & Silo 1 1 Premix Feed Mill 1 1 Cheese Factory 2 Fruit Processing 2 - Heifers 9,130 10,000 1.09 Negotiation. The Sadova-Corabia Project was negotiated in Washington from December 9-20, 1974 following prenegotiations in Bucharest from October 28 to November 6, 1974. At the request of the Romanian delegation, the Bank increased the loan amount from US$25 million to US$30 million in order to finance more dairy farms. The Romanians' request to extend the loan repayment period from 20 to 25 years was rejected. On procurement, the vigorous objection by the Romanians to the Bank's requirement for single contracts for purchase of equipment was negotiated with a provision in the Loan Agreement - 16 - that the technical integrity of the facilities would be ensured and the composition of the equipments would be agreed between the Bank and the Borrower. Five side letters were also added namely (1) Preparation of Progress Reports; (2) Appraisal of Investment Projects; (3) List of Agreed Investment Projects; (4) Disbursement Certificate; (5) Grouping of Orders for Equipment, Materials and Supplies. During negotiations the Bank also reviewed a number of investments which were included for financing. 1.10 Board Presentation. Two major questions: (a) explanations for local cost financing and (b) impact on labor productivity were raised by the Board. In response to (a) the management noted that Romania has a relatively well developed industrial base and local cost financing is appropriate for selected high priority projects. On labor productivity the staff explained that the project would give a significant boost to labor productivity which was evidenced during implementation. - 17 - II. Project Implementation 2.01 Loan Effectiveness. No special condition had to be met for loan effectiveness. The project was submitted to the Head of State of Romania and a decree was issued. On April 21, 1975 the loan became effective slightly ahead of schedule. 2.02 Project Start-Up. Three months after the loan became effective all the subprojects were approved and the loan amount was fully committed. Sub-borrowers under the project had already initiated farm development works even before the loan became effective. Project Cost and Financing 2.03 The appraisal mission's cost estimate and the actual costs are compared below. Details are given in Annex 1. Project Costs Appraisal Cost Overrun (+) Subproject Estimate Actual Underrun (-) --------------------Lei Million------------------ Orchards 142.0 184.1 +42.1 Vineyards 195.1 217.0 +21.9 Dairy Farms 422.0 324.9 -97.1 Beef Fattening 43.3 52.3 + 9.0 Fruit Handling Complex 22.2 11.1 -11.1 Refrigerated Trucks 21.2 13.7 - 7.5 Feed Mill & Silo 89.0 103.3 +14.3 Premix Plant 238.0 208.4 -29.6 Tractors & Implements 12.6 13.8 + 1.2 Leaf Analysis Laboratory 3.4 4.7 +-1.3 Technical Training 2.0 0.0 - 2.0 Total 1,190.8 1,133.3 -57.5 US$ Equivalent (mill.) 59.5 60.7 + 1.2 /1 /1 The Romanian Lei was revalued twice during project implementation. During appraisal the foreign exchange cost component was estimated at about 38% or Lei 451.4 million (US$22.6 million). Based on the actual subproject costs and applying revised foreign exchange coefficients, about 44.6% or Lei 508.7 million (USt 27.1 million) is the foreign exchange cost which is about 20% over the appraisal estimate. Analysis of the actual subproject costs show that different factors contributed to cost overruns and underruns. In the case of orchards and vineyards, the cost overruns are attributed to increase in the area planted and the higher tree density per hectare. In livestock significant savings were realized due to (i) reduction in the size of the dairy farm capacities from 830 cow farms to 696 cow farms; and (ii) lower cost - 18 - of imported in-calf heifers equivalent to about US$200 per cow for over 10,000 cows. Other notable cost differences are for the Fruit Handling Complex and Premix Plants. In the former, Government had decided to finance some equipments imported on concessionary terms. For the Premix Plant, despite substantial delays in the construction of the plant, cost underrun of about Lei 30.0 million was realized. It appears that the appraised cost estimate was based on preliminary plant design. In total the project was implemented with only minor changes in project composition at a cost of Lei 1,133.3 million or US$60.7 million. Whilst total saving of Lei 57.4 million can be recorded in Lei terms, in dollar terms, there is a cost overrun of about US$1.2 million due to the revaluation of the Lei in the course of project implementation. It is worthy to note here that the first completed agricultural project (Giurgiu-Razmiresti Irrigation Project, Loan 1082-RO) had a cost saving of about US$1.5 million. 2.04 Financing arrangements for the project was made by BAFI. Project implementation was augmented by timely availability of funds. Distribution of project financing is shown below: Project Financing Appraisal Actual State BAFI State BAFI Subproject CAFs Budget Loans CAPs Budget Loans ---------------------Lei Million-------------------- Orchards 1.4 4.2 136.4 6.2 18.7' 159.2 Vineyards 3.2 3.4 188.5 28.2 - 188.8 Dairy Farms 16.0 63.0 343.0 4.3 - 320.6 Beef Fattening 6.C 6.0 31.3 - - 52.3 Fruit Handling Complex - - 22.2 - - 11.1 Refrigerated Trucks - - 21.2 - - 13.7 Feed Mill & Silo - - 89.0 - - 103.3 Premix Plant - - 238.0 - - 208.4 Tractors & Implements - - 12.6 - - 13.8 Leaf Analysis Lab - 0.8 2.6 - 3.9 0.8 Technical Training 2.0 0.0 2.0 Total 26.6 77.4 1,086.8 38.7 22.6 1,072.0 % of Total Cost 2.2 6.5 91.3 3.4 2.0 94.6 The share of State budget in the project cost has fallen from 6.5% estimated during appraisal to 2.0%. This reduction is almost equivalent to the total cost saving of the project. BAFI loans which include IBRD funds though lower in absolute terms, provided 94.6% of the project cost compared to 91.3% estimated during appraisal. CAP contribution ranged from 1% of investment cost for Dairy farms to 13% investment costs for Orchards. - 19 - Subproject Implementation 2.05 As shown in the table above, the project financed (i) 11 Orchard farms covering a total area of 2,250 ha compared to the appraised 2,050 ha; (ii) 9 Vineyard farms of 2,044 ha against an appraisal area of 2,000 ha; (iii) 20 Dairy farms; (iv) 2 Beef Fattening farms of 10,000 tons live weight each; (v) Fruit Cold Storage and Handling with 400 tons and 7,000 tons respectively; (vi) 15 Refrigerated Trucks; (vii) Feed Mill and Silo with capacities of 140,000 tons and 58,000 tons respectively; (viii) a Premix Plant with 100,000 tons capacity; (ix) 81 Tractors and accompanying implements; and (x) various equipments for a Leaf Analysis Laboratory in Bucharest. Physical implementation of these subprojects compared with the appraisal expectations are discussec in the following sections. Physical implementation of the subprojects is given in Annex 2. 2.06 Orchards. The appraisal had envisaged development 2,000 ha of orchards over a period of four years, 1975-1979. Actual implementation took place between 1976 and 1979. Furthermore financing was intended for two State farms with a total area of 1,300 ha and three cooperatives covering 700 ha. However, during implementation the Borrower jointly with MAFI decided to reduce the average farm size and increased the total area by 250 ha and actually financed eight cooperative farms of about 1,200 ha and three State farms with a total holding of about 1,050 ha. The average farm size financed under the project is about 200 ha compared to 400 ha appraised. Planting of orchards started in the spring of 1976 on an area of 511 ha. By end of 1978 almost 100% of the total project farm area was under plantation. The first harvest for quick maturing trees was made in 1979. Other changes were also made during implementation. Fruit type composition and planting densities envisaged during appraisal and actual are shown below: Appraisal Actual Ha % Share Trees/Ha Ha % Share Trees/Ha Peaches 1,435 70 400 818 36 1,250 Apricots 308 15 n.a. 390 17 330-700 Cherry 307 15 n.a. 105 5 n.a. Apples 251 11 1,000 Pears 20 1 n.a. Plums 666 30 400-500 Total 2,050 100 2,250 100 Diversifications of fruit types was recommended by the sub-borrowers as well as the Bechet Research Station located in the project area. Research results from the station were made available to the project area farmers which enabled them to increase the tree density over the appraisal estimates. During the orchard establishment years, 60 tons/ha manure, 132 kg/ha of Nitrogen, 90 kg/ha of Pnosphorous, and 80 kg/ha of Potassium were applied to build the fertility of the soil. Measures were also taken by planting row trees to act as windbreakers. - 20 - 2.07 Vineyards. Of the 2,000 ha of vineyards appraised under the project two State farms with 860 ha and four cooperative farms covering 1,140 ha were included. Like the orchard farms, Government made the decision to finance only one State farm (Bechet Research Station), with 124 ha and eight cooperative farms in an area of about 1,920 ha. Planting of vineyards started in 1976 and was completed in 1979. In 1979 grapes were harvested from an area of about b90 ha. Vine spacing in the project area is 1.2 m by 2.U m. A three-story wire trellis supports the vines and the trellis wires are supported by concrete posts. 2.08 Dairy Farms. According to the Loan Agreement, the project was expected to finance eight new dairy farms with 830 cows each and four farms to. be provided with 830 in-calf heifers each. It was not until March 1978 that the Bank discovered that the actual new dairy farm was based on 696 cows as originally proposed in the Preparation Report. In a letter to the Borrower, the Bank requested a list of the dairy farms financed under the project including the disposition of the imported heifers. During the September 1978 Supervision Mission, the Borrower revised the list and submitted a new list of dairy farms showing an allocation of 696 cows per farm. This list was used by all subsequent supervision missions. However, the Completion Mission still found discrepancy in the list given to the Bank and those shown in the Quarterly Progress Reports by BAFI. The number of farms financed under the project and the distribution of the imported heifers was unknown to BAFI at the time of the Completion Mission. Following inquiries made, MAFI submitted a list which is presented in Annex 3. MAFI's list does not tally with BAFI's records. Nevertheless eight new dairy farms have been accounted for financed under the project with varying number of imported in-calf heifers. About 10,300 in-calf heifers were purchased from Holland, Germany and Denmark and were distributed to 20 dairy farms of which six are in the Sadova-Corabia zone (Dolj and Olt judets) and the remainder in other judets as far northwest as Arad. About 43% of the cows were allocated to CAPs and 57% to IAS compred to the appraisal ratio of 57% and 43% respectively. A typical dairy farm in the project includes three cow barns, one maternity barn, two heifer barns, one recovery barn, facilities for fodder and milking equipments and some provision for pasture improvement. The milking technology is an outdated system where cows are tied during milking. Quality of construction of these facilities are satisfactory and were completed in 1979. Total cost of the Dairy subproject is Lei 324.9 million or 77% of the appraisal estimate. 2.09 Beef Fattening Farms. As appraised two beef fattening farms including one State and one cooperative were financed. The Beef complexes with total capacity of 2,880 heads per farm were started in 1976 and completed in 1977. Implementation of the farms followed the appraisal model closely and the standard of buildings and construction are satisfactory. The system used, particularly the slated housing and feeding, is modern, efficient and permits good labor productivity. Cost overrun is estimated at 21%. 2.10 Fruit Handling and Storage Complex. This complex has a capacity of 400 tons of cold store and 7,000 tons of fruit handling and packing. Construction of the facilities took three years to complete a year longer than anticipated during appraisal. In the third year (1978) of construction, some parts of the complex were opened for operation. Equipments were provided under the Loan as well as purchases made by the Government of Romania. Because of savings in equipment purchases, the subproject was implemented at a saving of about Lei 11.1 million. - 21 - 2.11 Refrigerated Trucks. Total funds provided for the purchase of 15 refrigerated trucks, 16 tons capacity each, were utilized in 1976. The transportation enterprise in Craiova was established in 1976 witn 46 trucks of which 15 were provided under the project. In 1982 the enterprise operates 200 trucks and provides transportation services for South Western Romania. Appraisal cost estimates were based on unit costs of Volvo trucks which were higher than locally manufactured trucks; thus resulting in a cost saving of about Lei 7.5 million. 2.12 Feed Mill and Silo. The project financed a feed mill with a capacity of 140,000 tons and silos of 58,000 tons located in Corabia. Construction of these facilities were started in 1976 and completed in 1979. Compared to the appraisal cost estimate, there is a 14% cost overrun. During implementation, technical staff were trained by the Feed Trust. 2.13 Premix Plant. In 1976 contracts for the construction of civil works and delivery of equipments were signed with a local construction firm and foreign suppliers respectively. However actual implementation did not start until June 1978 and completion took.over three years. Delivery of equipments were made on schedule. The primary cause for the construction delay is shortage of construction workers. In nearby location an automobile plant was under construction which attracted workers from all over the judet. Bank supervision missions had urged the Borrower to take measures to alleviate the labor problem and speed up implementation. Since the car plant was given priority, efforts made by the Borrower were futile. The Premix plant, the first of its kind in Romania, remains the only subproject that has not started operations at the time of the Completion Mission. At full development the plant would produce.about 100,000 tons of premix to be used by feed mills in the country. Despite implementation delays, total cost estimate shows a saving of about 12% from the appraisal estimate. 2.14 Tractors and Implements. To augment the limited supply of agricultural machinery in the Sadova-Corabia Region, the project financed purchase of 81 tractors and related accessories. Delivery of these machinery were made in 1976 and 1977 at a slightly higher cost than anticipated. 2.15 Leaf Analysis Laboratory. The project assisted the Institute for Pedology and Soil Agrochemistry in Bucharest with the provision of laboratory equipment. Various equipment worth about US$52,000 were made available under the project between 1976 and 1979. 2.16 Technical Training. During appraisal, the mission had identified principal training constraints both at the level of the project area and the Borrower's skilled staff requirements. It was subsequently agreed during negotiations that short-term overseas training program for agronomists, economists, livestock specialists and horticulturists would be organized. However, the Borrower, after numerous requests by the Bank to initiate the training program, notified the Bank that it had trained Romanian staff in the U.S. through a bilateral program to satisfy the requirements of the Loan Agreement. BAFI then requested the reallocation of funds earmarked for training which was agreed by the Bank. - 22 - Procurement 2.17 List of materials and equipments procured through ICB compared with appraisal estimates is presented in Annex 4. According to the Loan Agreement, Schedule 4, contracts estimated to cost US$100,000 equivalent or more shall be awarded on the basis of the Bank's procurement guidelines. Moreover, "bid invitations for equipments, materials and supplies shall, whenever feasible, be grouped together so that each order shall consist of all such items to be procured during a twelve month period." Materials, equipments and supplies equivalent to US$21.6 million were identified suitable for procurement under the Bank's guidelines. Procurement problems related to Section A, Schedule 4 of the Loan Agreement occurred during implementation. The Loan Agreement had stipulated that the grouping and composition of equipments for the Fruit Handling and Storage Complex and the Feed Mill and Silo would be determined by agreement between the Bank and the Borrower. Notwithstanding this provision, the Borrower unilaterally selected the group of equipment and using its own procurement procedures awarded contracts to one foreign and a number of local suppliers. The Borrower argued that some of the equipment was procured as part of a larger purchase to meet the country's requirements and also the size of each contract was less than the US$100,000 limit allowing adoption of local procedures without Bank consultation. After establishing the technical integrity of the equipments contracted, the Bank concurred with the awards. 2.18 Total procurement under ICB was equivalent to US$20.6 million. Amount likely to be won by foreign suppliers was estimated at US$7.7 million during appraisal. Total foreign contract value amounted to US$5.9-million, equivalent to 20% of the loan which was substantially higher than contracts won under the on-going Ir-igation Project Loans. In addition, over 10,000 in-calf heifers were purchased through international shopping for a total value of US$10.5 million. Totally US$16.4 million or 55% of the loan amount was paid directly to foreign suppliers. ICB contracts won by Romanian manufacturers include materials and refrigerated trucks. The 15% preference margin was never evoked in awarding contracts to domestic suppliers. Disbursement 2.19 Disbursement percentages initially agreed were 58% of BAFI loans and 100% of foreign expenditures. During project implementation, eight reallocations and changes in disbursement percentages on BAFI loans were made. The disbursement percentages ranged from 15% to 58% on BAFI loans. Appraisal and actual disbursements by category are shown below. Category A praisal Estimate Actual ----------------------- US$ 000 ------------------------- (1) Disbursements under BAFI Loans 26,780.0 29,947.7 (2) Equipments, Spare Parts, Materials, Supplies for Leaf Analysis Lab 120.0 52.3 (3) Training 100.0 - (4) Unallocated 3,000.0 - Total 30,000.0 30,000.0 - 23 - 2.20 Loan disbursements took one year longer than anticipated due to delays in the construction of the Premix Plant. The closing date was extended to December 1980 ano the last disbursement was made in March 1981. Between December 1976 and December 1978 actual disbursements exceeded appraisal estimates. Slower disbursement in the subsequent quarters were on account of the Premix plant. Semi-annual estimated and actual disbursements are given in Annex 5. Disbursement profiles for the project, IBRD/IDA, EMENA Agricultural Credit Projects and IBRD Country-wide profiles for Romania are given in Annex 6. Compliance with Loan Covenants 2.21 Except the violations cited in para. 2.17, the Borrower complied with the Loan Covenants and the five Side Letters satisfactorily. - 24 - III. Operating Performance 3.01 For the purpose of analyzing the impact, the investments financed under the project are categorized into four major components. (A) Orchards and Vineyards (B) Livestock (C) Agroindustries (D) Support Services Assessment of project impact is based on the survey carried out by the Borrower, visits made to selected respresentative subprojects, and Bank Supervision Reports. Criteria adopted for evaluation include (a) physical targets i.e. yields, area planted, number of milking cows, number cattle fattened, capacity utilization, etc.; (b) technical coefficients - tree density per hectare, herd projections, input use; (c) financial and economic rate of return. A. Orchards and Vineyards Orchards 3.02 The project financed 11 fruit farms with an average size of about 200 ha. To examine production performance the mission visited two farms, IAS Corabia and CAP Potelu located in Olt District. IAS Corabia has an area of 208 ha. Fruit trees were planted in 1978 and 1979 and actual yields are only available for peaches and apples for 1981. In CAP Potelu, 150 ha were planted in 1976, 1977 and 1978. Actual yields are available for 1980 and 1981. Area planted and yields by fruit type are shown below. Area Planted Yields (t/ha) (ha) 1980 1981 1984 Appraisal CAP IAS CAP CAP IAS CAP IAS Full Development Apple - 24 - - 4.9 - 20 - Peaches 30 7 10 13 13.9 15 15 13.6 Sour Cherry 10 42 - - - 3 8 6.8 Sweet Cherry - 12 - - - - 5 - Plums 100 59 - - - 10 6 - Apricots 10 64 - - - 10 7 9.7 Peach yield in IAS Corabia exceeded the average CAP and IAS yield projected during appraisal. In 1981 actual average yield for peaches reached the appraisal full development yield. Projection for 1984 show a 10% increase in yield over 1981 which is very likely. These high yields are attributed to adequate application of manure during the planting years and chemical fertilizer, good management and timely irrigation. Moreover, the tree density adopted is substantially higher than anticipated during appraisal. Farm managers have indicated that there are occasional shortages of imported - 25 - fungicides. With the continued support from the Bechet Research Station in pruning techniques, fertilization, irrigation, overall improvements in horticulture management and availability of inputs, the project farms would exceed tne production targets anticipated at appraisal. A major constraint likely to emerge in the coming years is labor shortages unless appropriate mechanical harvestings are introduced. Moreover, by 1984/85 when most of the orchards reach full development, additional storage, transport and processing facilities would be required in the project area. One fruit handling and storage subproject has been financed under the project to serve orchard producers in the Sadova area. The Completion Mission was assured that provision for such facilities have been made in the 1981-1985 Plan period for Sadova-Corabia region. Summary of area planted, yields, production cost and income for IAS and CAP farms is shown in Annex 7 and 8 respectively. Vineyards 3.03 Eight CAP and one State Research vineyard farms on a total area of 2,042 ha are established under the project. The average farm size is 225 ha. Production data from CAP Ostroveni, 100 ha, and Bechet Research Farm, 124.5 ha have been collected during the mission's visits. The result are summarized below. Both these farms grow wine grapes and tree planting was completed in 1976 in tne research farm and in 1977 in the CAP. Grape Yield (t/ha) Area Appraisal Planted (ha) Actual Estimate Full Dev. 1976 1977 1979 1980 1981 1982 1983 CAP Ostroveni 40 60 12.4 9.5 9.3 12.5 15.0 11 Bechet Research 124.5 - 7.8 8.5 9.3 12.5 15.0 11 Average yield obtained for the two farms is about 85% of the projected full development yield. Independent estimates by both the CAP and the research farm show equal yields of 12.5 and 15 tons/ha for 1982 and 1983 respectively. CAP Ostroveni, in its first year's harvest, has surpassed the appraisal full development yield by about 1.4 tons per hectare. However this high yield was not sustained in the two subsequent years. According to the farm manager, the amount of fertilizer actually applied is about 10% below the requirements. Both Phosphorous and Potassium are in short supply. In contrast the performance of the research farm was below the CAP farm in 1979 and 1980. This is not very clear as IASs in general have higher yields than CAPs. The Bechet Research Station operates a total area of about 2,000 ha of which 124.5 ha is financed under the project. Plant and crop varieties adopted in the Sadova-Corabia region were developed and tested in this Research Station. Annexes 8 and 9 present the results of the Research and CAP farms. - 26 - B. Livestock 3.04 BAFI subloans were made to eight new dairy farms for buildings, equipment and imported cows and to 12 existing farms for purchase of in-calf heifers. Two beef fattening farms (one IAS and one CAP) were also financed under the project. The Completion Mission visited CAP Poina Mare Dairy Farm and IAS Corabia and CAP Dabuleni Beef Fattening Farms. Dairy Farm 3.05 Physical Development. Implementation of the dairy farm was in line with the appraisal projections. The cow barns, facilities and equipment were virtually identical with the original designs. The major departure from the appraisal projection was in the feed production. Only 250 ha (against 400 ha of irrigated land envisaged) were allocated to fodder production comprising 125 ha alfalfa, 50 ha cultivated pasture, 2J ha fodder beet and 50 ha maize silage. In addition 125 ha of maize silage double cropped after barley or wheat was provided. 3.06 Herd Development was much slower than appraisal estimates because only 58% of tne heifers projected were purchased. The herd growth was not only slower than expected, but, more importantly, the number of milking cows during the first six project years was only 50% to 60% of appraisal estimates. Although the appraisal estimate of the number of cows which would be milked each year (696 cows) is optimistic in relation to the facilities provided (para. 3.07) it is clear that the number actually milked each year to-date has been governed by the number of heifers purchased. For example it is expected that 492 cows will be milked in 1982. The mission estimates that 556 cows could be milked with the available housing and prevailing technical coefficients. It is now evident that this number will not be reached before 1983 or possibly 1984. Therefore, the maximum number of cows which could be milked with the physical facilities provided will not be reached until about project year 8 or 9. This was a major deviation from the appraisal strategy which made provision for a much more rapid build up. From a farm management and financial standpoint this was a major mistake. It is not clear why adequate heifers were not allocated. Since imported heifers were highly prized within Romanian livestock circles MAFI may have been under pressure to spread them out as much as possible. This would have been all right if the project farms purchased or were allocated local heifers to make up the difference. It is not clear why this was not done. A deliberate decision to segregate imported heifers appears to have been taken by Romania and the Bank and this may have exacerbated the problem. This was probably related to disease control but this is an inference and not specifically stated in the documents available. The Bank, if it had detected the problem, should have insisted during supervision that either the farm was allocated the appropriate number of imported or local heifers. However, the mistake should not have had to await Bank detection before being remedied but should have been recognized and rectified by both BAFI and MAFI. It was probably overlooked by supervision missions for the following reasons. 3.07 The appraisal model clearly overestimated the size of the milking herd. It was assumed that 696 cows would be milked each year at full development (Appraisal Report Appendix 8-5-3). This was not possible with the facilities provided. It is clear that Romania recognised this early on and it was the reason given for the reduction in the number of heifers allocated to - 27 - the March 1978 Supervision Mission. On the early master lists submitted from July 1975 through 1977 the physical size of all dairy subprojects is shown as 830 cows. The Marcn 1978 supervision requested an updated list and this updated list (Annex 4, September 1978 Supervision Mission) shows the physical size of all dairy projects to be 696 cows. The model does not appear to have been studied closely by either Romania or the Bank. In fact, the physical size of the model did not change and was always 696 cows. The confusion arose from the fact that although 696 cow spaces are provided this does not mean that 696 cows can be milked each year. However, the number of heifers that needed to be supplied to fill these facilities did not change. The Bank apparently interpreted the new list as meaning that 696 heifers instead of 830 were required per farm when the model was being financed. The correct interpretation should have been that 830 heifers were still required (over two years) to fill the facilities if the appraisal coefficients were assumed and the number required to satisfy any other set of assumptions was not worked out. However, if 696 heifers were allocated instead of 485, the herd development would be much better and there would be little cause for any complaint. 3.08 A further reason is that the supervision missions that visited the farm concentrated on animal performance particularly milk yield and understandably assumed that BAFI and MAFI could be relied on to allocate the right number of animals. The confusion on herd size was a contributory factor because it would appear that everybody involved was conditioned to think fewer animals were needed. In addition although appraisal projections for milk production were drastically reduced, this was caused by an error in the original projections and not a reduction in farm size. For example, milk production was projected at 3.058 million liters in the appraisal model; the first master list projected production per farm at 2.397 million liters and the revised 1977 list projected 2.01 million liters. We expect that milk production will be about 1.95 million liters at full development (1983) which is similar to the 1977 estimate. This assumes that 556 cows producing about 3,500 1/cow are milked each year. It is expected that about 3,300 litres will be sold per cow and about 200 fed to calves. 3.09 Technical Coefficients. Mortality figures are generally in reasonable agreement with appraisal estimates. In Romania it is difficult to get a clear picture on mortality because a number animals are obviously rescued from this category by emergency slaughter. However, if recorded mortality and emergency slaughter are considered together it is apparent that the overall situation is in reasonable agreement with the appraisal estimates. The cow culling rates are much lower than the appraisal estimates (Annex 11) because insufficient animals were available. It is unlikely that a 20% culling rate projected at appraisal will be reached. The minimum culling rate in an established herd should be at least 15% although 20% is preferable. There is no justification for a lower rate because it effects other important coefficients such as calving rate and milk yield. The culling rate generally recommended in Romania (about 13%) is considered too low even when the Romanian emphasis on increasing numbers rapidly is taken into consideration. Given the low culling rate the calving rate on this farm is judged satisfactory although in most years it was 5 to 10% below the appraisal estimate (Annex 11). - 28 - 3.10 The milk yield per cow is about 20% below the appraisal estimate. This yield is considered fair and with better feeding it is expected that the appraisal yields could be obtained. With good feeding the animals available are certainly capable of producing the yields projected but it is unlikely that feeding will be improved to this extent. There are three dimensions to the feeding problem as follows: (a) care must be exercised to allocate sufficient areas to forage production. Although it was not clear that this farm had an inadequate area allocated there was a suspicion to this effect. Obviously the total amount of forage produced depends on the yields as well as the area and there is a tendency to overestimate yields. Realistic yields should be used in estimating the area required for forage production; (b) Forage quality is the main feeding problem on this farm and it typifies a country-wide problem. However, the quality on this farm judged from observed yields, animal condition and amounts of concentrates fed, was reasonable by Romanian standards; and (c) The concentrate allocation at 600 kg/cow is too low when the quality of the forage is taken into consideration. It would be more profitable from the farm standpoint to feed more concentrates at prevailing milk and concentrate prices. The farm manager fed the quantity allocated and he would welcome a larger allocation. With existing forage and one ton of concentrate per cow it is expected that a yield of about 4,000 liters would be obtained. Beef Fattening Unit 3.11 At appraisal it was projected that this farm would purchase 2880 and sell 2736 bulls annually. A 5% mortality was assumed. Actual animal purchases and sales for the years 1978-81 were as follows: Animal Purchases and Sales Purchases Sales (Meat) Emergency Slaughter Weight Weight Weight Total Sales Year No. (Kg/Head) No. (Kg/Head) No. (Kg/Head) No. 1978 2323 68 1726 329 318 135 2044 1979 2258 68 2005 407 637 163 2642 1980 2808 109 2088 416 393 145 2481 1981 1841 99 1602 412 435 269 2037 3.12 Average animal sales, including emergency slaughter for the years 1978-81 was 2,301 heads compared with 2,736 projected or about 84% of the appraisal estimate. This is a reasonably satisfactory throughput. Emergency slaughter accounted for about 16, 24, 16 and 21% of the total animals slaughtered for 1978, 79, 80 and 81 respectively. As indicated in the above table, the average weights for emergency slaughter animals were low and - 29 - obviously were uneconomic. The magnitude of this category indicates that the unit has serious problems with animal performance. However, the weight or animals sold for meat is satisfactory and considerably higher than the appraisal projection (365kg) for three out of the four years. 3.13 The animal records indicate virtually zero mortality and as in the case for the dairy farm discussed above, a considerable number were obviously rescued from this category by emergency slaughter. Even when allowance is made for the absence of a mortality category, it is still clear that this farm has a serious problem with animal health. The housing and production system in use gives rise to serious respiratory problems in young animals which can lead to permanent pulmonary damage in a fairly large percentage. The problem is primarily an environmental one, which is brought about by concentrating a large number of young calves is one area. It is characteristic of the system being used. Although the severity of the condition will depend on the overall quality of management and veterinary care, the primary causal factor is the environment; a relatively large number of young calves kept in a common air space and the space per calf reduced as much as possible. There is no easy solution to this problem. The suggestion is made that calves should not be introduced to intensive beef units until they are considerably older (possibly three to four months) and less susceptible to lung infections. However, this is only a suggestion that might be worth trying out. If this course was adopted and proved successful it is suggested that provision should made to hold the bull calves on the dairy farms until they are old enough to avoid the problem. This approach would avoid the present heavy concentration of young bull calves in the same beef unit. Overall investment would not be altered much but that portion for calf rearing would be transfered from the beef units to the dairy farms. 3.14 A serious nutrition problem existed on this unit. The problem had two dimensions as follows: (a) The quality of forage, particularly maize silage was extremely poor. The explanation given was that the maize silage crop suffered from severe hail damage in the field. In addition, the period of filling the silage pit was much too long because although adequate harvesting equipment was available, transport wagons and trailers were in short supply; and (b) Inadequate concentrate feeds were allocated to the farm especially when the quality of the available forage is taken into account. Only 250 kg of concentrates were allocated/head and this is insufficient for the system of baby beef production being practised even though some wet beet pulp was also fed. The farm manager would have liked to feed 1,000 kg/head. An allowance of 530 kg/head is provided for in the Beef Fattening Model used in the Livestock IV (Cattle) Project and in that instance good forage was assumed. 3.15 It is reasonable to assume that the unhealthy animal observed and the respiratory problems were exacerbated by the feeding problem. Good nutrition is a prerequisite to good health and if the nutrition problem were rectified it is probable that emergency slaughter would be substantially reduced. The throughput was probably restricted somewhat by the quantities of concentrate - 30 - feeds allocated because the farm manager may have been reluctant to stock the facility to full capacity since the supply of concentrates was constrained. One could not cavil with this decision although there was some inference that the availability of animals may also have been a constraining factor. 3.16 The system of beef production financed is similar to that financed under the Livestock IV (Cattle) Project. It is a good system and this farm can become a good investment if the feeding problem is remedied. Up to now, it would have to be judged less than satisfactory because of the poor animal performance which is reflected in the excessive emergency slaughter numbers. While it should be possible to overcome the feeding problem without too much difficulty because the solution is well understood, the respiratory problem may be more difficult to solve because there are no simple solutions and it is not clear that the solution is known. C. Agroindustries 3.17 Fruit Handling and Storage, Feed Mill and Silo and the Premix Plants are classified under agroinaustries. Fruit Handling and Storage Complex 3.18 In 1979, the first year of its operation, the complex handled 1,910 tons of apples and peaches. Since then it has increased its capacity utilization to 7,500 tons in 1981. Fruits are delivered from IAS Sadova which has 450 ha of orchards financed under the project and over 1,000 ha existing plantation. At full development of IAS Sadova the handling and storage capacities would not be adequate to cater to the needs of other neighboring farms. Net operating income has risen from Lei 1.0 million in 1978 to Lei 2.3 million in 1981. Quantity of fruit handled compared to appraisal estimate is shown below. Appraisal Actual Average Projected Full Development 1978-1981 1982 Peaches 3,200 3,150 6,432 Grapes 4,000 - - Apples - 620 2,600 Feed Mill and Silo 3.19 The major problem facing the feed mill is under-utilization of capacity. In 1978 total feed output was about 23,400 tons and reaching a maximum of 105,600 tons or 75% of the installed capacity in 1980. Raw material is allocated by the Feed Trust which is responsible for production of livestock feed in Romania. The plant manager noted that because of grain shortages, full benefits from the investments have not been realized. Planned production for 1982 also shows 70% utilization. Consequently the plant management had to reduce its staff by about 40%. The management team comprised a Director, Chief Mechanic, Nutritionist and Accountant. On the job - 31 - training is given three to four times per year by the Feed Trust. Maize, wheat and barley are supplied from the Silo financed under the project and located in the same compound as the mill. Quality control of the feed is done by a regional laboratory located in Baneasa. Giurgiu Districts collects samples to determine the feed composition and nutrient values. These services are essential supervisory functions for improving the mill's operating performances. Due to overriding material shortages of protein meals, the concentrate composition particularly for pig and poultry is low in protein content which affects the feed conversion efficiency of pigs and poultry in Romania. Distribution of concentrates for different animals produced is presented below. Appraisal Actual Full Development 1978 1979 1980 1981 ------------------------ Tons------------------------- Pigs 90,000 21,271 104,510 102,822 84,100 Chicken 20,000 2,098 534 2,040 1,657 Cattle 20,000 - - 1,112 675 Sheep 10,000 - - - - Total 140,000 23,369 105,044 105,974 86,432 /1 1980 and 1981 only. The Premix Plant financed under the project is expected to ease the foreign exchange burden of imported protein ingredients. 3.20 Adjacent to the feed mill, the project has also financed a silo with a capacity of 58,000 tons which is 11,000 tons more than estimated during appraisal. Wheat, barley and maize are stored. In 1978 the silo received 61,000 tons of grain reaching a peak of 137,000 tons in 1980. Between 1978 and 1981 the average turnover was 1.8 which is satisfactory. The silo is used to supply the requirements of the feed mill, local deliveries and export. Operation of the silo is under the direction of the Cereal Central which is a national organization responsible for marketing of cereals in Romania. Construction of the silo has made significant contribution to improving grain handling in the Sadova-Corabia region. Increasing maize and wheat production in the irrigated areas of Olt and Dolj Districts over the current medium-term Plan would require additional on-farm storage capacities. As this problem is very common throughout Romania, the Borrower is currently preparing a national grain storage program for possible Bank financing. However the emphasis in future storage investments seem in favor of on-farm small-scale facilities rather than similar to the one financed under the project. Premix Plant 3.21 To meet the growing demand for mineral and vitamin premixes and protein concentrates of the livestock industry of Romania, the project financed a 100,000 ton capacity Premix Plant in Craiova, an industrial town in - 32 - the Dolj District. Also known as a Protein Nucleus Plant, its product mix at full development would be: Mineral Premix 4,500 Vitamin Premix 4,500 Milk Substitute 10,000 Protein Concentrate 81,000 Total 100,000 Between 1976 and 1980 Romania imported an average of about 300,000 tons of concentrates for livestock feed. At an averge price of Lei 8,000 per ton, the foreign exchange cost amounts to US$1b0.0 million. Production from this plant which is expected to operate at full capacity in 1984 would ease the critical shortages of protein concentrates and other ingredients needed by the livestock feed industry. Trial operations would be completed in 1982. 3.22 As part of the equipment suppliers' contract, nine senior and technical staff were given training in Holland for an average period of six months each. In addition technical assistance is given on the site by the suppliers for two months after the trial operation. A five-year performance guarantee is assured in the contract. At full operation capacity, the plant would employ 103 workers, 32 administrative and technical staff and 65 in the computer center (serving all factories in the District). D. Support Services 3.23 To provide support services in the Sadova-Corabia area, the project financed 15 refrigerated trucks, 81 tractors and implements, and a Leaf Analysis Laboratory. Implementation of these subprojects was in accordance with the appraisal forecast. The refrigerated trucks were delivered in 1976; tractors and implements were distributed tothe mechanical enterprises in the project area in 1976 and 1978 and equipments for the Leaf Analysis Laboratory in Bucharest were supplied between 1976 and 1979. Generally, the services provided by these project equipments are satisfactory. Refrigerated Trucks 3.24 In response to increasing agricultural production for exports from the irrigated Sadova-Corabia area, the project financed 15 refrigerated trucks with a capacity of 16 tons each. These trucks are part of a fleet of 200 currently owned by the enterprise in Craiova. The parent enterprise in Bucharest oversees the operation of the Craiova unit and another one located in Oradea. The trucks are used primarily for transport of fresh vegetables, fruits, meat, and eggs to Europe and the Middle East. Peak season is May to October when 95% of the trucks are in the field. On an average the enterprise records 75% of the fleet are operating in a year. The average travelling distance for the trucks is about 60,000 km per truck per year which is quite high. Ireland is the farthest point reached in Europe and Iran in the Middle - 33 - East. For the return trips, often arrangements are made with either foreign enterprises exporting to Romania or Romanian import agencies to bring in largely industrial goods. During 1976-1980 the enterprise had 55% of the trucks contracted on return to Romania. 3.25 Maintenance of the trucks is done by the enterprise. Including management staff, drivers, mechanics and other support staff, there are 2.5 men per truck. Useful life of a truck is about 550,000 km or ten years. Plans for 1981-1985 is mainly replacement of the existing fleet with 20 ton capacity trucks which are expected to be also fuel efficient. Due to substantial fuel price differences between Romania and its trading partners, the refrigerated trucks load domestically bought fuel for return trips. Tariffs charged for refrigerated transport varies with the type of product, destination, packaging, etc. As an example, transport cost to Iraq cost US$8.5 per case of eggs weighing 32 kg and US$1.25/km/ton for tomatoes. Net income from the operation of the 15 trucks has increased from Lei 872,000 in 1978 to Lei 2.1 million in 1980. In 1981 profit declined to Lei 1.6 million due to reduced operational travel. Tractors and Implements 3.26 Romanian agriculture suffers from low level of mechanization including tractors and combines. In 1976 only one tractor was used for 75 ha of arable land. The ratio is slightly better in the irrigated Danube plains than in the northern highlands. Moreover, the IASs had their own machinery whereas the CAPs were serviced by mechanical enterprises (SMAs). In the past priority was given to IAS in the distribution of tractors. To offset this imbalance, the project provided 81 tractors with implements to cater to the CAPs in the project area. Whilst these additions did not alleviate the tractor shortages significantly they were able to improve the quantity and quality services provided by the SMAs. In particular the project vineyard and orchard farms were ensured adequate machinery services under the project. 3.27 Tractor fees were in the past charged on the basis of hourly service. Since 1979, when the Government established the Unified Agroindustrial Councils which were umbrella organizations for State and cooperative farms and machinery service enterprises, the rates charged were based on production norms. This measure was introduced to centralize machinery services so as to lessen the disparity between IASs and CAPs in tractor availability and to provide incentives to machinery operators to render prompt and efficient service by tying payments to levels of production. Complete integration of machinery services given to IAS and CAP farms has not taken place yet. Also the IASs still have the advantage and better access to machinery than CAPs. Leaf Analysis Laboratory 3.27 The appraisal mission had identified major research shortcomings in leaf analysis for orchards and vineyards. In addition to carrying out experiments in leaf analysis the laboratory is responsible for monitoring ground water contamination through rising high water tables in areas where sandy soils are predominant which cover one-third of Romania. In collaboration with the Bechet Research Station located in the project area, the Bucharest-based laboratory has developed an experimental program, - 34 - collecting samples from the different sandy soil regions and making recommendations. Two types of analysis are undertaken in the laboratory. The macroelement research collects 2,000-22,000 samples a year to determine the various elements -- nitrogen, potassium, phosphorous, etc. Simultaneously microelement investigations are also made on sizes of samples ranging from 200 to 2,000 for copper, manganese, zinc, cobalt, etc. analysis. To support this program the project financed laboratory equipment valued at USt52,300. The project had also made provision for training of technicians and researchers in leaf analysis. However, the Borrower, despite repeated requests by the Bank, delcined to use the loan proceeds earmarked for overseas training. As a compromise, the Bank had suggested recruitment of an internationally known expert in leaf analysis to organize seminars in Romania. Even this offer was not accepted and the funds were reallocated to other categories. Supervision missions had noted enthusiasm on the part of the Romanian researchers involved in leaf analysis for conducting a seminar in Romania by an outside expert. It is not clear why the Bank agreed to reallocate the funds rather than insisting that either the overseas training or the seminar in Romania be carried out. - 35 - IV. Project Institutions and Performance A. The Borrower - BAFI 4.01 BAFI was established in 1968 fo finance and supervise agriculture and agroindustry investments. The principal tasks and responsibilities of BAFI are as follows: (a) to appraise and endorse the tecnnical economic documentation of investment projects; (b) to grant short- and medium-term loans for financing investments in agriculture and agroindustries; (c) to exert control during implementation over the utilization of material and financial resources allotted to investment projects; (d) to maintain deposit and checking accounts for CAPs and State farms; and (e) to cooperate with foreign institutions and international organizations having similar tasks. 4.02 BAFI is managed by an Administrative Council, an Executive Bureau and its President. The Administrative Council is the policy making body of BAFI and meets quarterly. It is composed of the President, two Vice Presidents, the Directors of BAFI, some BAFI branch representatives, economic and agricultural experts, and a delegate designated by the general trade union of Romania. The Executive Bureau is a decision-making body and meets on a weekly basis. Its seven members are the President, two Vice Presidents, three BAFI Department Directors, and the representative of the trade union. The President is the chief executive officer appointed by State decree who implements the decisions of the Administrative Council and the Executive Bureau. 4.03 BAFI is organized in six departments at headquarters and has 41 branches - one in each of the districts of Romania - as well as 92 sub-branch offices. The six departments deal with financing of: (a) State farms; (b) food and agroindustries; (c) CAPs; (d) coordinating, planning and external relations; (e) accounting and auditing; and (f) economic matters, administration, legal affairs and personnel. The branches and sub-branches are responsible for the agricultural sector activities in their respective areas. 4.04 As of May 1981, there were 200 persons employed at BAFI's head office in Bucharest, and 3,130 in its field offices, of which 71 were engineers, 18 lawyers, 684 university graduates, 2,269 specialists with secondary school training -- mostly in banking and accounting -- and 89 auxilliary personnel. To train its staff, BAFI offers courses in agriculture, project planning and evaluation, credit operations, recovery of loans, and marketing. BAFI's staff and organizational structure appear to be well established, well qualified and effective. 4.05 With the implementation of Sadova-Corabia Agricultural Credit Project and subsequent agricultural projects assisted by the Bank in Romania, a number of BAFI staff were enrolled in short-term courses in the Bank's Economic Development Institute (EDI). These participants have benefited immensely from the courses given particularly in project evaluation methodologies. Upon their return they have shared their knowledge with their colleagues and adopted the rate of return analysis as a tool for project preparation and - 36 - subproject appraisal. However, this methodology is only applied to Bank-assisted projects. The official project analysis technique is the pay-back period. Often discretionary social considerations overrule the pay-back period test of project appraisal. Numerous discussions between the Bank and BAFI on this subject have taken place to agree on a methodology that w.ould assist decision makers in choosing the most economic project. 4.06 BAFI's operations are carried out within the framework of a Short-Term Financing Plan (STFP) and Medium-Term Financing Plan (MTFP). The STFP is approved each quarter by the Council of Ministers and shows the short-term resources to be lent by BAFI to each enterprise. BAFI rigidly enforces the Plan, and expenditures are not allowed to exceed the Plan provisions. The MTFP shows the medium- and long-term lending program of BAFI and is also approved by the Council of Ministers. The MTFP is made in sufficiently general terms to allow BAFI to do meaningful appraisals and, if an investment project is found unacceptable, to substitute it by another one. This planning system seems to work well. In case additional funds are needed over and above Plan allocations, BAFI has to get them from the National Bank. 4.07 BAFI appraises all technical and economic documentation for an investment prior to approving the loan. In addition to a financial review of investment proposals, the engineering group of BAFI subject them to scrutiny. BAFI can require that the proposal be redesigned to reduce investment costs and/or improve efficiency. All loans for individual farmers and cooperative members are approved by branch directors of BAFI, who also approve all investments less than Lei 10 million. Investments between Lei 10-30 million for CAPs are approved by the Department Director of BAFI, and by the Branch Manager for IASs. Investments between Lei 30-70 million are approved by the Vice President of BAFI and all investments above Lei 70 million have to be approved by the Council of Ministers. The loans are mainly secured by arrangements with borrowers whereby they commit all present and future income to debt service. Repayment risk is extremely low within the Romanian political economic framework. 4.08 Supervision of loans is done by each branch, sub-branch and operational head office department. BAFI exercises a strict control over both annual production activities and the disbursements. BAFI inspectors visit projects at least quarterly and prepare supervision reports. The financial situation of borrowers is examined monthly and reported to the head office. The disbursements are made against documentary evidence and the verification of works done is performed by field visits at least once a quarter. the disbursement procedures and the control procedures followef by BAFI are satisfactory and ensure that the funds are disbursed for approved purposes only, and are used for the purposes for which they are granted. 4.09 Audit of BAFI accounts is carried out by a commission appointed by the Ministry of Finance. In addition to normal audit, a more extensive audit is carried out for World Bank financed projects in order to comply with the Bank's auditing requirements. In the more extensive audit, the audit team from the Ministry of Finance does spot checking of selected branches and a few selected cooperatives and State farms financed by BAFI under World Bank financed projects. The audit focuses on compliance with procedures as well as - 37 - physical progress. The audit personnel spot checks the documentation maintained by BAFI branches and review the disbursement documentation to verify accuracy of Statements of Expenditures. The auditor's report includes an opinion on whether proceeds of World Bank loans withdrawn on the basis of Statements of Expenditures have been used for the purpose for which they were provided. The audit report is submitted to the Deputy Minister for Finance and instructions are issued for resolving any audit objections. The audit report is also submitted to the World Bank. Audit arrangements described above are considered satisfactory. 4.10 Grace periods, repayment periods and the interest rate vary according to the purpose of the loan and the type of sub-borrower. In the case of CAPs, BAFI finances up to 70% of the total cost of a given investment. The maximum grace period varies from one to seven years and the maximum repayment period varies from eight to 25 years depending on type of investment. The interest rate charged is 3% per annum and the loan is paid off in equal annual installments. In the case of IASs, BAFI finances up to 100% of the investment cost. The maximum repayment terms and grace periods are similar to those for cooperatives, however the interest rate charged is 2% per annum during the construction period and 4% per annum thereafter. Individual producers may borrow up to 70% of the value of investment items. Maximum repayment periods are five years with no grace period and the interest rate is 3% per annum. 4.11 Interest rates on investment subloans range from 2-4% per annum. As a result of central controls over domestic prices, Romania achieved a domestic inflation rate of about 1% a year during 1978-1980. The inflation during 1980-1985 is projected to be about 2.5% per annum. BAFI's on-lending interest rates are real and positive and are expected to remain so, although somewhat less positive than in the past. It should, however, be noted that under the centrally planned economic system in Romania, interest rates play no role in resource allocation as this is achieved by the planning mechanism as well as the Law on Investments. The current interest rates on BAFI loans are considered adequate relative to BAFI's administrative and financial costs. BAFI loans made to CAPs, IASs and other State enterprises are presented in Annexes 12 and 13 in Olt and Dolj respectively. 4.12 The various sources of BAFI's funds are its statutory capital, surplus reserves, funds from State budget, IBRD borrowings, short-term borrowings from the National Bank, and deposits. In 1980 there was a significant change in BAFI's sources of funds. The funds from the State budget were discontinued and the overdraft from the National Bank was increased. This change was in line with the general economic reforms in the country. Short-term borrowings from the National Bank is the most important source of BAFI funds, constituting over 85% of its resources. BAFI pays 1.5% annual interest on both National Bank borrowings and deposit accounts. The relative importance of the National Bank overdraft is expected to increase over the next few years. The medium- and long-term loans form 39.5% of BAFI's assets and are mainly financed from external credits and borrowings from the National Bank. BAFI's external borrowings mainly consist of World Bank loans, which finance about 10% of BAFI's assets, and are expected to maintain this level over the next five years. - 38 - 4.13 BAFI's operating performance can be judged from the growth of its asset portfolio and the degree to which it has succeeded in controlling the cost of its operations. During the period 1976-1980 total assets grew by about 56%. During the same period, BAFI's administrative expenses averaged about 0.18% of total assets. During the next Plan (1981-1985) BAFI's assets are projected to grow by about 20%, and administrative expenses are projected to be about 0.23% of total assets. The relatively slower growth of assets reflects the Government policy that an increasingly larger share of investments should be financed out of enterprise savings. The increase in administrative expenses is anticipated due to increased BAFI supervision of loans. B. Ministry of Agriculture and Food Industry 4.14 The Ministry of Agriculture and Food Industry (MAFI) is responsible for planning, coordinating and providing support services in the agriculture sector. At the District level, MAFI's activities are delegated to the respective General Directorate of Agriculture to implement policy decisions and to take appropriate measures to achieve the production targets. MAFI is composed of departments, general directorates, directorates, centrals, trusts and enterprises. The four principal departments are: (a) Department of State Agriculture with one central responsible for poultry enterprises and 39 trusts at the District level responsible for IASs; (b) Department of Land Reclamation responsible for planning, designing construction of irrigation, drainage and other land reclamation works; (c) Department of Food Industry which has eight centrals responsible for processing and marketing of meats, fruits and vegetables; and (d) Academy of Agriculture and Forestry Services responsible for all agricultural research and the development and distribution of improved seeds, plants, breeding animals and investigation of production techniques. 4.15 Agricultural planning process begins at the farm level under guidelines issued by the District General Directorates of Agriculture within the framework of the National Plan. IASs and CAPs draw tentative plans for investment production, financing, etc. These plans are submitted to the District Agricultural Authorities for review and transmittal to MAFI. MAFI then aggregates and reconciles the Judet plans and presents them to the State Planning Committee. After deliberations and approval by the Grand Assembly of the Romanian Communist Party the plans are sent back to the IASs and CAPs through MAFI and District MAFI representatives and production targets are set for the farm units. During implementation of the planned investments, the General Directorates of Agriculture jointly with the Branch BAFI staff carry out regular supervisions. Staff from MAFI also offer technical support through frequent visits to the Districts. - 39 - 4.16 In the Sadova-Corabia area, MAFI's role was significant in research. With the establishment of the Bechet Research Station in 1960, the agricultural development in the project area drew heavily from its research results and technical services. C. Role of the World Bank 4.17 In its second year of membership in the World Bank, Romania borrowed US$100 million for Giurgiu-Razmiresti Irrigation and Sadova-Corabia Agriculture Credit Projects. Bank staff's input in the design and preparation of Sadova-Corabia Agriculture Credit Project was very limited. When the first Bank Economic Mission visited Romania in the spring of 1973, a shopping list of agricultural projects were presented for financing. The Bank's unfamiliarity with the Romania's economic system and management and the need to urgently finance agricultural projects as well as the existence of well developed institutions may all have contributed to the Bank's limited role in project design. Nevertheless the Bank still exercised some influence when reviewing the Preparation Report. From the proposed list of subprojects the Bank in agreement with the Borrower dropped a forage dehydrating plant and added (i) a premix plant, (ii) equipment for leaf analysis, and (iii) technical training. Romania's development strategy for the Sadova-Corabia area was acceptable to the Bank as it was based on (a) increasing production and income in a least-developed region; (b) exploiting the irrigation infrastructure through financing of primary production; (c) providing limited capacities for processing; and (d) providing support services. 4.18 During the implementation years, nine supervision missions visited Romania. The supervision missions had staff continuity and technical specialists. Except the Premix Plant, all other subprojects were implemented on schedule. Supervision missions reported to the Borrower the Bank's concern about the delay in the construction of the Premix Plant. The Borrower had no leverage to speed up implementation. 4.19 Other problems that the Bank confronted were in procurement, efficiency of dairy cows and the technical training component. As discussed in para. 2.17 the Borrower overlooked the Loan Agreement by procuring equipments under local procedures. The Bank nevertheless withdrew its opposition after ascertaining the technical integrity of the equipments contracted. The second supervision focus was on the efficiency of the dairy cows. Bank supervision missions repeatedly drew the Borrower's attention to low milk yield per cow caused largely by poor quality feed and meagre feed concentrate. This issue was also highlighted on a national scale when the Bank conducted the Cattle and Sheep Subsector Survey. It now appears that the Government has been apprised of the seriousness of the problem and concrete action plans are being taken as part of the Livestock IV Project. In a related field, the allocation of imported cows to the dairy farms in and outside the project area could not be reconciled with the different records available. It was not until 1978 that the Bank discovered that the distribution of imported cows was not in accordance with the Loan Agreement. In response to the Bank's query, the Borrower revised the list showing 696 cows per farm. The Completion Mission still found a discrepancy and upon request was furnished an actual distribution of the imported cows shown in - 40 - Annex 3. Bank supervision missions should have pursued this issue as it affected herd development and capacity utilization of the dairy farms. Finally, the Bank should have insisted on the implementation of the technical training program. While it is true that Romania had trained a number of technicians through bilateral arrangements during project implementation, the training program envisaged under the project would have augmented the scarcity of technicians exposed to experiences of other countries. To accommodate the Borrower's desire, the Bank agreed to reallocate most of the funds earmarked for training in exchange for hiring of an internationally known expert to conduct a seminar in Romania. Despite repeated reminders from the Bank to hire an expert, the Borrower gave no positive reply except the request for reallocation. One supervision mission had recommended rejection of the final reallocation. Considering that the amount earmarked was an insignificant proportion of the loan amount and since the Borrower confirmed that adequate number of technicians were trained in the U.S. through a bilateral agreement, the Bank agreed to reallocate the remaining funds from the training category. - 41 - V. Rates of Return 5.01 The financial rates of return based on actual investment and production costs and incomes generated, and projected operating costs and benefits have been recalculated. These financial rates of return are compared below with the appraisal estimates. Economic rate of return for individual subprojects were not -calculated in the appraisal report. All costs and benefits used are in constant 1982 prices. Financial Rates of Return Economic Rates of Return Appraisal Actual ---------------------- Percent --------------------- Orchard IAS 16.4 13.0 18.0 CAP 17.0 17.0 23.0 Vineyards IAS 9.7 10.0 13.0 CAP 10.7 5.0 7.0 Dairy CAP 4.6 0.2 8.0 Beef Fattening IAS 5.7 6.0 10.0 CAP 5.7 4.0 8.0 Fruit Handling Complex 12.0 18.0 25.0 Refrigerated Trucks 6.8 -6.0 0.4 Feed Mill ) - -5.0 27.0 Grain Silo) 8.5 0.2 18.0 Premix Plant 7.7 0.1 8.0 Tractors 9.9 3.0 9.0 Except for the Dairy Farms, Premix Plant, Refrigerated Trucks, Feed Mill and Grain Silo, the financial rates of return are equal to or greater than the 3-4% percent interest rates for BAFI subloans. The investments in orchards and vineyards nave attained good results which are attributed to good management, satisfactory level of input use and strong support service from the Bechet Research Station in the project area. In the livestock subsector the Beef Fattening Farms, despite underutilization of the facilities and high rate of emergency slaughterings, the financial rates of return are satisfactory. However, the poor performance of the Dairy Farm generated 0.2% financial rate of return which is primarily related to (a) very low rate of herd buildup, and (b) low milk yield which is due to poor quality forage and scarcity of concentrate feed. Measures to improve the performance can be - 42 - taken and are known to the Borrower. The Bank's involvement in the livestock subsector has drawn the Government's attention to these types of problems widely spread in Romania. Investments in agroindustries scored substantially lower rates of return than the appraisal estimates. Underutilization of installed capacities is prevalent in the Feed Mill. In the case of the Grain Silo, the data provided by the Borrower assumes zero storage loss which gives a 10% financial rate of return. However, applying loss coefficient of 5%, the result is a 0.2% financial rate of return. Tne benefit and cost streams used in the financial analysis are presentea in Annexes 14 to 26. 5.02 To derive the economic rate of return for the project, conversion coefficients based on ratio of economic to financial prices used in recent Bank works in Romania have been applied to the financial cost and benefit data used in computing the financial rate of return. After deriving the rates of return for the subprojects, using the percentage share of the subprojects in the total project cost as weights, the weighted average economic rate of return of the project is re-estimated at 11% which compares with 17% appraisal estimate. In Romania, where the opportunity cost of capital is assumed to be 9%, the ERR of the completed project is economically viable. 5.03 The project has contributed to employment creation and facilitated the means for substantial income in the project area. An estimated 2,500 permanent and 1,000 seasonal workers are gainfully employed in the subprojects financed under the project. The quality of life in rural Sadova-Corabia has improved significantly including better housing, improved nutrition, education and other social amenities. Environmentally, the introduction of irrigation complemented by investments in primary production, agroindustries and services, has created conditions for sedentary living. Though the exact population of the project area is not known, estimates indicate an increase in the population on account of (a) reduction in the emigration of families and (b) an increase in the influx of families attracted by growing urbanization of the project area and employment opportunities in the industrial sectors of the economy. - 43 - VI. Conclusions and Lessons Learned 6.01 Whilst the overall performance of the project in its initial years was below that anticipated during appraisal, with minor adjustments, particularly in capacity utilization (silos, feed mill, beef fattening), improvements in feed quality and quantity (dairy and beef fattening), and continued adequate supply of fertilizer and other chemical inputs (orchard and vineyard farms), the project would surpass the production targets set at appraisal. Some lessons emerge from the experience of Sadova-Corabia Project. 6.02 The development strategy for the Sadova-Corabia region evolved systematically starting from well founded research followed by provision of irrigation infrastructure which led to financing of on-farm investments and processing plants. In the years ahead the investment chain would continue with expansion of handling, storage and processing facilities to cater to domestic as well as export markets. 6.03 Whilst the selection of priority and timing of investments were appropriate, the current performance of the subprojects financed are largely below their potentials. Actions to correct these malfunctions are attainable given the Government's commitment to exploit the benefits from the investments. In livestock, priority should be given to improving forage quality and to ensuring that adequate quantities are available. The allocation of concentrates should be determined by an overall feeding plan which is established on the analysis of available feeds. Milk yields, with better feeding can be increased from 3,300 liters/cow to about 4,000 liters/cow. There was a clear weakness in the strategy adopted for herd development which should have been recognized because this not only substantially underutilized facilities provided but seriously reduced production. The failure by the Borrower as well as by a number of Supervision missions to focus on the number of heifers purchased and distributed, and monitor herd development emphasizes the need for supervision missions to check this important item. Both the Bank and the Borrower and MAFI should ensure that sufficient animals are available to fully stock livestock farms which are being developed and-that adequate feed supplies are also available. It is even worth postponing new livestock investments in the project area for that matter throughout Romania, until the existing ones are adequately stocked and fed. Government should also seriously consider comparative costs and benefits of modernization and new livestock farms. These issues are being addressed within Livestock IV Project. 6.04 As part of institution building, the project had made provisions for short-term overseas training for agriculturists, economists, livestock specialists, etc. Bank's experience in this and other projects suggest that funds from Bank loans earmarked for overseas training are rarely used for that purpose. Often the Romanians during project implementation request the Bank for reallocation as the training requirements are satisfied through bilateral arrangements. In the case of Sadova-Corabia, there was tacit agreement between the Borrower and the Bank to use part of training funds for organizing a seminar in Romania by an internationally known expert in Leaf Analysis. As repeatedly emphasized in supervision reports, the Bank should have taken the initiative to identify experts and forwarded the names to the Romanians for their choice. Neither a Terms of Reference nor an action plan was agreed between the Borrower and the Bank.  - 45 - Annex 1 PROJECT COMPLETION REPORT SADOVA CORABIA AGRICULTURAL CREDIT PROJECT ROMANIA Actual Project Cost Investment Cost 1976 - 1977 1978 - 1980 1981 - 1982 Z F.E. Total F.E. Total F.E. Total F.E. Total F.E. used Subprojects (Lei M) (i M) (Lei M) ($ M) (Lei M)($ H) (Lei M)($ M) ($ H) Orchards 184.1 1.4 67.7 0.5 83.2 0.6 33.2 0.3 14.0 Vineyards 217.0 1.6 99.6 0.7 94.7 0.7 22.7 - 14.0 Dairy farming 324.9 1.2 50.3 0.7 27.6 0.5 - - 29.0 Provision of dairy farms 10.5 247.0 10.5 - - - - 100.0 Beef fattening units 52.3 0.7 52.3 0.7 - - - - 26.0 Fruit handling & Storage Complex 11.1 0.2 10.1 0.2 1.0 - - - 33.0 Refrigerated Trucks 13.7 0.4 13.7 0.4 - - - - 67.0 Feed mill and silo 103.3 2.1 89.4 1.8 13.9 0.3 - - 40.0 Premix plant Craiova 208.4 8.6 a/ - - 139.2 5.6 /1 69.2 3.0 75.0 Tractors and implements 13.8 0.4 7.0 0.2 6.8 0.2 - - 60.0 Leaf Analysis Lab 4.7 - 3.1 - 1.6 - - - 25.0 Technical Training 1.1 - - - - - - - - TOTAL 1,133.3 27.1 640.2 15.7 368.0 7.9 125.1 3.5 s/ It includes 100% import of equipment, know-how, training and technical assistance plus 25% of the remaining works. The exchange rates used - 1976-77 20 lei/US$l 1978-80 18 lei/US$1 1981-82 15 lei/US$l Sourcer BAFI, April 1982. - 46 - Annex 2 PROJECT COMPLETION REPORT SADOVA CORABIA AGRICULTURAL CREDIT PROJECT ROMANIA Subproject Physical Implementation 1976 1977 1978 1979 1980 1981 1982 Orchards (ha) 571 899 758 14 - - - Vineyards (ha) 763 707 536 39 - - - Dairy Farms (Nos.) 8 - - - - - - Beef Fattening (Nos.) 2 - - - - - - Fruit Handling Complex (Z of Works) 18 73 9 - - - - Feed Mill " 25 57 13 5 - - - Silo " 58 32 8 2 - - - Premix Plant " - - 18 35 13 19 15 Refrigerated Trucks (Nos.) 15 - - - - - - Tractors & Implements (Nos.) 40 41 - - - - - Source: BAFI, April 1982. - 47 - Annex 3 PROJECT COMPLETION REPORT SADOVA CORABLA AGRICULTURAL CREDIT PROJECT ROMANIA Distribution of Imported In-Calf Heifers No. of In- Agricultural Unit District Calf Heifers A. Project Area 1. CAP Gingiova Dolj 487 2. CAP "Inainte" Poiana Mare " 485 3. CAP Daneti " 471 4. CAP Mirsani " 640 5. CAP "Timpuri Noi" Poiana mare " 600 6. CAP Virtop " 601 Subtotal T12W B. Outside the Project Area 7. CAP Cazanesti Mehediati 417 8. LAS Girla Mare " 513 9. IAS Giarmaca Timis 505 10. IAS Varias i 500 11. LAS Sinandrei (ferma Ortisoara) " 600 12. IAS Sinandrei (ferma Sinandrei) " 640 13. CAP Nerau " 200 14. CAP Pecica Arad 500 15. IAS Nadlac 1$ 1,100 16. AEl Bradu Arges 528 17. CAP Finta Dimbovita 240 18. CAP Nucet " 313 19. LAS Scudina Olt 400 20. LAS Alexandria Telearman 568 Subtotal 7,024 Total 10,308 Source: MAFI, April 1982. - 48 - Annex 4 PROJECT COMPLETION REPORT SADOVA CORABIA AGRICULTURAL CREDIT PROJECT ROMANIA List of Goods Estimated List of Goods to be Actual List of Goods Procured through ICB under Procured through ICB under IBRD Guidelines IBRD Guidelines Not available Available Not available Available in Romania in Romania Total in Romania in Romania Total Qty USM Qty US$M 7I Qty US$M Qty US$M USm A. Materials 1. Fungicides 2,750 t 1.3 - - 1.3 - - 2,750 t 1.3 1.3 2. Reinforcing steel - - 10,000 t 1.6 1.6 - - 8,037 " 1.7 1.7 3. Rolled steel - - 3,000 " 0.5 0.5 - - 3,000 " 0.5 0.5 4. Steel Pipes - - 1,000 " 0.2 0.2 - - 1,000 " 0.2 0.2 5. Zinc coated sheets - 1,500 " 0.3 0.3 - - - - - 6. Cement - - 40,000 " 0.6 0.6 - - 130,400 " 4.2 4.2 7. Asbestos cement plates - - - 2.4 2.4 - - 476,000 sm 0.6 0.6 8. Electric Cables - - 135,000 m 0.3 0.3 - - 51,000 m 0.1 0.1 9. Reinforcing concrete poles for trellis - - 1.5 H pcs 2.1 2.1 - - - - - 10. Chemical Fertilizers - - 452,000 t 2.7 2.7 - - 7,270 c 4.0 4.0 11. Metal construction parts - - 450,000 " 1.4 1.4 - - 4,500 " 1.4 1.4 TOTAL 1.3 12.1 13.4 14.0 14.0 B. Machinery and Equipment 1. Fruit handling and storage complex package - 0.1 - 0.2 0.3 - - - - - 2. Feed mill (including silo) package - 0.1 - 1.3 1.5 - 0.2 - - 0.2 3. Premix Feed Mill Package - 3.4 - 0.9 4.3 - 5.6* - - 5.6* 4. Refrigerated Trucks 15 Units - 0.7 - - 0.7 - - - 0.7 0.7 5. Laboratory equipment - 0.1 - - 0.1 - 0.1 - - 0.1 TOTAL 7.1 - 2.4 6.9 - 6.0 - 0.7 8.5 Total Base Cost 5.8 - 14.5 20.3 - 5.9 - 14.7 20.6 Price contingency 1.3 - - 1.3 - - - - - TOTALS 7.1 14.5 21.6 5.9 14.7 20.6 Of which: - likely to be won by Romanian companies - 13.9 Won by the Romanian companies - 14.7 - likely to be won by foreign companies - 7.7 Won by the foreign companies - 5.9 * BAFI estimates. - 49 - Annex 5 PROJECT COMPLETION REPORT SADOVA CORABIA AGRICULTURAL CREDIT PROJECT ROMANIA Appraisal and Actual Disbursements (USS Million) IBRD Fiscal year Actual/Estimated and semi-yearly Appraisal Actual (M) 1975 June 30, 1975 0.6 - 1976 Dec. =171975 2.7 0.8 29.6 June 30, 1976 5.5 3.5 63.6 1977 Dec. 31, 1976 8.5 9.4 110.6 June 30, 1977 11.7 14.9 127.3 1978 Dec. =T71977 15.0 18.1 120.6 June 30, 1978 18.7 21.1 112.8 1979 Dec. =, 1978 21.9 22.7 103.6 June 30, 1979 26.0 25.1 96.5 1980 Dec. 31,1979 30.0 26.6 88.6 June 30, 1980 - 27.2 90.6 1981 Dec. 31, 1980 29.3 97.6 March 5, 1980 - 30.0 100.0 Closing Date 12/79 12/80 Completion Date 12/82 12/82 Cumulative Repayments (USS Million) Feb. 1, 1980 0.5 0.5 100.0 Aug. 1, 1980 1.1 1.1 100.0 Feb. 1, 1981 1.7 1.7 100.0 Aug. 1, 1981 2.4 2.4 100.0 Feb. 1, 1982 2.8 2.8 100.0 Aug. 1, 1982 3.45 3.45 100.0 - 50 - Annex 6 PROJECT COMPLETION REPORT SADOVA CORABIA AGRICULTURAL CREDIT PROJECT ROMANIA Disbursement Profiles (Cumulative Percent Disbursed) Year from Approval Date (A) (B) (C) (D) 1 - 1st Half 0.3 0.4 2.4 12.0 2nd Half 3.2 4.1 8.7 31.0 2 - 1st Half 9.3 10.9 19.8 50.0 2nd Half 18.1 20.0 34.4 60.0 3 - 1st Half 28.9 30.7 50.3 70.0 2nd Half 40.9 42.4 65.0 76.0 4 - 1st Half 53.0 54.3 77.2 84.0 2nd Half 64.6 65.7 86.3 89.0 5 - 1st Half 75.0 75.9 92.7 91.0 2nd Half 83.8 84.5 97.0 98.0 6 - 1st Half 90.8 91.3 100.0 100.0 2nd Half 96.2 96.4 - - 7 - 1st Half 100.0 100.0 - - 2nd Half - - - - No. of Projects 72 22 25 1 (A) IBRD/IDA Bank-wide disbursement profile for the Agricultural Credit Subsector. (B) IBRD/IDA region-wide disbursement profile for the Agricultural Credit Subsector in EMENA Region. (C) IBRD country-wide profile for Romania. (D) Sadova-Corabia Note: The profiles were constructed using historical data from operations covering the period FY70-80, and they have been accelerated to eliminate the "long tails", and in effect, to create a 5% targeting element. - 51 - Annex 7 PROJECT COMPLETION REPORT SADOVA CORABIA AGRICULTURAL CREDIT PROJECT ROMANIA State Orchard Farm 1978 1979 1980 1981 1982 1983 1984 - Estimates Investment (lei '000) 8,300 1,574 1,857 2,544 1,075 388 - Area Planted (ha) 166 31 12 - - - - Area Harvested (ha) - - - 23 96 195 209 Yield (tons/ha) Apple - - - 4.9 10.0 15.0 20.0 Peaches - - - 13.9 8.0 10.0 15.0 Sour Cherry - - - - 3.0 5.0 8.0 Sweet Cherry - - - - - 3.0 5.0 Plas - - - - - 4.0 6.0 Apricots - - - - 4.0 5.5 7.0 Production Cost (lei '000) - - - 316 1,282 2,620 3,388 Income (lei '000) - - - 654 1,805 4 7.790 Net Income (lei '000) - - - 338 523 2 )401 - 52 - Annex 8 PROJECT COMPLETION REPORT SADOVA CORABIA AGRICULTURAL CREDIT PROJECT ROMANIA CAP Orchard Farm 1978 1979 1980 1981 1982 1983 1984 ---- Estimates ---- Investment (lei '000) 1,200 2,051 1,638 1,261 1,614 721 - Area Planted (ha) 28 55 67 - - - - Area Harvested (ha) - - - 28 120 130 150 (Cumulative) Yield (tons/ha) Plum - - - - 3 10.0 10.0 Apricots - - - - 3 10.0 10.0 Sour Cherry - - - - 3.0 5.0 8.0 Peaches - - - 10.0 15.0 15.0 15.0 Production Cost (lei '000) - - - 825 2,172 2,636 3,048 Income (lei '000) - - - 1 5,575 6 Net Income (lei '000) - - - 731 1,022 2,939 3 628 - 53 - Annex 9 PROJECT COMPLETION REPORT SADOVA CORABIA AGRICULTURAL CREDIT PROJECT ROMANIA Bechet Vineyard Farm (Research) 1976 1977 1978 1979 1980 1981 1982 1983 -- Estimates ---- Investment (lei '000) 3,599 3,540 3,245 Area Planted (ha) 124.5 Area Harvested (ha) - - - 124.5 124.5 124.5 124.5 124.5 (Cumulative) Yield (tons/ha) - - - 7.8 8.5 9.3 12.5 15.0 Production Cost (lei '000) - - 2,163 2,340 2,440 3,038 3,746 Income (lei '000) - -1854 3.122 3,400 Net Income (lei '000) - 691 782 960 1L600 1,857 - 54 - Annex 10 PROJECT COMPLETION REPORT SADOVA CORABIA AGRICULTURAL CREDIT PROJECT ROMANIA CAP Vineyard Farm 1976 1977 1978 1979 1980 1981 1982 Investment (lei '000) 3,366 3,124 2,421 1,357 791 752 Area Planted (ha) 40 60 Area Harvested (ha) - - - 40 100 100 100 (Cumulative) Yield (tons/ha) - - - 12.4 9.5 9.3 12.5 Production Cost (lei '000) - - - 455 1,920 2,350 2,594 Income (lei '000) - - - 1,242 2,7 26 Net Income (lei '000) - - - 787 850 546 1,412 - 55 - Annax u1 PROJECT COPlEfinON REPORT S4DOVA CORA8IA AGRICULTAL CMIT PROJECT ROIMNUÅ Zwd-Po4eoio fa= CAP ~tna-za4 = 4 ..arm 1976-77 11 1978 11 1979 1 1980 1 1981 2/ 1982 2/ 1983 3/ 1984-97 3/ PURCHASES ra)=nall muerg 485 - - - - - - - mouTALTT (a) 3reding females 4 - 14 - 10 - 1 14 (b) Calvec O-1 mantha old 23 21 26 - 51 - 56 56 (c) Reilers 12-24 mnhg old 4 1 1 - 10 - 4 14 Total r 3 Z 57 33 49 7 , 4 EXEEY SAUGTER 36 28 22 30 81 50 30 22 SALES (Catle) (a) Culled cwu 13 15 21 49 34 48 104 104 (b) Calves and heifer 60 - - - - - 100 100 (c) Calves - 149 312 110 136 216 250 2.50 Total 77 T33 -m 170 280 Zr4 7s- SALES MIL ('000 Uitrac) 1,246 1,243 1,266 930 1,450 L,420 1,600 1,835 ED COMOSTTION AT YEARS END (a) Breding femalen 468 475 526 550 600 700 696 696 (b) Calveg 0-12 moachs old 292 205 184 240 352 200 250 250 (c) ifeiars 12-24 *unchs old - 230 169 187 120 196 196 245 Total r 0 v7r 79 . 1072 1,096 1,142 ,191T DIRM 411 363 363 346 387 492 556 556 1ECMNCAL COEMCENTS (a) Culving (1) 80 77.5 75 75 70 70 80 80 (b) ortality CM) 1. calvec 6 5.8 7.3 15.6 13.1 6 10 10 2. haiiers 12-24 mouch - 0.9 0.6 1.2 1.7 - 2 2 3. breeding fmalea 0.8 - 2.9 1.0 1.8 - 2 2 (c) Cow culling (M) 2.7 3.1 4.4 11.2 6.2 10 15 15 (d) Kilk production/cow (lits) 4562 3855 3300 3200 3250 3500 3500 3500 1/ Supplied by Ranmia. 7/ Ro~=uian Projection. '/ mission Projeccion. - 56 - Annex 12 PROJECT COMPLETION REPORT SADOVA CORABIA AGRICULTURAL CREDIT PROJECT ROMANIA Summary of BAFI Loans and Terms - Ot District Name of Out of which Repayment Grace Interest Penalty Subproject BAFI Loans Period Period Rate (%) Rate (%) (Lei M) -- Years a/ b7 A. Silo and Feed Mill - Corabia 103.3 10 3 2 4 6 B. Beef Fattening Unit - LAS Corabia - constructions 26.5 16 3 2 4 6 C. Orchards 1. Cap lanca 14.4 10 5 3 3 6 2. CAP Grojdibodu 7.7 10 5 3 3 6 3. CAP Vadostrita 7.1 10 5 3 3 6 4. CAP Stefan cel Mare 11.2 10 5 3 3 6 5. CAP Potelu 8.0 10 5 3 3 6 6. CAP Urzica 16.2 10 5 3 3 6 7. LAS Sadova 11.9 10 5 2 4 6 a/ During construction. b/ After commissioning. - 57 - Annex 13 PROJECT COMPLETION REPORT SADOVA CORABIA AGRICULTURAL CREDIT PROJECT ROMANIA Summary of Investment Costs, BAFI Loans and Terms - Dolj District Interest Rate (Z) BAFI Repayment Grace During After Penalty Loan Period Period Construc- Comniss- Rate (Lei M) (Years) (Years) tion ioning (Z) A. Dairy Bechet 11,115 20 3 3 3 6 Gingiova 9,970 20 3 3 3 6 Poiana Mare "Inainte" 9,198 20 3 3 3 6 Daneti 11,159 20 3 3 3 6 Dabuleni II 11,472 20 3 3 3 6 Ostroveni 10,716 20 3 3 3 6 Dobresti 16,434 20 3 3 3 6 Motatei 12,414 20 3 3 3 6 B. Beef Fattenin CAP Dabuleni 25,525 16 3 3 3 6 C. Fruit Storage & Handling Complex -Sadova 11,115 - - 2 4 6 D. Vineyards Calarasi 37,678 10 4 3 3 6 Danian 12,049 10 4 3 3 6 Danet 43,535 10 4 3 3 6 Dobresti 10,499 10 4 3 3 6 Dabuleni 34,768 10 4 3 3 6 Locusteni 16,803 10 4 3 3 6 Oscroveni 12,768. 10 4 3 3 6 Timburesti 10,292 10 4 3 3 6 SCCAN Bechet 10,384 10 4 3 3 6 E. Orchards CAP Calarasi 12,851 10 5 3 3 6 CAP Dabuleni 4,197 10 5 3 3 6 LAS Sadova 28,120 10 5 2 4 6 SCCAN Dabuleni 32,010 10 5 2 4 6 F. Premix Plant 18,483 10 2 2 4 6 G. Refrigerated Trucks 13,'00 10 - 2 4 6 H. Agricultural Machinery 11,148 10 - 2 4 6 - 58 - Arn- 14 ROMANIA PROJECT COMPLETION REPORT SADOVA CORABIA AGRICULTURAL CREDIT PROJECT IAS ORCHARD FINANCIAL RATE OF RETURN (000 LEI) ------------------------------------------------------------------------------------------------------------------ 1 2 3 4 5 6 7-20 INVESTMENT COSTS 10707.00 1490.98 2284.11 3027.36 1247.00 415.16 0.00 OPERATING COSTS 0.00 0.00 0.00 376.04 1487.12 2903.40 338.00 3UBTOTAL 10707.00 1490.98 2294.11 3403.40 2734.12 3218.56 3395.00 ;ENEFITS 0.00 0.00 0.00 778.26 2093.80 4757.22 7790.00 LNC.HET BENEFITS -10707.00 -1490.98 -2284.11 -2625.14 -640.32 1538.66 4402.00 HE RESULTS FOR THE PROJECT ARE: IET PPESENT VALUE AT 12.0% - 1156. LNTERNAL RATE OF RETURN = 12.9% - 59 - Annax 1 RC~AIA PROJE COMP.TION qEFCRT SA CMIA ARICILTURAL CRDIT PM.ECT CAP GRepARD FWNANC. RATE CF .ýr!JRN U4O LEI) I 2 3 4 » -: NVTMET C45T! 1548.40 204.77 2014.74 1500.59 S72.24 771.47 0. .. 0 . OFGArJ3 COsTS o.00 0.00 0.x 0.40 14 3182.71 2172. 0 A.0 . 7195o 5U3TOTAL 1548.40 2604.77 2014.74 1t00.9 '.72.24 1654.2 22.40 24.00 34.C0 3198.00 DEI20.40 0.40 0.00 0.40 0.0 1664.92 3194.00 IS! 555. 5440 5ó76.20 :IC.lET 3EITS -1548.0 -2604.77 -2014.74 -1500.59 -172.24 10.70 . 2927.2 :23.0 7E M.iS FMR THE PRO=ECTAE 4 :MESNT 'MÆJE AT 12.0X a 3501. NTO t. WTE OF "URX a 17.92 - 60 - AVOWs.M ROMANIA PROJECT COMPLETION REPORT SADOUA CORADIA AGRICULTURAL CREDIT PROJECT BECRET VINEYARD FARM FINANCIAL RATE OF RETURN (000 LEI) 1 2 3 4 5 6 7 8-20 .HVSSTMENT COSTS 4642.71 4495.80 3991.35 0.00 0.00 0.00 0.00 0.00 iPERATING COSTS 0.00 0.00 0.00 2573.97 2714.40 2610.80 3038.00 3746.00 .UBTQTAL 4642.71 4495.80 3991.35 2573.97 2714.40 2610.80 3038.00 3746.00 JENEFITS 0.00 0.00 0.00 3396.26 3945.16 4962.64 5603.00 5603.00 .mC.hET BENEFITS -4642.71 -4495.80 -3991.35 822.29 1230.76 2331.86 2565.00 LS57.00 'HE RESULTS FOR THE PROJECT ARE: IET PRESENT VALUE AT 12.01 * -L602. :NTERNAL RATE OP RETURN - 9.85 - 61 - RGftB.III ZRQJCT COHPUg7Ton R9PORT s4aOA CoRfteA AGRICULTURAL CRDIT PROAECT CAP vINeyARO gA~ FTNONCIA4 RAt OP RCTUR (000 LI!> 1 2 3 4 5 ó -2 4142.14 19&7.41 2977•42 t14.• - 917.36 304..4 .0 0.00 00.00 .00 541.4- 227.0 :197.79 ::94.00 4342·14 3967.4U 2977.u3 :4.:u 3o44.7 2002.42 n Z94.10 0.00 0. 0..0 11477.99 3:13.20 :546.20 4004.40 -4342.14 -3947.4l -2977.I3 -471.30 41.44 -1S4.22 1412.00 1r4< PROJECT laR: 1 Aö 12.0: *•-:. RETUR» * 4.33 - 62 - MAA..I ROMANIA PROJECT COMPLETION REPORT SADOV4 CONASMA aAtCULTMRftL CRSMIT PRO.JECT FINAMIAL RATE Of RETURN (000 LI) 1 2 3 5 6 7-19 20 INVESTMENT COSTS 4074.00 19094.06 2034.48 0.00 0.00 0.00 0.00 2.00 OPERATING COSTS 0.00 17.88 2771.40 2726.99 2139.09 2333.67 4565.00 4565.00 SUBTOTAL 4624.00 22421.96 4626.06 2726.99 2139.09 2233.47 4565.00 4565.00 8tNEPITS 0.00 4692.42 3865.16 3733.32 2476.96 3334.12 5902.00 8853.00 INC.MET BENEFITS -4624.00 -17729.54 -970.92 1406.34 337.87 1000.45 1337.00 4286.00 THE RESULTS FOR THE PROJECT A493 NET PRESENT VALUE AT 12.0Z -2990. INTERNA. RATE OF RETURN * 0.22 - 63 - PROJcca PROJUCT CUMPLXTZ0N REgPORT &aO0dh CORai *GRICULTURAL CRD1T PROJCCT omlY KATTNING COabaA v~NaCM. R#Tt al RTURN 1 2 3 7-0 INUEsTMENT COSTI 12934.00 313.70 0.00 0.00 Q.-0 .i. OPtRATING CoRTS 0.00 0.00 10993.4 14196.94 10843.84 1084.78 0:4.-30 SUNTOTAL 12934.00 3193.70 10992.84 14199.94 16243.44 10644.7U 10154.00 ezTS 0.00 0.00 10679.76 14L89.é 16414.8 12934.30 1:a90.00 INC.NCT BUNKITS -129M4.00 -3^I.70 -114.0 1990.64 171.00 :071.:: 19å.00 TW MSULTI POR THE PROJC T ÖRE: MCT PRE5NT VAUt AT 12.0Z a -525. INTIRNAL Rat OP RTURN 6. 3 - 64 - Annex 2.0 IAP 3WE 4- Il "NACDL RA7E '7 IE'.M rN.ESTMENT CST 370424 386.00 . 0 '2PVAT38NG 22SS00 .0 '.1.5 733 254 -71 7 -1UB1 TAL 3704.241 -Hå.á .l) 3 156 4'..4 3:4.3 : .3 i.7 9 BENEFITS9.40 M.o ::T23.:6 10M6W 3.6 ?å 97..8s0a.0 .rEULTS MR MiE PROJET ARE sET PREMENT ULUE AT L2.0% -J804. TITERUAL RATE OF RETURN . - 65 - A=ez 21 ROMANIA PROJECT COMPLETION REPORT SADOA CORAIA AGRICULTURAL CREDIT PROJECT FRUIT HANDLING COMPLEX FINANCIAL RATE OF RETURN (000 Lil) 1 2 3 4 ,6 7-20 INVETNT COSTS 2720.00 10692.00 1240.00 0.00 0.00 0.00 0.00 OPERATING COSTS 0.00 0.00 6661.2s 4635.10 11381.44 2137w.08 =699.00 SUBTOTAL 2720.00 10692.00 7901.23 4635.10 11381.44 1375.438 2.99.00 3efTS 0.00 0.00 7907.48 5669.90 16275.84 24389.58 29199.00 INC.NET BENEFITS -2720,00 -10692.00 6.20 1014.30 4894.40 2514.50 3500.00 THE RESULTS FOR THE PROJECT ARE: NET PRESENT VALUE AT 12.OZ s 501. INTERNAL RATE OF RETURN a 18.2= - 66 - AM-~ 22 RO MA* A P*OjaCT CONFLETION- REPORT SADOVA CORASIA AGRICULTURAL CREDIT PROJECT REFRIDERATV11 TRUCKS FINANCIAL RATE Of RETURN (000 LEI) 2 1 4 S 4 7-Lo INVESTMENT COSTS 20276.00 0.00 0.00 0.00 0.00 0.00 .oo 8PSRATING COSTS 0.00 3494.20 7475.40 &36.10 6844.93 5U72.16 5569.00 iUSTOYAL '0276.00 3694.:0 7479.00 63480.Lo 644.93 5872.L6 3559.00 BENEFITS 0.00 4230.00 8565.00 3314.60 912.3 7629.03 7320.o0 INC.MET aGNEPITS -20"7&.00 533.0 1090.40 1964.50 2279-.0 175.87 t?31.00 THE RESULTS FOR THE PROJECT ARE: mET PRESENT U&Au AT 12.0Z * -10774. INTERNAL RE OF RETURW * -S.7Z - 67 - PROJECT CTJqtgT CN R<PORT 3400Ou CORatA AGRICUL.rURA CREDT PROat WEED MILL Pt~CIAuL k*Tt aW RCTURM ••004 LE,L ..4VEST4CMT COSTS 17112.0 38094.00. 04.00 2.. 0 IPERaMN COSTS 0.00 0.00 43335.32 292.44 204706.3: Léa390.9 9 . iUBTOTA4 L711:.4 38054.00 51399.52 7179.44 :04719.3: 1a1910.39 ,09009..., ENEFITS 2.00 0.40 4337:.4 :71451.70 111904.7: 143890.9 :11900..1 - -- - --- ------------ ---- ---- C. TS G<NFITS -L7tka00 -3U03&.40 -7923.14 -9..98 5Z4.40 L4.40 .0 M RULTI POR rWC PROJKCT å4W: iT PlEMENT VALU« AT 12.0X I -4464l. .STERMog RAfE OP RCTURM m -5.4z - 68 - ROMANIA PROJECT COMPLETTOI REPORT SAOWA CORASIA AGRICULTURAL CREDIT PROJECT SILO FINANCIAL RATE OF RETURN (000 LEI) 1 2 3 4 5 6 7-20 INUESTENT COSTS 43332.00 23048.0* 5456.00 1053.00 0.00 0.00 0.00 OPERATING COSTS 0.00 0.00 102459.96 146196.32 219088.64 191938.74 225640.00 SUBTOTAL 43332.00 23046.00 107915.96 147231.32 218068.64 191938.74 225640.00 BENEITS 0.0@ 0.00 10227.20 15735.82 127475.04 205416.46 235315.40 INC.MET DENEFITS -43332.00 -23043.00 311.24 10264.30 -90613.60 13477.72 9675.00 THE RESULTS FOR THE PROJECT IttI NET PRESENT VALUE AT 9.02 * -57566. INTERNAL RATE OF RETURN * 0.21 Ms lt å åI: å 4M4 s a s- a1 s~ N e 8 8 8 L. è è èè - 70 - àAaa. 2 ROMANItA ?ROJECT COMPUT:ON REPIRT SADOVA CORA1A GRICUVfU9L CREDIT PROJECT rRACTORS FINANCIAL RATE OF RETURM (000 4EI, 1 2 3 4 1 5-i- 'VESTMENT COSTS 9640.00 9112.00 0.00 0.00 0.00 OPERAtING COSTS 0.00 2393.:4 :544.96 31å3.44 4794.44 540.45 4I34. e SUBTOTAL 9660.00 11505.24 2544.96 3tå3.åa 4794.64 !402.43 3 ------------- - -----f- -------- ------ ------------ ------- 9ENEFITS 0.00 6439.70 6015.24 5797.99 6212.44 oå39.5 300.00 :NC.SET BENEFTTS -9640.00 -5066.Z4 346a29 2624.41 1429.00 1L36. 1:44.00 rHE RESULT3 FOR rwe PROJECT aR: E RESEST UALUE AT L2.0z a -4245. ter=LRArE 49 RETUPPs - .7-. T. C-~.o 24415 IBRD 11176(PCR) v24 5 1 TO Cra~o JULY 1982 Onc va) CatroovoCARACALi ToEucares. ROMANIA AGRICULTURAL CREDIT PROJECT ApefeVii Sadova-Corabia (With Sub-Projects Financed Under Loon 1083- RO) CelruRedeo Deveselu i. D CPetve rms T mburesttteng Marotinu State forms C..perative forms V,neyOrds. State forms Cooperot,ve fo,ms AmrrstlO FrF,t handhng and stoqe ® Proten nucleuS pl.nt Compound feed plant Ond s1 -44- rno~l D r SLed,nocue DState farms Amrdstidejos - Cooperative s internatonal Transport Enterprise- Cro.ovo Uit Bucinisu Agriculturl mGchine statos Proporu= Mai ccnol and penstocks - -- Secondory conols ond pressure pumping stations ,----r- Levee --Limit of the Irrigation System Railroad 7 Roads Sadova 2Rivers \ ~~~Villa ges International boundories THIS MAP IS BASED ON IBR0,11176,NOVEMBER 1974 SOME PROJECT INFORMATION HAS BEEN UPDATED ¯ stava V151n0 AND IBRD Mo DISCLAIMER HAS BEEN ADDED L se -4344 ãiärop o en CCORABIA 4 5 -43'45 eht434t NdOn0001000 u 1010 *~B Potelu G- Fad.on 24°30' D4 NUU 2rER R 0 N I1 workrean11 00 sentrez1iswer to SA O D NUz IRRIGA EM |5 5 6 B o MI24° B U A R P A