Morocco - Rharb Irrigation Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 3942 PROJECT PERFORMANCE AUDIT REPORT MOROCCO: RHARB SEBOU IRRIGATION PROJECT (LOAN 643-MOR) May 27, 1982 FILE COPY 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 CMV - Centre de Mise en Valeur (Local Development Center) CNCA - Caisse Nationale de Credit Agricole (National Agricultural Credit Bank) DH - Direction de l'Hydraulique, Minist re de l'Equipement et de la Promotion Nationale (Hydraulics Directorate, Ministry of Equipment and National Development) ONE - Office National de 1'Electricite (National Energy Authority) ORMVAG - Office R6gional de Mise en Valeur Agricole du Rharb (Regional Office for Development of the Rharb) FISCAL YEAR January 1 - December 31 GOVERNMENT OF THE KINGDOM OF MOROCCO FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT MOROCCO: RHARB SEBOU IRRIGATION PROJECT (LOAN 643-MOR) TABLE OF CONTENTS Page No. Preface .................................. Basic Data Sheet ....................*...... ..... ............... ii Highlights ................................................. 0........ iv PROJECT PERFORMANCE AUDIT MEMORANDUM I. SUMMARY ***************************.... ............... 1 The Project and Its Objectives ........................... 1 Project Preparation and Design ........................... 2 Project Implementation ........................... * ....... 2 Project Results .................................. ....... 3 II. MAJOR ISSUES ............................................. 4 Manpower Development ................. .................. 4 Sprinkler Versus Gravity Irrigation ...................... 5 Slow Adoption of Irrigation .............................. 6 Environmental Deterioration ...................... 7 Flood and Frost Risks .. ............................. 7 III. IMPORTANT LESSONS FOR THE BANK ........................... 8 ANNEX 1 - TRANSLATION OF COUNTRY COMMENTS .......................... 11 PROJECT COMPLETION PROJECT I. Summary ...... o............................................ 15 II. Background .............................. . ............ 18 III. Formulation .............................................. 19 IV. Implementation ........................................... 21 V. Expected Agricultural Impact ............................. 31 VI. Institutional Performance and Development ................ 37 VII. Economic Evaluation ......................................... 41 VIII. Bank Performance ......................................... 44 IX. Conclusions .............................................. 45 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. TABLE OF CONTENTS (Continued) Page No. Tables: 1: Farm Distribution in Project Irrigated Area in 1980 ........... 47 2: Appraisal and Final Cost Estimates ............................ 48 3: Cultivated Hectares, Average Yields and Production . ........ 49 4: Production Costs, Gross and Net Value per ha at Full Development (1980 prices) ......... 50 5: Net Value of Production at Full Development ................... 51 6: Farm Budgets .................................. 52 Annex I ............................................. 53 Map - IBRD 15724 (PCR) - 1 - PROJECT PERFORMANCE AUDIT REPORT MOROCCO: RHARB SEBOU IRRIGATION PROJECT (LOAN 643-MOR) PREFACE This is a performance audit of the Rharb Sebou Irrigation Project in Morocco for which Loan 643-MOR was approved in October 1969 in the sum of . US$46.0 million and closed fully disbursed on May 30, 1980. The audit report consists of an audit memorandum prepared by the Operations Evaluation Department (OED) and a Project Completion Report (PCR) dated April 1981. The PCR was prepared by the Europe, Middle East and North Africa Regional Office on the basis of a detailed completion report prepared by one of the project executing agencies, ORMVAG, in January 1981. An OED mission visited Morocco in October 1981. Discussions were held with officials of the Ministry of Agriculture and the project authority. The information obtained during the mission was used to test the validity of the conclusions of the PCR. The audit memorandum is based on the mission's discussions, on interviews with Bank staff, and on a review of the Appraisal Report (No. PA-20a) dated September 4, 1969, the President's Report (No. P-748) of Octo- ber 15, 1969, the Loan Agreement dated November 13, 1969, the PCR and corre- spondence with the Borrower and internal Bank memoranda on project issues contained in relevant Bank files. A copy of the draft report was sent to the Borrower for comments on February 19, 1982. The suggested changes have been introduced or appro- priately footnoted in the PPAM and they are attached as Annex 1. The valuable assistance provided by the Government of Morocco and the project staff met during the preparation of this report is gratefully acknowledged.  - 11 - PROJECT PERFORMANCE AUDIT BASIC DATA SHEET MOROCCO: RHARB SEBOU IRRIGATION PROJECT (LOAN 643-MOR) KEY PROJECT DATA Appraisal Actual or Item Expectation Current Estimate Total Project Cost (US$ million) 97.0 125.5 Overrun (%) - 30 Loan Amount (US$ million) - 46.0 Disbursed - 46.0 Cancelled - - Repai ) -3.1 Repaid As of August 31, 1981 42.9 Outstanding ) - 42.9 Date Main Physical Components Completed 12/77 12/78 Proportion Completed by 1977 (%) - 90 Economic Rate of Return (%) 11 9 Financial Performance - Good Institutional Performance Good Cumulative Estimated and Actual Disbursements (US$'000 Equivalent) FY71 FY72 FY73 FY74 FY75 FY76 FY77 FY78 FY79 FY80 Estimated 2,000 6,200 11,200 20,400 28,400 35,000 41,600 46,000 - - Actual 2,300 5,900 10,500 15,200 26,300 35,700 40,800 41,900 45,700 46,000 Actual/ Estimated % 115 95 94 75 93 102 98 91 - - OTHER PROJECT DATA Original Actual or Item Plan Revisions Estimated Actual First Mention in Files or Timetables - 1962 Government's Application n.a. Negotiations 07/15/69 - 07/15/69 Board Approval 10/28/69 - 10/28/69 Loan Agreement Date 11/13/69 - 11/13/69 Effectiveness Date 03/16/70 - 06/08/70 Closing Date 11/30/78 - 06/30/80 Borrower Kingdom of Morocco Executing Agency Development Office of the Rharb/ Hydraulics Directorate (dam) Fiscal Year of Borrower January 1 - December 31 Follow-on Project Name Sebou II Development Project Loan Number 1018-MOR Amount (US$ million) 66.0 Loan Agreement Date 06/27/74 - iii - MISSION DATA Month/ No. of No. of Man- Date of Item Year Days Persons weeks Report Appraisal 01-02/69 19 7 17.5 09/04/69 Supervision I 03/70 4 5 2.5 04/01/70 Supervision II 09/70 12 3 6.0 10/23/70 Supervision III 01/71 9 2 3.0 03/03/71 Sueprvision IV 07/71 8 3 3.0 09/02/71 Supervision V 01/72 9 2 3.0 02/22/72 Supervision VI 06/72 10 5 7.5 08/26/72 Supervision VII 02/73 7 2 2.0 07/19/73 Supervision VIII 06/73 7 1 1.0 11/01/73 Supervision IX 03/74 12 2 4.0 04/22/74 Supervision X 11/74 4 2 1.0 12/12/74 Supervision XI 06/75 2 4 2.0 11/18/75 Supervision XII 02/76 7 4 4.0 03/24/76 Supervision XIII 06/76 3 3 1.5 07/20/76 Supervision XIV 03/77 7 3 3.0 03/25/77 Supervision XV 08/77 4 2 1.0 09/16/77 Supervision XVI 12/77 2 1 0.2 01/10/78 Supervision XVII 06/78 7 2 2.0 07/14/78 Supervision XVIII 03/79 13 2 4.0 04/18/79 Supervision XIX 05/80 2 2 0.4 05/29/80 Completion 01/81 13 2 3.5 Total 161 72.1 COUNTRY EXCHANGE RATES Name of Currency (Abbreviation) Dirham (DH) Year: Exchange Rate: Appraisal Average (1969) US$1 = 5.0 DH Intervening Years Average US$1 = 3.6-5.0 DH Completion Year Average (1981) US$1 = 4.3 DH - iv - PROJECT PERFORMANCE AUDIT REPORT MOROCCO: RHARB SEBOU IRRIGATION PROJECT (LOAN 643-MOR) HIGHLIGHTS The Rharb Sebou Irrigation Project was designed to develop the land and water resources in the Rharb plain. The project provided for the con- struction of the Idriss Dam, the development of new irrigation on 38,000 ha, the improvement of rainfed agriculture on 26,700 ha, the construction of sugarcane processing facilities and road infrastructure, and technical assis- tance to help implement the project. The basic objective of the project was to establish viable farming units to benefit farmers in the area and increase the contribution of the project area to the national economy. The project achieved the bulk of its infrastructure development objectives. The project did not, however, fully achieve its agricultural development objectives. More importantly, the project resulted in workable solutions to many of the problems which hindered the full realization of those objectives. The project is presently at a stage where the basis for further agricultural development is well established in the Region and a major manage- rial and policy input is needed to take optimum advantage of it. The manage- ment input is required for maintaining the physical structures completed under the project and providing effective support services to producers. The allocation of this responsibility between public, cooperative and private interests should be seriously studied in light of Government directives to decrease the burden on the public budget and in light of the need to promote self-help and the efficient use of resources. The policy input is needed for ensuring the preservation of viable farm units, establishing and enforcing standards to protect against a deterioration in the project environment, and motivating farmers to serve the regional and national development objec- tives. The economic rate of return was re-estimated at 9% compared to 11% at appraisal. The major lessons from this experience for future projects are: (i) adequate supervision of both physical implementation and developmental aspects of a project pays off, (ii) the adequacy of the national research- extension system for providing the project with the necessary back-up should be well assessed at appraisal, (iii) flexibility should be built into the design of large irrigation structures to allow for adapting their use to major changes unforeseen at appraisal, and (iv) preparation/appraisal should concern itself as much with the creation of viable farming units as with the preserva- tion of their viability over time. -v- The following points may be of particular interest: - failure of the rainfed component of the project resulted from more extensive floods than expected at appraisal (PCR, paras. 4.11-4.13) and from the failure of Government efforts to restruc- ture land ownership (PCR, para. 4.26); - procurement was complicated by the multiplicity of contracts (PCR, paras. 4.19-4.20); - manpower development was not given adequate attention in this project (PPAM, para. 10); and - cost recovery remains an issue in the project area (PCR, paras. 6.09-6.14). PROJECT PERFORMANCE AUDIT MEMORANDUM MOROCCO: RHARB SEBOU IRRIGATION PROJECT (LOAN 643-MOR) I. SUMMARY The Project and its Objectives 1. The Rharb Sebou Irrigation Project was conceived as an eight-year phase of a wider and longer term program for the development of the Sebou Basin. It was preceded by the Sidi Slimane Project (1964 Bank Loan 389-MOR) which, although justified on its own merits, was considered as part of the initial phase of the agricultural development of the Rharb Plain. The long- term development program for the Sebou Basin was prepared within the national development guidelines defined and accepted by Government for the period 1964-1985. These guidelines recognize irrigation as the main immediate means for increasing crop and livestock production, also accepting the long-term role of improved rainfed farming. The project provided for: (a) construction of the Idriss I storage dam at Arabat; (b) land consolidation, reorganization and redistribution over 90,000 gross ha; (c) land preparation and construction of irrigation and drainage systems over 38,300 net ha, and improvement of existing irrigation on 5,000 net ha; (d) improvement of rainfed agriculture over 26,700 net ha; (e) construction of buildings; (f) improvement of roads and crop processing facilities; (g) experiments and investigations for subsurface drainage; (h) engineering and supervision services including geological studies of the reservoir area; and (i) strengthening and reorganization of the Rharb Regional Agricultural Development Office (ORMVAG) at Kenitra, including retaining general consultants and planning the second phase of development. 2. These elements were financed in support of three objectives set for the project, namely, first, to increase agricultural production for both import substitution and export through increased cropping intensity, increased -2- productivity, and integration of crop and livestock activities; second, to improve small farmers' incomes in the project area through land redistribution and access to improved inputs and services; and third, to prepare for further development in the project area. Project Preparation and Design 3. Project preparation involved extensive studies undertaken by Govern- ment, assisted by UNDP/FAO. Preparation covered technical, socio-economic, and institutional aspects of the proposed development activities. The Bank was kept informed of the progress in the preparation work and, for that reason, was instrumental in raising several important issues that needed resolution prior to investment decisions being made by either the Government or the Bank. In particular, the Bank contributed to Government's decision to expand the scope of the preparation work to include an assessment of the organization and management aspects of the proposed agricultural development scheme. The questions raised evolved around the adequacy of the administra- tive capability for the construction, operation and maintenance of project works, and the adequacy of support services including research, extension, credit, input supply and land reorganization. The Bank also raised several technical questions regarding the cropping pattern and the phasing of infra- structural and agricultural development activities. Thus, judging from the volume and substance of the exchanges that took place during preparation, it is clear that project preparation was given appropriate attention by the Government, particularly at the policy making level, and by the Bank. 4. A major factor that facilitated the constructive exchange of views between the Government and the Bank has been the relative continuity in Bank staff involvement in the project. In addition, the Bank has made a commend- able effort to provide or help the Government identify qualified technical assistance whenever technical problems arose for which the country lacked the qualified manpower to investigate and resolve. Project Implementation 5. An outstanding feature of this project has been the intensive dialogue between the country and the Bank on various aspects of project implementation. This dialogue was made possible through well timed and well staffed supervision missions characterized by a high degree of continuity in staff involvement. The Government has consistently sought Bank assistance whenever technical problems developed during implementation and the Bank has, in most cases, responded positively to meet the project needs. Government officials have expressed satisfaction with the Bank supervision input. 6. As a result of this intensive dialogue, changes in the project environment, unforeseen at preparation and appraisal, were continuously assessed by Government and the Bank cooperated in facilitating most of the necessary adjustments in project design to be introduced in the light of new knowledge, thus, improving the chances for project physical as well as devel- opment objectives to be achieved. The major changes in project design were: -3- (i) the construction of an independent sugarcane processing plant instead of adapting the sugar beet factory to process cane, (ii) the rehabilitation of the road system beyond the requirements identified at appraisal, (iii) the introduction of flood control, and (iv) the lower emphasis on improving rainfed agriculture. These changes were mainly the result of incomplete knowledge at the preparation stage about factors for which more information could not have been obtained during preparation/appraisal in a predictable period of time. Prominent among these factors which were reassessed during project implementation were (i) the frequency and extent of floods, both of which proved worse during the implementation period than predicted on the basis of statistics available at the preparation stage, (ii) the success of the newly introduced sugarcane and the unforeseen overlap with sugar beets in their processing necessitated the construction of a new sugarcane factory and additional reinforcement of the road network, and (iii) the influence of national price policies and international marketing constraints on production patterns in the project area. Project Results 7. In relation to its production objective, the project succeeded in improving both productivity and production (PCR, Table 3). Sugarcane, rice, forage and truck farming performed better than expected at appraisal, while sugarbeet and wheat production fell below appraisal expectations. The citrus program was decreased for economic reasons. The project is presently at the mid-point of its development period as estimated at appraisal. So far, citrus, sugarcane, sugarbeet, and rice have, respectively, reached 30%, 40%, 75% and 22% of their appraisal full development targets. Wheat production, meanwhile, has declined by about 10% while forage crop production has more than tripled. Considering the fact that the attention of the project manage- ment unit had to concentrate on the physical implementation of the project during the first half of the project development period, the production results so far obtained are satisfactory. However, there remains a sub- stantial unexploited potential for increasing productivity and production beyond the levels achieved so far. In order to build upon the realizations of the project, it is essential that, henceforth, project management concentrate -more on making better use of and maintaining the resources available and maybe less on construction of infrastructure (PCR, para. 1.13). 8. Information available is insufficient for a proper evaluation of the project impact on farm incomes. Thus, it is not possible, at this stage, to assess the extent to which the project achieved its second objective of improving farmers' incomes. Qualitatively, however, it is clear that the project already had a significant positive impact on the standard of living of a high proportion of farmers in the area. Even more important is the apparent impact of the project on other economic activities in the region, particularly agro-industry, construction industry, and services. The impor- tant feature in this project is that the secondary effects are not a result of merely financial injections in the system, but rather the result of activities completely integrated into the production system supported by the project. Private, cooperative and publicly supported industries emerged to supply and service the irrigation system and to process the major project products (sugar, rice, milk, citrus). 9. The project was also a contributing factor to the development of cooperatives in rice milling and sugar processing. In addition, the Agrarian Reform Cooperatives assisted under the Project are getting off to a good start. The project has also provided opportunities for strengthening the local contracting capability and has contributed to manpower development in the Region. These achievements indicate that the project has succeeded in introducing the principles of self-help in the region in the sense of lesser reliance on Government services. A major challenge now facing the Govern- ment is to spread the principles of farmer self-help to such functions as irrigation system maintenance, land preparation, input supply and output marketing in order to promote efficient resources utilization and decrease the burden on public operating funds. The Government has already adopted the policy that the Regional Offices should be revenue generating or at least self-sustaining. This policy, however, is not yet fully implemented. II. MAJOR ISSUES Manpower Development 10. A basic shortcoming identified at preparation stage was the weakness of the development institutions in the project area, the lack of managerial skills and the limited capability in research, extension, credit, land tenure, and operation and maintenance of the proposed irrigation system. Proposals were prepared by the Government and discussed with the Bank for reorganizing and strengthening the Regional Agricultural Development Office. Those pro- posals were reviewed by the appraisal mission and provision was made in the project for the employment of consultants to assist in planning and super- vising the implementation of the proposed development program. Concerning local staff, the appraisal report stated that "the strengthening of the Regional Office to meet the increased work load of the project will be facili- tated by the fact that construction of a number of other major irrigation projects in Morocco will be nearing completion.... Thus, the Ministry of Agriculture intends to transfer a large number of capable, experienced engi- neers and agronomists from other Regional Offices as the demand for their services builds up in the Rharb." This audit finds that the appraisal approach to staffing the project could have been improved in two respects. First, because of its interest in the global development goals of the country, the Bank should have promoted adequate staffing of all development projects regardless of their stage of construction and the source of their financing.1/ 1/ The Region pointed out that, under the Morocco Third Education Project, a National Agricultural Extension Center was established at Meknes as a first step in developing a network of regional extension/farmer training Centers. This Center became operational in 1981. This audit finds this input too little, too late to serve the needs of a major investment as that undertaken in the Rharb Sebou Project. -5- Encouraging the transfer of experienced staff across projects is not wrong in itself. However, the Bank did not stipulate that the projects supplying the staff be properly provided for, did not provide for training replacements, nor did it stipulate that the Government train replacement staff. The Bank repeatedly expressed concern over lack of qualified manpower in Morocco at the- time the project was prepared and appraised, and continued to do so during implementation. This concern, however, was not reflected in the allocation of project funds for training. Nor was this audit able to identify other training programs which were ongoing in the country at that time and which the Bank and the Government could have counted upon for increasing the supply of manpower of the quality needed for this and other development programs.l/ Second, as some Government officials indicated, given the benefit of hind- sight, it is difficult to explain spending US$5-6 million on consulting services while simultaneously spending negligible amounts on training local staff in order to make the country less dependent on outside consultants in the future.Z/ Sprinkler Versus Gravity Irrigation 11. Government's unilateral decision to equip 2,600 ha with sprinkler irrigation was prompted by the shortage of precast canal units and Government determination to accelerate the construction of irrigation network to meet the target of the Five-Year Plan which ended in 1977. This decision was accompanied by the introduction of changes in the organization and management of the canal sections factory to improve its production and by consideration of additional sources of supply of the canal sections. A study of the cost of sprinkler versus gravity irrigation, undertaken at the request of the Bank, showed higher capital and operating costs for sprinkler irrigation. Available data did not allow a proper economic evaluation of the two systems. On that basis, the Bank decided not to disburse to the account of works done for the sprinkler system. 12. Looking at the Bank decision strictly from the efficiency of the loan administration angle, this decision was the right one since it was in conformity with the loan agreement and thus showed the Department's concern over the proper management of the project funds. However, at the time this decision was made, the appropriateness of various irrigation techniques was being questioned both within the Bank and by officials involved in project implementation. This means that there was doubt as to what technique was appropriate for the Rharb. Accordingly, and in retrospect, the decision not to support sprinkler irrigation can be challenged and the question asked why the Bank did not encourage Government to experiment (on a scale smaller 1/ Staff in the Region are of the opinion that staffing of OMVAs in Morocco improved considerably between 1970 and 1975, to the extent that by 1975, they could be considered well staffed at a technical level. 2/ Staff in the Region point out that a high proportion of the funds for consultancy services was spent in support of the Direction Hydraulique for dam design, construction and flood study. That part spent on the irrigation component provided important on-the-job training. - 6 - than the 2,600 ha proposed by Government) with alternative systems of irriga- tion, particularly under circumstances where irrigation was an innovation for most farmers involved and where new crops and new crop rotations were being introduced. In fact, later experiments undertaken by Government have demon- strated that the sprinkler system can have major technical advantages over gravity irrigation since (i) it allows for irrigation during 24 hours (two 12-hour settings), whereas gravity irrigation, as presently practiced by farmers, allows for operation only during daylight. In the case of sugarcane for example, Government officials reported that although the system was designed for 24-hour operations, it presently allows for irrigation of only about two-thrids of the theoretical maximum irrigable area if 24-hour irriga- tion were feasible, and (ii) the sprinkler system proved more suitable for some of the rotations recommended in the area. For example, the sunflower crop following sugar beets is usually not irrigated in perimeters with gravity systems because of the need to prepare ridges after harvesting the sugar beets. Conversely, in areas with sprinkler systems two or three irrigations are normally given to sunflower resulting in substantial increases in yield. This apparent technical evidence in support of sprinkler irrigation could have been evaluated economically if the Bank had supported experimentation; instead the Bank chose to reject Government proposals strictly on the basis of a comparison of capital and operating costs of the two systems. Slow Adoption of Irrigation 13. The PCR attributes the low irrigation adoption rate to reluctance of farmers to irrigate crops which are traditionally rainfed (PCR, para. 5.02) and to inadequate extension (PCR, para. 5.03). This audit does not support this conclusion for the following four reasons. First, it is too early to conclude so affirmatively that farmers will remain reluctant to irrigate winter crops (wheat and sugar beets). It may be a fact that "farmers in higher rainfall areas accept the discipline of irrigation much less readily than those in the more arid south (PCR, para. 9.01)", but it also is a fact that farmers in the higher rainfall north stand to lose more from excess water than from lack of it. Thus, since pre-irrigation and spring irrigation of winter crops is a new phenomenon in the area and no research work was done to help farmers minimize the risk of excessively watering winter crops under a system with supplementary irrigation, it does not appear appropriate to blame project failure to introduce supplementary irrigation for winter crops on farmer's reticence to change. This is particularly the case since farmers in the region have shown a high level of technological sophistication in identi- fying the strengths of the newly introduced irrigation system and shifting to crops most likely to allow them to take advantage of those strengths. Second, using the PCR calculations (PCR, para. 7.06), it is clear that farmers are not motivated to irrigate wheat since, even under successful irrigation, the impact of incremental wheat production on their incomes remains small.!1 In 1/ Staff in the Region consider the income per incremental day of labor to be the relevant variable rather than the incremental total income. They argue that since the return to incremental labor is high (DH 125/day) in the case of wheat, farmers should be motivated to irrigate wheat. This audit disagrees with this argument because the PCR calculations allocate the total incremental return to labor and ignore other inputs. -7- their view, the risk involved would diminish, or possibly eliminate, incre- mental benefits. Third, organizationally, the new cropping pattern repre- sented a drastic change for the farmers, without transitional alternatives. In retrospect, it may have been more efficient to concentrate on irrigating summer crops while improving the production of winter crops under rainfed conditions and researching ways to irrigate them efficiently once farmers are well versed in irrigation technology. Fourth, the project lacked the agricul- tural research support needed for identifying weaknesses in the farming systems and finding practical ways to correct them. This audit is of the opinion that the weak link in project organization was research rather than extension. The project did not provide for research and the existing research organization failed to serve farmers at the levels needed for new agricultural systems being introduced with the unavoidable technological, socio-economic and environmental uncertainties. Environmental Deterioration 14. Development in the project area has resulted in a high level of water pollution due to lack of regulations and public control. The major sources of pollution have been the sugar industries, other industries, and the sewer systems. The project area has faced malaria problems occasionally, and farmers continue to be subjected to the hazards of bilharzia. According to correspondence -on files, the Bank has raised the issue of malaria and bilharzia on'two occasions. However, there is no evidence that the Bank has given the environmental problems the needed attention in the course of its dialogue with Government. Studies were financed by the Bank under Sebou II project, but to date no action has been taken by Government to address the problems. At this stage, it is imperative that the Bank assist Government (in the context of the Sebou II project for example) in establishing standards for controlling pollution and in establishing procedures for minimizing the incidence of water related diseases in the project area. Flood and Frost Risks 15. Damages caused by floods and frost during Project implementation were substantially greater than those expected on the basis of estimates made at the preparation and appraisal stages (PCR, para. 4.11-4.17). The potential for flooding and frost was studied by the preparation team on the basis of historic data available and first hand observations during their field work. Although the audit had no basis for evaluating the quality of the field investigations undertaken during project preparation, there is ample evidence in the preparation documents and in correspondence between the Bank and Government that these issues were adequately studied and reported upon as part of the feasibility and preparation work. The judgements made at appraisal cannot, therefore, be questioned. Nevertheless, in view of the serious impact floods and frost had on project performance, this audit chose to underline the importance of requiring a proper assessment of these factors and other risk- related elements during the project preparation stage and the importance of reviewing during the appraisal stage the adequacy of the answers provided by preparation documents. - 8- III. IMPORTANT LESSONS FOR THE BANK 16. The outstanding feature of this project was the intense and con- structive dialogue established between the Government and the Bank from initiation of the preparation of the project to completion of its implementa- tion. This dialogue has allowed for adjusting project design in light of new knowledge or unexpected changes in the environment under which the project was implemented. The end result was the preservation of the development goals of the project and a solid start (even though slower than expected) in their achievement. The supervision process was a continuation of the preparation and appraisal process. Well staffed supervision missions have maintained a constant watch on progress in the implementation of the project (both physical and developmental) and assisted the Government in correcting most weaknesses in design and in adapting to new realities. This is an example worth emulat- ing, particularly in countries with weak institutions and limited manpower base. 17. The basic weakness of this project was its inadequate provision for research in an area where a new agricultural system was being introduced. In the case of winter crops, the project provided for crop improvement under rainfed conditions but this element suffered from the heavy emphasis on infrastructure development in project implementation. The project did not provide, however, for the development of irrigation techniques that would minimize the risk of overwatering winter crops and facilitate proper water management. In the case of summer crops, the project did not emphasize experiments with various irrigation systems and the identification of cropping patterns that would take best advantage of water available and are suited for the area resource endowment, including labor. 18. In designing large projects, some technical alternatives are some- times rejected on economic or other grounds. As conditions subsequently change, such alternatives may become viable or necessary. Thus, flexibility in design and constant monitoring of how the project relates to the rest of the economy are critical. In this project, the Bank has not supported the installation of hydroelectric power plant at the Idriss Dam,,but supported measures to be taken at the design stage to make later installation of such plants feasible without unduly large new investments (PCR, para. 4.07). Changes in international energy prices made the construction of the power plant economic, and the Government built the plant. Thus, the flexibility in design turned out to be of great value to Morocco in meeting its energy needs and in further utilizing the Dam. 19. Land tenure was a major issue at the preparation-appraisal stage. The project was designed to create viable farms, but did not introduce mea- sures to preserve them. As a result, inheritance traditions are causing a de-facto subdivision of farms (although no transfer of legal titles is taking place yet) which is again leading to non-viable farm units and hindering the application of recommended crop rotations. This issue should be given special - 9- attention in the context of the Sebou II project. Project management staff suggested two alternatives for consideration. The first consists in the creation of a land Bank which would permit the Project Management Unit to buy and sell land under specified regulations in order to maintain the economic size of farms. The second alternative consists in keeping the land undef public ownership and giving farmers the right to cultivate on the farms allocated to them for life. These and other alternatives should be considered and their suitability for Morocco discussed with Government.  - 11 - ANNEX 1 TRANSLATION OF COUNTRY COMMENTS Received March 26, 1982 Failure of the rainfed component was due mainly to the unforeseen floods. The construction of a sugar cane factory (SUNACAS) was not justified on the basis of frost affecting sugar cane, but rather on the basis of the overlap between the sugar cane and the sugar beet processing period (February-August and May-August respectively). The slow supply of irrigation canal sections was due mainly tc the inefficiency of the factory which was designed to supply the needed canal sections over a five-year period. Other comments of lesser importance are: (i) sugar cane yield was 100 m ton/ha for the 1979/80 season and not 36.4 m ton/ha as table 3 of the PCR shows; (ii) the gravity irrigation system was designed to operate on a 24 hour basis contrarily to what was stated on page 11 of the PPAM; (iii) the sugar factory at Dar Gueddai has a daily capacity of 3,500 m tons, not 3,000 m tons. Signed Director of ORMVAG  - 13 - KINGDOM OF MOROCCO COMPLETION REPORT OF THE RHARB SEBOU IRRIGATION PROJECT (LOAN 643-MOR) April 29, 1981 Europe, Middle East and North Africa Regional Office  - 15 - KINGDOM OF MOROCCO COMPLETION REPORT OF THE RHARB SEBOU IRRIGATION PROJECT (Loan 643-MOR) /1 I. SUMMARY 1.01 The Rharb Sebou Irrigation Project was appraised in January 1969, and a $46 million Loan for the project was signed in November 1969. The Project was successfully completed in 1980. 1.02 The project area is situated in the flood plain of the Sebou River, north of Rabat, in a 500 mm winter rainfall zone. The project was formulated after extensive preparation and preinvestment studies by a UNDP/FAO project, and is the first investment package of three required to develop the land and water resources of the Plain. 1.03 At appraisal the project included the construction of the Idriss Dam; the development of new irrigation on 38,300 ha; the improvement of rainfed agriculture on 26,700 ha; land consolidation and distribution; construction of sugarcane processing facilities; roads and infrastructure and technical assistance. Major issues at appraisal included land tenure, the feasibility of introducing sugarcane to the project area, and technical design of the project. Flooding and the effects of frost on cane which subsequently also became major project issues were not extensively discussed in the appraisal report. 1.04 Actual construcEion targets achieved were close to the provisions at appraisal except for: (a) The rainfed component of the project situated /1 This completion report has been written on the basis of a detailed completion report prepared by one of the project executing agencies, ORMVAG. The ORMVAG report, dated January 10, 1981, comes in six volumes as follows: Volume I; Introduction; Volume II: Identification and Description of Project; Volume III: Project Execution; Volume IV: Results; Volume V: Institutions; Volume VI: Annexes. The report also relied on the findings of a mission to discuss the completion report in January 1981, and supervision reports and files on the project. - 16 - in lower lying lands, where it was found that flooding could damage the land drainage works proposed. They were not supported by the farmers and not built under the project. This component represented only 6% of Project investments at appraisal. (b) Conversion of an existing sugar beet factory to process sugar cane, where appraisal proposals were found to be unfeasible for technical reasons. A separate cane factory, built under a different loan (Sebou II Project Loan 1018-MOR) which covered this and other items, had advantages because it was easier to process frost affected cane more rapidly. 1.05 There were only minor engineering design changes during the project period. The Government decided to equip one 2,560 ha area for sprinkler irrigation on an experimental basis instead of the appraised pumped gravity supplies. No loan disbursements were made for the sprinkler system. Also, following major floods in 1970 and subsequent studies, it was decided not to equip an area of about 2,600 ha with irrigation facilities so that it could be zoned as a natural floodway. 1.06 The dam was completed on schedule but there was a delay of about one year in the construction of irrigation works. Major highlights of the construction period were (a) the smoothly run dam construction; (b) major floods which ravaged the project area in 1969, 1970, 1977 and 1979 and the consequent debate throughout the project period of the possible need for flood protection works to protect the irrigation facilities being built under the project; (c) supply problems with precast canal units used to build the irrigation system, causing delays; (d) the multiplicity of small contracts resulting from the current preference in Morocco for committing funds annually; (e) a lack in consistency in management of ORMVAG in the early years of the project caused by rapid staff rotation. 1.07 Early in the project the Bank agreed to a Government request to allocate funds to a detailed study of the flood risk in the Plain and subsequently to include $12 million of flood protection works (dykes) in the Sebou II Project to protect the project irrigation works from possible flood damage. The dykes were built around only one section of the project (P11), and the remaining dykes were then cancelled. Studies show that the project area remains subject to some risk of flood damage until the completion of a large new dam upstream, Mjara, expected during the 1990s. Crop damage in the interim is likely to be less than that occurring without the project because of the change to more flood tolerant crops under the project. Infrastructure damage is expected to average less than 1% of capital costs annually. 1.08 Goods and services for the project were procured in a large number (170) contracts, including some 100 civil works contracts. The bank prior review limit of $100,000 for civil works led to a review of about 50 civil works contracts covering 99% of the value of the contracts. A limit of $1,000,000 would have reduced the number of contracts reviewed to only about 20 while still capturing 86% of contract value. An upward revision of the prior review limit is recommended for future projects of this type (paras 4.20-4.21). - 17 - 1.09 Hydroelectric facilities for Idriss Dam were not included at appraisal on economic grounds, but they became viable after the energy price increases in 1973, and were subsequently installed under a supplier credit. Their construction was greatly facilitated by the fact that measures had been taken in the original design to make such later construction possible without any unusually onerous new investments (para 4.07). 1.10 Land consolidation in the irrigated areas was successful. Unlike the Bank's experience in many other countries, this work was carried out efficiently and on schedule. However, it failed in the rainfed areas partly due to the lack of effective supporting legislation. Land distribution in the project area benefitted 1,355 farmers up to 1980 but a start on distribution of some of the 13,855 ha of irrigated collective lands was only expected to be made in 1981. Agrarian Reform Cooperatives set up under the project have so far performed well. 1.11 Total project costs were finally 29% above appraisal estimates in dollar terms, but if allowance is made for uncompleted works and exchange rate variations the overun was 35%. The dam was 18% over original estimates and the irrigation system 55%. Cost overuns were less than those to be expected by applying the actual inflation rates experienced, suggesting that costs were adequately contained in a period of rapidly rising prices (para 4.29). 1.12 Full agricultural development is expected to be achieved by about 1990. Production of sugarcane, and wheat is expected to be more than appraisal estimates because larger areas are expected to be devoted to these crops, although yields will probably be less than anticipated. Citrus and cotton will be less than expected because of marketing and technical problems. Frost has turned out to be a hazard for sugarcane but the Office R4gional de Mise en Valeur Agricole du Gharb (ORMVAG) has organized effective ways of processing the frost affected cane in order to minimize losses. The rate of adoption of irrigation by farmers to date has been slower than anticipated, and it now seems likely that part of the wheat crop will remain unirrigated because of the reticence of farmers to accept irrigation of this crop, A major extension effort will be required to ensure effective use of the irrigation system by the full development date of 1990. 1.13 ORMVAG was plagued by a series of rapid senior staff changes at the beginning of the project which negatively affected project performance. Subsequently the situation stabilized and an efficiently managed Office with high quality staff was developed. Management has concentrated on the construction aspects and now needs to emphasize operation and maintenance by allocating adequate staff and funds for this (para 6.08). 1.14 Poor operation of the Idriss Dam led to water deficits for irrigation after the drought conditions experienced in 1981. Better harmonization of the interests of ORMVAG and the Office National d'Electricit6 (ONE) is still required (para. 6.06). - 18 - 1.15 Water charges have been raised upwards to levels which could recover 100% of 0&M costs and a small percentage of capital costs (about 3%). However, collection rates are low, presently about 30% and cover much less than O&M costs, notwithstanding a covenant in the Loan Agreement requiring the full collection of water charges (see para. 6.12). 1.16 Annual audit reports were not received by the Bank. ORMVAG's accounts were under constant audit by the Ministry of Finance using the "a priori" system of financial management common in French speaking countries (para 6.15 and Annex 1). 1.17 Project economic rate of return is expected to be 9% compared with 11% estimated at appraisal and farm incomes are expected to reach levels of at least double those that would be possible without irrigation. The project has already had substantial employment creation and import substitution benefits and these are expected to increase with project development. Secondary benefits in the development of infrastructure (housing) and processing industries in the project area because of the project have been important. II. BACKGROUND 2.01 The project is situated in the Rharb Plain, which is the largest contiguous area of flat, high quality agricultural land in Morocco. It is the flood plain of the Sebou River, the biggest river in Morocco (the second largest river is the Oum-er-R'bia River), providing about 40% of the surface water resources of the country. The 460,000 ha plain lies just north of the capital city, Rabat, in a zone of relatively abundant winter rainfall (500 mm) and hot dry summers. 2.02. In the eastern part of the Rharb Plain, the 30,000 ha Sidi Slimane Project was completed in the fifties using water controlled by the El Kansera Dam on the Beht tributary of the Sebou. Elsewhere, prior to the project, irrigation was limited to some 5,000 ha of privately owned rice and orange plantation schemes and the Plain was under extensive rainfed cultivation, mainly of wheat and sugarbeet. Over 80% of the water resources of the Sebou Basin were uncontrolled and ran wasted to the sea in contrast to the situation in the Oum-er-R'bia Basin where over 100,000 ha were controlled to irrigate the large Tadla and Doukkala irrigation systems. Development of the Sebou waters and the Rharb Plain was therefore, at that time, a high Government priority. 2.03. A particular feature of the project area in the later sixties was the unstable land tenure situation. Much of the land had been farmed by foreign settlers who introduced modern commercial agriculture to some 300,000 ha in the Sebou Basin. Most of these farms were over 100 ha in size and many were more than 500 ha. After Independence some of this land was sold to Moroccan farmers and the remainder was expropr7ated by the Government for eventual distribution to Moroccans. Large land transfers were current at the time of appraisal. - 19 - 2.04 A previous Bank-financed project in the area was the Sidi Slimane Irrigation Rehabilitation Project (FY65 Loan 389-MOR) which comprised the repair and improvement of certain hydraulic structures of this project. Recent projects include the Sebou II Project (FY74 Loan 1018-MOR) which provides for agro-industrial facilities and flood protection works /1 and the various Caisse Nationale de Cr4dit Agricole (CNCA) lines of credit which have provided for improved medium and long term agricultural credit. Outside the project area, the Bank Group has financed three other irrigation projects: Souss Groundwater (FY75), Doukkala I (FY76) and Doukkala II (FY77); two Agricultural Development Projects focussing on rainfed agriculture in the Meknes (FY75) and Fes-Karia-Tissa areas (FY79); and a Vegetable Production and Marketing Project (FY80). Three Performance Audits have been completed on Moroccan Agriculture projects covering the first three Agricultural credit projects executed by CNCA /2. III. FORMULATION 3.01 The project was formulated using the results of a comprehensive Basin development plan of the Sebou carried out by an UNDP/FAO Project from 1963 to 1966 which led to the preparation of detailed feasibility studies for investment. The Basin study recommended the development of irrigation, hydroelectric and flood control facilities, and the parallel improvement of rainfed agriculture. The total irrigation potential of the Basin was put at some 250,000 ha and a phased development was recommended. One controversial recommendation was that irrigated sugarcane should be "introduced as an alternative to sugar beet for sugar production in order to accelerate the achievement of national sugar production goals". This was controversial because there was a body of opinion that thought that current research results did not sufficiently prove the adaptability of sugarcane to the Gharb climate. 3.02 The Bank project was essentially the first investment package of three proposed to fully develop the land and water resources of the plain. For full development two dams were recommended, Idriss Dam at Arabat and Mjara Dam. Idriss would provide sufficient water control for the first two investment packages. Mjara would provide water for the third package and Important flood protection benefits. Since effective flood control could only be provided by the Mjara Dam, and analysis indicated that Idriss should be built before Mjara, the land to be equipped for irrigation under the first investment package was chosen where there was least risk of flood damage, i.e. in higher lands on the left bank of the Sebou river. Because of topography and cost considerations, irrigation was proposed in separate perimeters served by pumping direct from the river rather than by a gravity canal. /1 See discussion in para 4.11 et sequ. /2 OED Report on Agricultural Credit Programs, Background Paper No. 4 "Evaluation of the CNCA/IBRD Agricultural Credit Programs in Morocco (CNCA I Loan 433-MOR); Report M79-442 (CNCA II Loan 861-MOR); Report 80-962 (CNCA III Loan 1361-MOR). - 20 - 3.03 The provision of hydroelectric facilities was considered and rejected at Idriss on economic grounds although allowance was made in the design for the future installation of power facilities should economic conditions change. These facilities were subsequently provided separately from the project (para 4.06). 3.04 The appraisal objective of the project was to improve agriculture in three communes and part of a fourth commune covering a gross area of 90,000 ha in the Rharb Plain by the provision of irrigation facilities and the improvement of rainfed agriculture. At appraisal, the project included the following major components: (a) The construction of the Idriss I Dam at Arabat on the Inaouene River; (b) In the total project area of 90,000 ha: land reorganization and redistribution in the communes of Dar Gueddari, Jemaa des Haouafate and Msaada and the Ouled Khalifa secton of Khenichet; (c) In 60,000 ha (43,300 ha net) of the above area: land preparation and the construction of new irrigation and drainage systems covering a net area of 38,300 ha and the improvement of existing irrigation on 5,000 ha; (d) In the remaining 30,000 ha (26,700 ha net): the improvement of rainfed agriculture; (e) The construction and equipment of a new sub-division office, two new local development centers and 20 sector offices which, together with five existing development centers, would serve both the irrigated and rainfed parts of the project area; (f) The improvement of roads and crop processing facilities to serve the project area; (g) Experiments and investigations to determine design criteria for subsurface drainage; and (h) The strengthening and reorganization of the Rharb Regional Agricultural Development Office at Kenitra to manage the project with the assistance of consultants and to plan the second phase of development. 3.05 Major issues at appraisal included the land tenure situation in the project area, the feasibility of sugarcane cultivation (which was accepted), the viability of hydroelectric facilities at the Idriss Dam at Arabat (which were rejected) and the proposed use of precast concrete raised canal sections ("canaletti") for the irrigation distribution systems (which were accepted). There is no record that the flood risk was a major issue. - 21 - IV. IMPLEMENTATION Targets Achieved and Design Changes 4.01 The area targets achieved during the project compared with appraisal objectives are compared in the following Table: Project Targets and Achievements Appraisal Actual ---------ha net---------- Land Reorganization 70,000 35,700 New Irrigation Facilities 38,300 35,700 Existing Irrigation Improvement 5,000 about 5,000 Rainfed Improvement 26,700 0 The dam and administrative buildings were built as planned. The crop processing facilities and some of the roads were not achieved under the present project. A second loan covered these and other items (Loan 1018-MOR). 4.02 There were only minor engineering design changes during the project period. The dam followed the designs accepted at appraisal, and the basic layout of the irrigation system remained for the most part unchanged. However, following serious flooding of the Rharb Plain in 1970 (para 4.11) it was decided, in consultation with the Bank, not to develop part of the original project area for irrigation where the land was situated in a natural floodway that was important for the drainage of the Plain. The two perimeters excluded (S19 and SC - see map) reduced the area developed for irrigation by 2,600 ha to 35,700 ha. Another change was the decision in 1975 by ORMVAG to equip the 2,560 ha perimeter of P7 for sprinkler irrigation on an experimental basis instead of the gravity system approved and used in the rest of the project area. This involved higher capital cost (about 20% higher) and operating costs (100% higher). At the time the Bank was not convinced that these added costs were warranted and no loan disbursements were made for the work involved. There is no evidence to date of better performance in the sprinkler equipped areas that would justify the higher investment. Finally the method of supplying water to the two irrigation perimeters situated in the interior of the plain close to the Beht tributary (Sectors P7 and P8) changed during detailed design. At appraisal a water transfer from the main Sebou River using a temporary pump station was planned on the assumption that water in the Beht would not be available because of the full development of Sidi Slimane project upstream. As it turned out the projected development of the Sidi Slimane project did not take place and there was sufficient water in the Beht River so that the construction of the transfer canal could be delayed, and it was not built under the project. - 22 - 4.03 A major change during implementation was caused by the realization that the appraisal proposals for providing facilities for processing the project's sugar cane output were not technically feasible. The appraisal mission had accepted the recommendations of the Sebou Preparation team that the optimum solution for cane processing was to convert an existing sugar beet factory to a mixed beet/cane factory at relatively low cost by adding separate crushers and conveyors for cane. The idea was attractive because the beet crushing season is theoretically, for technical reasons, limited to a period of about four months (normally May-August) and the beet factory therefore normally remained unused for eight months in the year. Research results on cane indicated that it would be possible to fit in a two month cane crushing season before and after beet harvest and thus improve the overall use of the factory. In practice it was found that a split cane crushing season such as this would cause great difficulties for the land preparation, growing and harvesting cycles for cane, particularly if the beet season was disturbed by late rains in spring or early rains in autumn. In addition, due to sharp increases in prices of sugar processing equipment in 1972/3 and a reassessment of equipment needs to convert the existing factories, including the need to upgrade important existing facilities such as boilers, clairifiers and filters, the cost of conversion was reassessed at $13.3 million compared with the appraisal estimate of $5.1 million. Since this was not far different from the cost of a completely new factory, then estimated to be about $17.0 million, the Government asked the Bank to support the construction of a completely separate cane factory which would have all the advantages of an independent operation. In 1974 the Bank financed the newly proposed factory and other infrastructure under a separate project, the Sebou II Project (Loan 1018-MOR). Under the Sebou II loan a 2,500 ton/day capacity factory was built near the existing sugar beet factory at Mechra-Bel-Ksiri. The new factory became operational in June 1975. This factory is now in full use and a second factory with a capacity of 3,000 ton/day is presently under construction at Dar Guedarri. This second factory is not financed by the Bank. 4.04 An important (and-unplanned) advantage of the separate cane factory turned out to be the improved treatment of frost affected cane that was possible with the separate factory. Rapid treatment of cane is important after frost damage to avoid loss in sugar content. With a combined beet/cane factory, this would not be possible without disrupting the beet crushing season in the case of a widespread frost because of the large volume of cane that has to be processed quickly. The added flexibility of the separate factory has greatly facilitated the implementation of action programs to save the cane harvest following frosts which occured in 1976 and 1981. Construction and Procurement 4.05 The major part of project construction took place between 1969 and 1978. Completion was one year later than planned at appraisal. Given the number of problems that occured during the construction period, the overall program achieved was creditable. - 23 - 4.06 Dam construction went smoothly. The main contract was awarded after ICB prior to Board Presentation and the contractors actually moved onto site in 1969. There was a major input by foreign consultants for detailed design and supervision of construction which was successful in ensuring that suitable technical standards were maintained during construction. A major flood occured during construction in March 1970 but diversion arrangements were satisfactory and the construction program was not affected. Some design changes were necessary after full excavation of the foundations resulting in some increased costs but nothing more than normal for a dam of this type. Other design changes of the spillway were made after a reassessment of the hydrology. One interesting feature of the dam design was that the possiblity of subsequently fitting hydroelectric facilities was incorporated in the design so that facilities could be installed should economic conditions change. This involved some relatively minor investments in conduits and gates. As it turned out the energy price increases of 1973 made the Idriss ler power station more economically attractive and ONE signed a contract in 1975 for the installation of hydropower units using a suppliers credit. /1 These units became operational in 1978. 4.07 This raises a general point that should be kept in mind at the design stage of projects, particularly for large structures. It often happens that some technical alternatives are rejected on economic or other grounds, but that conditions subsequently change and make the alternatives or options viable or necessary, such as was the case with the hydroelectric power plant at Idriss ler Dam. In this case the subsequent construction was greatly facilitated by the fact that measures had been taken in the basic design to make such later construction possible without any unusually onerous new investments. 4.08 Typical of projects prepared and appraised in the sixties both preparation and appraisal reports are silent on reservoir expropriation and relocation issues. However, expropriation of land flooded by the reservoir and relocation of people and infrastructures affected appear to have been achieved without major difficulties. The actual number of people relocated is not recorded, but it is known to be small. Expropriation costs (DH 12 million) equalled some 10% of construction costs. 4.09 Construction of the Irrigation Systems was by contract. There were no force account works. The main works were carried out over the seven year period between 1972 and 1978 - a delay of about one year on the appraisal schedule. The average rate of construction achieved was 5,100 ha/year (appraisal: 6,400/year). /1 Two 19.6 MW units were installed producing some 40 million kwh/year, increasing to 140 million kwh/year at full development. The cost was about DH 70 million. 4.10 Major features of the construction period were (a) major floods which ravaged the project area in 1969, 1970, 1977 and 1979 and the consequent debate throughout the project period of the possible need for flood protection works to protect the irrigation facilities being built under the project; (b) supply problems with the precast canal units being used to build the irrigation system; (c) the multiplicity of small contracts resulting from the current system in Morocco of budgeting and committing funds annually; (d) a lack of consistency in management of ORMVAG in the early years of the project caused by rapid staff rotations (see para 6.02). 4.11 Floods. The history of flooding and damage due to floods is documented in the ORMVAG completion report. L The 1969 floods, right at the beginning of the project, were the first since the exceptionally high floods of 1963. Thus during the project preparation period, no floods were actually observed by the FAO/UNDP preparation team. At appraisal, the appraisal mission had accepted the recommendations of the FAO preparation team that no special measures for flood protection could be justified in the Plain until the construction of the Mjara Dam - a large dam on the Ouerra River which was planned for construction after the Idress ler Dam, and which would largely protect the Rharb Plain from flooding. The preparation team estimated the annual flood damage (in 1968 prices) expected in the whole Rharb Plain at DH 3 million. No separate estimates were made for the project area. However, as mentioned in para 3.02 above the project area was selected in the first place from those lands where the risk of flood damage was the least. 4.12 The 1969 floods were observed by the full project management team and their consultants, and reports of the floods caused great concern in Morocco and the Bank. Following a special FAO/CP mission in March 1970 to review the possible implications of the previous year's floods on the project, a major study by consultants of the flooding problem was set up at the request of the Government and financed under the project. The initial reports by these consultants led the Government to request the Bank to include in the Sebou II Project (Loan 1018-MOR) a $12 million component to provide flood dykes to protect the project irrigation areas. This component was included and construction started in 1974. After the protection of one perimeter (P11) had been completed, no other works were undertaken, mainly because of intense opposition to the protection scheme among the local farmers. 4.13 The detailed reasons for the decision not to go ahead with dyke protection scheme will be discussed in the Sebou II completion report (scheduled for 1982) because that is more of a matter that concerns that /1 See Annex I of ORMVAG Report - 25 - project. The implications on the present project of the of the flood risk situation are presently as follows: (a) the project area is presently subject to risk of flood damage; the greatest risk is in the lower lying rainfed parts of the project area; on one part of the project (Sector P11), protection dykes have been built so that the flood risk on this perimeter, while still existing, is less than the "natural" flood risk; (b) as a direct consequence of the studies of flood risk by the consultants, the area equipped for irrigation under the project was reduced by excluding certain zones on which the flood risk was considered too high (mainly perimeters S19 and SC). This led to a net reduction in the area equipped under the project of 2,600 ha; (c) another direct consequence has been the failure of the rainfed component of the project; in the first place the damage to land banking and drainage works being built in the rainfed lands following flooding was found to be so substantial that complete reconstruction was necessary after major floods. The project management was therefore not inclined to continue with these works in the rainfed lands; secondly there was concern among local farmers (which was generally denied by the consultants studying the question) that the dyke protection works which were meant to be undertaken around the higher irrigated areas would exacerbate flooding problems in the lower lying rainfed areas by diverting water from the higher lands to the lower lands so that they did not want to risk being involved in any project actions in the lowlands which could cost them money (they would theoretically have had to pay charges on land shaping); (d) there is now a tendency among farmers to favor crops that are less affected by floods, particularly in the higher risk parts of the project area. Irrigation gives farmers this element of choice. Wheat is a major risk crop, followed by sugarbeet. Sugar cane on the other hand is tolerant to flooding and for summer irrigated crops there is no risk because floods always occur in the late winter/early spring before summer crops have been planted. 4.14 Historically, flood damages have been mainly to crops rather than infrastructure in the Rharb Plain, usually in the approximate proportion 75%:25% by value. Actual damages in the whole Rharb Plain in previous floods were as follows (1971 prices): Year 1963 1969 1970 1971 Total Damage (DH million) 43.5 24.0 62.4 19.6 of which % Crop Damage 65 80 65 94 - 26 - Since the start of construction of the project in 1972, there have been two major floods in 1977 and 1979 during which the actual damage in the project area has been roughly estimated by ORMVAG as follows (1980 prices): 1977 1979 --DH million-- Agriculture 8.5 22.0 Infrastructure 7.0 7.5 Total 15.5 29.5 4.15 It is difficult to draw conclusions with the paucity of data available and the general uncertainties involved in this sort of situation. However on the basis of what is available, and discussions with the project staff, it seems reasonable to state qualitatively that: (a) with the project, crop damage from flooding in the irrigated part of the project area is expected to be significantly less than the without project situation, because changes in cropping patterns have ,r;esulted in less flood prone crops being planted in the irrigated areas; (b) crop damage in the rainfed areas is expected to be marginally more with the project because of the slightly increased yields being obtained in the rainfed areas due to extension work. However, if the project had gone ahead as planned in the rainfed areas, crop and infrastructure damage with the project would have been much greater than without the project; (c) damage to infrastructure from flooding with the project is expected to take place, but because of the type of irrigation network chosen (raised canaletti) the annual damage is not expected to be a significant proportion of the total value of the infrastructure on place. 4.16 In support of (c) above, the total damage in the high flood years of 1977 and 1979 averaged DH 7.2 million compared with a present day value of the irrigation infrastructure of some DH 820 million, so that the damage in each of these years was equal to less than 1% of the value of this infrastructure. Since this sort of high flood does not occur every year, on the basis of recent experience it now seems likely that annual flood damages are going to average less than 1% of the value of the infrastructure unless a flood of exceptional volume and frequency occurs. 4.17 The flooding problem is expected to be to a large extent resolved by the future construction of the Mjara Dam. Since this dam is not included in the present five year plan, its start will probably be delayed until after 1985. Completion should be in the 1990s period. The flood risk is therefore expected to remain for the next 10-15 years. - 27 - 4.18 Supply of Precast Canal Units. One of the justifications given at appraisal for the choice of precast canal units for the irrigation distribution system was that the work could be carried out more quickly using this system than if more conventional concrete lined canals were used. But there was also concern expressed that sufficient precast elements be made available as necessary. As it turned out the slow supply of these precast units was a cause of delay throughout the early part of the project and a constant cause for concern of the project management and the Bank. The project staff made a great effort to overcome this bottleneck by helping the supplier with technical studies and by scheduling works to maximize progress with these supply constraints. The problem could have been avoided if the new supplier that installed a factory in the project area as part of the project had been asked to install a larger factory in the first place. 4.19 Procurement. Goods and services for the project were procured in a large number (about 170) contracts of which 154 contracts covered the works managed by ORMVAG in the agriculture area. The number of civil works contracts was 96. Dam construction was mainly handled by large international contractors and suppliers. Civil works for agriculture was handled by a multiplicity of small local contractors with relatively short contracts which usually did not extend beyond one construction season. Processing of these small contracts was a heavy burden on the ORMVAG administration and on the Bank staff involved in the project. 4.20 The Loan Agreement provides that all contracts for civil works in excess of $100,000 should go to international competitive bidding and the same figure was the limit for prior review by the Bank. The breakdown of civil works contracts sizes was approximately as follows: Civil Works Contracts Number of Contracts Total Value /a of Price Range /a in Range Contracts in Range (US$ million) (US$ million) 10.0 2 /b 29.3 5.0-10.0 1 9.7 1.0- 5.0 19 33.2 0.1- 1.0 30 10.4 0.1 44 1.2 96 82.8 /a Using the current exchange rate of US$1 = 4.3 DH /b The two contracts were for Dam Construction (US$14 million) which was won by a foreign contractor and for the supply of precast canal units (US$15.3 million) won by a local contractor. The above table shows that: (a) the Loan Agreement required 46% of civil works contracts with a total value of $81.6 million to go ICB. The value of these contracts represents 99% of the total value of contracts let; (b) the limits in the Loan Agreement being the same for ICB and prior review by the Bank similarly resulted in procurement review by the Bank of 46% of the contracts and 99% of the value of the contracts; and (c) an increase in the ICB/prior review limit from $0.1 million to $1.0 million would have resulted in a reduction of the percentage value of contracts so covered from 99% to 86% but it would also have reduced the prior review from 52 contracts to 22 contracts, saving substantially in staff time, without affecting adversely procurement procedures or project execution 4.21 Unlike the dam contract, international contractors showed no interest in the opportunities offered to bid on the scattered civil works of the irrigated areas. No contracts were awarded to foreign contractors. Given this fact and the statistics quoted in para 4.20 it would seem sensible to raise the limit for ICB and prior review threshold to at least $1 million for civil works on future projects of this type. Technical Solutions and Innovations 4.22 The major technical innovation introduced to Morocco through the project was the use of pipelaying machines to build the subsurface drainage networks which made possible efficient drainage construction at relatively low cost. Innovations were also incorporated in widely different technical solutions for the design of pump stations to resolve the difficult problem of pumping water which was often highly charged with sediment from the Sebou River under varying head conditions. The pipelaying machines were very successful. Some of the pumping stations have not been as successful as anticipated in dealing with siltation problems and maintenance costs are higher than anticipated: for the design of the irrigation networks, layouts used on the project were similar to those already used and tested successfully in Morocco and the project did not provide anything new. 4.23 One noticeable feature of the project compared with projects in other countries is the effectiveness with which the land consolidation program was carried out in the irrigated areas. Using a simplified form of land capability analysis combined with a land value assessment, ORMVAG managed to execute land consolidation in 40,000 ha in four years, reaching a peak rate of 14,500 ha a year and always remaining ahead of project construction. Consolidation was not the cause of lengthy delays in project implementation on this project as it often is eleswhere. This success is partly due to the existence of effective legislation (Code des Investissements) supporting these activities in irrigated areas. Outside the irrigated areas, however, land consolidation was not successful, mainly because of the failure to carry out expected land improvement works in those areas (which would have provided the impetus for boundary changes) and also a lack of equivalent legislative support in the rainfed area. - 29 - Agrarian Reform 4.24 Prior to the project land ownership in the project area had been in a period of transition for some years. The general trend was a movement of foreigners out of the Rharb and an establishment of Moroccan farmers. One part of the project supported the implementation of the 1966 Agrarian Reform law and the 1969 Agricultural Investment Code in the communes making up the project area with two main objectives: (a) to stop land fragmentation; (b) set up irrigated farms with a minimum of 5 ha, and 8 to 12 ha rainfed farms by distributing lands expropriated from foreigners to landless farmers or farmers living on collective lands. 4.25 Project objectives have been only partly met so far in the irrigated areas but in the rainfed part of the project there was no success. In the irrigated areas land consolidation, which had to be carried out before any redistribution, was successfully carried out between 1970 and 1974. Subsequently some 6,700 ha were distributed from the common fund to 1,230 farmers in the project area. In addition 125 small farms were increased in size to 5 ha each using 400 ha of expropriated lands. The process continues and in 1981 it is expected to distribute 3,100 ha of collective lands to 600 beneficiaries. The latest ORMVAG figures on land ownership/use in the irrigated area are shown in Table 1, which shows that some 93% of the farmers on 62% of the project area now farm in units of 5 ha or less. Most of these farmers (60%) still farm collective lands. The process of distribution of these collective lands has so far made only little headway. The table also shows that in the Rharb Plain generally, one third of land available for distribution has gone to private farmers, one third to public agencies and one third remains to be distributed. 4.26 In the rainfed lands the difficulties of restructuring the land ownership situation in a rainfed area, which have also been experienced in the ongoing Meknes Project (Credit (555)-MOR), were not overcome. There was added uncertainty caused by the major flood risk in this area which reduced beneficiaries interest in being allotted a farm on this land. Neither land consolidation nor distribution were achieved in these areas. The main lessons on the application of the Land Reform in rainfed areas will be from the Meknes Project so this question is not discussed further here. 4.27 The Agrarian Reform cooperatives set up under the project have been successful and they are well supported by their members. A director is appointed by the Government to help 3 to 4 Cooperatives and cropping patterns and agricultural techniques are adopted more quickly than on private farms. - 30 - Final Costs and Cost Overuns 4.28 The total cost of the project at completion was US$125.5 compared with $97.0 at appraisal (Table 2), implying an overall cost overun of 29%. However, if allowance is made for works originally included in the project and not carried out and exchange rate variations, the actual cost overun was about 35%. Of the separable project actions the effective cost overun of the dam was 18%, while that for the irrigation component was 55%. Dam cost overuns .were less than the average cost overun because the estimates were based on actual contract prices and because the major investments took place during the first three years of the project when inflation rates were low. For the irrigation works the construction occurred over the later eight years of the project during a period of high inflation. 4.29 An analysis of actual inflation rates experienced in Morocco during the project period and the time series of project investments shows that the actual cost increases experienced were less than those to be expected by a simple inflation of prices. A direct application of these inflation rates results in price increases of the irrigation component of 90% over the 1969 base price estimated compared with the 55% actually experienced. The indications are therefore that ORMVAG was successful in controlling construction costs in a period of rapidly rising prices and financial uncertainty when costs could easily have grown in an uncontrolled manner. This was presumably achieved at some cost to the local contracting industry by squeezing capital replacement and profit margins. 4.30 While costs were in general contained, two items turned out to be more expensive than anticipated: pump stations and land levelling. This was due to the technical solutions chosen in the case of the pump stations and the need to move larger amounts of earth than anticipated in the case of land levelling. The pump stations final costs were 110% higher than appraisal estimates. While much of this can be put down to the unexpected explosion in equipment prices experienced in 1973 and 1974, the costs are still higher then expected. The cost of land levelling ended up with a similar overun. Disbursements 4.31 Loan 643-MOR was fully disbursed on May 30, 1980. During the project period the Government requested two reallocations of the proceeds of the Loan. The first, in 1971, was to allow consultants to make a study of flooding and possible means of protection in the Rharb Plain. The project description was changed at the same time to allow for this by adding the study as the tenth part of the project. The second reallocation was made in 1976 covering the transfer from Categories V and VI of $6.9 million to Category I to help pay for part of the cost overun in this category. A comparison of planned and actual disbursements by Category is shown below: - 31 - Allocation of the Proceeds of the Loan Category Item Planned Actual --- US$ million --- I Civil Works 14.5 26.7 II Equipment 9.0 5.5 III Consultants 2.5 4.6 IV Land Reform and Management 3.5 1.6 V Interest on the Loan 12.5 7.6 during construction VI Unallocated 4.0 - Total 46.0 46.0 Unusually, part of the Loan (in Category V) was allocated for payment of loan interest charges during construction. V. EXPECTED AGRICULTURAL IMPACT Production Estimates 5.01 Because of relatively high rainfall, the Rharb Plain is an area where irrigation is not necesssary for subsistence, but the provision of irrigation makes possible the production of diversified crops which grow outside the rainy season (sugar cane, citrus, rice, cotton) and improved yields and incomes.from existing rainfed crops (sugar beet and wheat). With the project all crops were expected to be irrigated. The major innovation was the widespread introduction of sugar cane and the cropping intensities were expected to average 115-120%. With experience to date, it is already possible to indicate some major changes from appraisal assumptions that can how be expected. A comparison of preproject, present and future production on a crop by crop basis is given in Table 3. The following summary table compares latest production and yield assumptions at full development with appraisal estimates of what would be achieved at full development: - 32 - Expected Project Expected Yields at Production Full Development /a at Full Development (tons/ha) ('000 tons) Estimated Latest Estimated Latest Crops at Appraisal Estimate At Appraisal Estimate Citrus 247 96.0 24 20 Sugar Cane 765 1,120.0 78 70 Sugar Beet 224 252.0 25 to 35 25 to 35 Seed Cotton 11 1.0 1.8 2 Paddy Rice 25 17.1 4.5 4.5 Wheat 15 26.0 1.6 to 2.2 1.2 to 2.5 Sunflowers 9 7.6 1.4 0.7 to 1.5 Forage (Berseem equivalent) 663 331.0 30 to 45 25 to 35 /a Where two yields are given the first figure is for rainfed conditions and the second for irrigated conditions. 5.02 Major factors affecting production plans since appraisal have been (a) the successful performance of sugar cane which is expected to lead to increased areas under sugar cane; (b) the King's orders in 1974 to increase sugar and wheat production in irrigated areas; (c) the technical failure of cotton in the western part of the project area which has reduced cotton areas; (d) national policy to reduce new citrus plantings because of marketing contraints; (e) the reticence of farmers to irrigate crops which are traditionally rainfed (sugarbeet and wheat) leading to low irrigation adoption rates. It must now be considered unlikely that full development is achieved before about 1990 mainly because of the slow acceptance by farmers of the the idea of irrigating wet season crops. This compares with the appraisal estimate of 1988. Irrigation adoption rates 5.03 Adoption of irrigation by farmers was projected to be slow at appraisal because of the lack of tradition of irrigation in the area and the alternative offered by rainfed agriculture. The preparation studies estimated that only 50% of a perimeter would be irrigated in the first year of irrigation and that this would increase slowly over a ten year period to 92% (i.e. 62% after 2 years, 72% after 4 years, 81% after 6 years and 92 % after 10 years). The experience to date has been that adoption of irrigation has been slower than expected. It now seems that part of the wheat crop will always remain unirrigated, and the introduction of irrigation on sugarbeet, sunflower and vegetables will be a slow process. Only sugarcane, rice and citrus are irrigated without delay. The achievement of full devleopment by 1990 will require a major effort by extension staff to change present farming practices. - 33 - 5.04 While actual figures concerning adoption rates can be misleading because of the different crops and external factors involved (such as flooding or a punpstation breakdown), some general figures illustrate the current gap between expectation and performance. For example, in the 1978/9 crop season the percentage of the total equipped area that was actually irrigated should have averaged about 65% but was only 35%. The maximum use in any sector was 55% (after six years of operation). In one sector only 16% of the equipped area was irrigated two years after completion. For a group of perimeters completed between 1972 and 1974 the irrigated area was 47% of the area equipped but for another group completed between 1976 and 1977 the percentage was only 29%. These figures illustrate the general level of development in 1979. However the situation is changing fast as farmers become more accustomed to the opportunities that the project offers. Crop Performance 5.05 Sugar cane is now fully established as a successful crop and there is generally more demand for licences to grow cane than availability, and pressure from farmers to convert from other crops to sugar cane. Production results and sugar content are generally as expected and the crop is turning out to be highly profitable for farmers, yielding a net income presently averaging some 65% more than sugar beet for example (see Table 4). Farmers also like cane because they find the cane rotation easier to handle than the multiple crop rotation involved for sugar beet. There is also the attraction of a secure market for the cane harvest. However, harvesting is still a problem because of labor shortages at harvest time, and mechanization is continuously under study. 5.06 The two physical hazards for agriculture in the Rharb are floods and frosts. Sugarcane resists floods better than most crops. It can stand up to three days in water without suffering undue damage, and this is another reason for its popularity among the farmers. Frosts on the other hand can destroy the crop unless it is harvested soon after the frost. The frost hazard was not highlighted at appraisal, but this turned out to be a major concern for the project management throughout much of the project period. In spite of attempts at zoning cane cultivation to avoid frost risk, it has been found that frosts throughout the Rharb Plain are more common than was expected. It is of major credit to the project management that effective methods of dealing with this hazard have now been successfully developed - mainly by early processing and importing new seedcane from elsewhere in Morocco to start the subsequent crop, so that the overall effect of frosts on the project is now considered to be quite minor. In quantitative terms a conservative reassessment of the long term effects of frost and other aspects on the average yield of sugar cane expected to be obtained in the project area has resulted in a reduction from 78 tons/ha to 70 tons/ha. Apart from frosts another reason for the reduced average yields expected is that the cane growing cycle has turned out to be slightly longer than expected in some zones so that it is better to harvest a two year growth instead of the expected one. This reduces the overall annual yield obtained even after accounting for subsequent annual ratoons. - 34 - 5.07 In contrast to the success of cane, both citrus and cotton have been crops which have failed to meet project objectives so far and the situation is not expected to change much in the future. Citrus has a high value so that its exclusion from the project will have a particularly negative effect on project viability. In the case of citrus which is the highest value of the major project crops (NVP per ha is 28% more than sugarcane; see Table 4), the problem is that of marketing for export. In the early seventies an unmarketable surplus developed in Morocco and the Government took the extreme measure in 1974 of stopping all new citrus plantations. Only 300 ha of the expected 5,800 ha of new citrus has therefore been planted. Project production is mainly from 4,500 ha of existing plantations that were provided with an improved irrigation supply arrangement. The average project yield is expected to be only 20 tons/ha instead of 24 tons/ha because production is mainly from these older plantations. Tree renewel would maintain a higher yield but citrus prices have not kept up with those of other crops so there is little incentive for farmers to reinvest. The price problem is highlighted by the following Table which shows relative price changes in selected agricultural commodities in Morocco since appraisal in 1969. Appraisal Prices Present Prices % Increase ------------DH/ton in current prices---------- Citrus 250 400 60 Wheat 450 1,250 178 Sugar Beet 60 145 142 Sugar Cane 40 105 162 Cotton 1,200 3,200 167 5.08 The problem with cotton is technical. There is a slightly higher humidity in the western part of the project area which prevents the cotton bolls from opening normally and reduces the quality of the fibre, so that cotton has been found to be not as profitable in the project area as it is in the nearby--Sidi Slimane project. Cotton has therefore been replaced by sugarcane in most of the project area. Given the short distances involved, success and failure zones are less than 50 km apart, the failure of cotton is surprising and underlines the hazards of extrapolating research and production results outside even the microregion in which they are produced. If necessary, a suitable cotton variety could probably be identified and introduced in the project in time, but with the cane alternative available the effort does not seem warranted. 5.09 The future of the two main rainfed crops for which supplementary irrigation was to be provided under the project, i.e. wheat and sugar beet, remains difficult to predict, but present indications are that while beet should finally become a fully irrigated crop, some wheat planted within the irrigated perimeter will always remain unirrigated. In this report it has been assumed that the percentage of wheat that remains unirrigated will - 35 - finally stabilize at 50%. This projection for wheat and sugar beet is in contrast to the present situation where only small areas of beet are irrigated and pratically no wheat is irrigated at all. 5.10 The problem of wheat irrigation is complex. Basically the physical conditions for wheat can be excellent without irrigation and yields of up to 2 tons/ha are possible with a well-distributed rainfall. On the other hand rainfall distribution is generally very uneven in the Rharb, so that the crop usually suffers from drought under rainfed conditions. However the project soils are heavy with relatively poor internal drainage so that it is easy to overwater the crops with irrigation (or too much rain) and consequently reduce yields. In short, irrigation is physically useful, but difficult to carry out. In financial terms irrigation also seems an attractive proposition. Long term average yields of 2.5 tons/ha are now expected under irrigated conditions compared with the appraisal estimate of 2.2 tons/ha under the same conditions. Without irrigation an average of only 1.5 tons/ha is expected to be achieved. The net value of production/ha with and without irrigation, and the income per incremental day of family labor with irrigation are all favorable for the use of irrigation; as shown in the following table: /a Wheat in the Rharb Plain Yield NVP/ha Labor (t/ha) -DH- /b (days) Rainfed Wheat 1.5 1,045 10 Irrigated Wheat 2.5 2,295 20 Difference 1.0 1,250 10 The expected income per incremental day of labor is 125 DH /a For details see Tables 3 and 4. /b Net Value of Production 5.11 While technical solutions are available and the financial advantages appear compelling, it is perhaps the biggest failure of the project so far that wheat is not irrigated. Apart from normal social and traditional reasons, one reason appears to be simply that-short term credit is not available for wheat since it is not a crop that is grown under contract with ORMVAG. Farmers are not prepared to prefinance inputs by themselves so that successful conditions for the success of irrigated cropping are not achieved. Because of lack of credit for proper ploughing, lands are poorly prepared for sowing, usually a disc harrow is the only machine used, so that if rains occur just after an irrigation of 500 m3/ha, for example, the crop suffers from excess moisture and is damaged. Also the farmers still tend to use their own seeds which are of poor quality and not very responsive to fertilizers. Good results have been achieved in - Jb - pilot plots ploughing 10-15 cm deep, followed by harrowing, irrigating using the corrugation method, and using selected seeds. A major extension effort will be necessary to get results at the farm level and some solution will have to be found to the credit problem. ORMVAG is presently considering various options including linking the sugarbeet contract to a wheat contract which seems a promising solution. Given the national priority for increased wheat production and the potential that now exists in the project these efforts should be partly successful, but the lack of interest in wheat irrigation among the farmers seems so complete at present that it will be surprising if more than 50% of the wheat area is ever irrigated. 5.12 The sugarbeet situation is more encouraging. Since this crop is grown under contract with ORMVAG, inputs and technical assistance are provided as necessary. The land is now properly prepared to receive an irrigation throughout most of the project area by sowing on ridges to allow furrow irrigation. In the first years of the project there was no irrigation but some 10% of the crop is probably now irrigated. The positive evolution to the present is expected to continue and it has been assumed that 100% of this crop will be irrigated by 1990. Production results show that irrigation is technically and financially advantageous as shown in the following Table: Sugarbeet in the Rharb Plain Yield NVP/ha Labor (t/ha) (DH) /a (days) Rainfed Beet 25.0 1,238 110 Irrigated Beet 35.0 2,163 144 Difference 10.0 925 34 The expected income per incremental day of labor is DH 27. /a Net Value of Production It is interesting that, according to the above figures, an incremental day of labor is about five times more remunerative spent irrigating wheat than sugarbeet (see para 5.10 above). It is probably because wheat is more sensitive to excess moisture or flooding that farmers prefer to irrigate beet rather than wheat. In this case they prefer to minimize potential risk rather than maximize potential income. 5.13 There are no major issues with the other irrigated crops. Rice is performing as expected although wild rice is a serious problem that needs combatting. Forage crops are expanding well with the dramatically successful development of milk production, which is presently growing at some 30%/year in the project area. Vegetables are also developing well. - 37 - The Rainfed Area 5.14 Two types of rainfed development were envisaged under the project, first the development of a modern rotational rainfed agriculture in those zones that were to be developed for irrigation in order to introduce farmers to modern agriculture ahead of the provision of irrigation, so that when water became available farmers would take early advantage of the investments; and second the development of improved rainfed cropping in existing rainfed lands adjacent to the irrigated areas involving some 6% of project expenditures. In general the first type of development has had some success while the second has been a complete failure. On the high lands to be equipped for irrigation farmers were successfully introduced to a four year rotation including sugarbeet and sunflower grown under contract with ORMVAG. ORMVAG organized the farmers into groups under the Centres de Mise en Valeur (CMVs) and prepared them for irrigation practices. Development in the permanent rainfed areas on the other hand was to be helped by providing basic land shaping to improve drainage by banking the land into "ados". Early results were encouraging, but the damage caused to the banked land by floods in these lowlands was so complete that most farmers and ORMVAG agreed to drop the component early in the project. The Bank made several efforts to reinstate the operation but was never successful. Thus, apart from general improvements in production-due to improved extension, which from available figures seem to be very small, this component was not successful. VI. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT Organization for Project Implementation 6.01 As expected at appraisal, the project implementing agency for the Dam was the Direction de 1'Hydraulique (DH) and for agricultural development was the Regional Agricultural Development Office for the Rharb (ORMVAG). Set up in 1966 the basic organization of the Office existed prior to the start of the project and it was expanded to meet the needs of the project. Consultants assisted the DH and ORMVAG staff in design work throughout the project period, and helped ORMVAG set up advanced accounting and management systems. Consultants were phased out towards the end of the project as national staff gradually took over. 6.02 Staff changes were a constant problem for ORMVAG in the early years of the project. There were eight different project managers during the eleven year project implementation period of which six held office during the first seven years of the project. Each departing project manager tended to take key staff with him to his new assignment and the project suffered to some extent from the resulting lack of continuity. In 1976 the situation stabilized and continuity greatly improved. There is no doubt that ORMVAG has developed into an impressive regional development office and it is a tribute to the quality of the Moroccan staff that the project's construction objectives were achieved so successfully. The management proved innovative and effective in dealing with unexpected events (such as flooding, or frost in the cane fields which required urgent action to save the crop). It is now essential for ORMVAG to devote the same energy to the development phase of the project and to give increased importance to the operation and maintenance in budget and staff allocations if the project objectives are to be reached. 6.03 A major management innovation due to the project was the efficient system of recording crop contracts established with the project farmers and the demands and flows of inputs such as credit, seeds and fertilizers. The general accounts of the Office are well kept according to the rules of commercial accounting, producing at the end of each year a balance sheet, a general management account and a profit and loss account (see para 6.15). In 1979 the total number of staff employed was 1,974. Agricultural Extension 6.04 Extension is provided by crop specific agents operating from seven CMVs in the project area. Extension is most successful for crops which are grown under contract with ORMVAG such as sugarcane, sugarbeet and cotton, but still weak for other c'rops. Organized training in water management and irrigation techniques have not yet started. The actual density of extension agents at present is one agent for each 380 ha of sugar cane; one for each 180 ha of sugar beet and one for each 90 ha of cotton. Extension work is managed at the field level by the director of the CMV. Agrarian Reform Cooperatives, of which there are now 40, have additional assistance from the cooperative managers who advise groups of 3 to 4 cooperatives. Agreed cropping patterns are more closely followed by agrarian reform beneficiaries than by private farmers. Operation and Maintenance 6.05 Operating results are generally as expected at appraisal except for the rate of adoption of irrigation which has so far lagged on the conservative assumptions made at appraisal (see para 5.03). 6.06 The level of water in the Idriss Dam has been kept well below the full retention level because of the need to realign some 15 km of railroad and 10 km of road before raising the water to the full operating level. The relocation investments were delayed under the original project plan because the storage at the lower level is sufficient for the project. The relocation works are now underway separate from the project and are expected to be completed in 1981. This will allow operation of the reservoirs at a higher level, giving increased storage and more power and energy production from the dam's hydropower facility, and more flexibility in operation. Some harmonization of the interest of ORMVAG and ONE still needs to be introduced by the Hydraulics Directorate, which is responsible for operating the Dam, to avoid the reoccurence of operating problems experienced during the 1980/81 winter. Following exceptionally low winter rainfall the reservoir was drawn down by power generation to such an extent that insufficient water was available for irrigation in the project area that was urgently needed to counter the effects of the drought. - 39 - 6.07 The irrigation system is well designed and can be operated efficiently provided project personnel and farmers cooperate to make this possible. A number of operational problems remain to be solved during the development phase of the project, including a proper organization of the timing and frequency of irrigation related to different crop requirements, the reduction of operational losses in the main canals and at farm level and difficulties with the operation of pump stations when water is at low levels in the Sebou River and silt load in the river is high. At present, operational losses in the main canals are estimated to average 28%. Given the high hydraulic efficiency of the irrigation distribution system and the excellent level of control within the system, it should be possible to improve this with better management. 6.08 Essential maintenance is carried out on the irrigation systems but budgetary allocations are inadequate for long term requirements. The allocation of adequate sums to protect the project investment from deterioration in the future will be a major challenge for the project management. Some unclassified project roads, which are essential for access to the project area and are the responsibility of the Highways Department, have not been properly maintained to date. It may be advantageous to transfer maintenance responsibility of this to ORMVAG. Cost Recovery 6.09 Farmers are meant to participate in project costs through two taxes covering a direct capital repayment and a volumetric water charge in accordance with the provision of the 1968 Agricultural Investment Code. The Loan Agreement requires prompt billing of all water charges and prompt collections which is a strict covenant compared with later financed projects. 6.10 Direct participation was fixed at DH 1,500 per ha before the beginning of the project and has not since been changed. A total exoneration is granted for farms of 5 ha or less, 5 ha exoneration for farms of 5-20 ha and full payment is required for farms over 20 ha. Payment is due within four years of completion, either in a lump sum or in 17 equal payments at 4% interest. Since the first part of the project received water in 1972, capital repayment first became due in 1976 and by 1983 all repayment should be under recovery. To date of total of about DH 1.2 million has been recovered covering 800 ha of land that has been sold by the original owners to new owners. The sale cannot be legalized without settling this debt to ORMVAG. Given present rates of inflation, it is not surprising that to date, except in the case of land sales, all farmers have chosen to repay through extended annual payments at the low interest rate of 4%. The level of direct participation represented about 40% of capital costs when it was instituted in 1969. If paid as a capital sum it presently represents 15% of capital costs at current prices and much less if the extended payment plan is adopted. 6.11 Volumetric water charges should normally be paid annually according to the Code. Full charges are due after a five year buildup period for annual crops and a ten year period for tree crops. The price of - WJU - 0.029 DH/m3 established in 1969 was increased to 0.039/m3 in 1981 and will rise to 0.058/m3 in 1984. For sprinkler irrigation an additional pumping charge is made which is currently 0.05 DH/m3. The volume of water used by farmers is assessed by the subdivision responsible for management on the basis of the period of delivery. A minimum consumption of 3,000 m3/ha is debited to each farmer to encourage use of the irrigation system. 6.12 Assessment of levels of repayment within the project area is difficult because, to date, information about charges and collections is not separated from overall recovery in the ORMVAG areas of responsibilities (which includes the Sidi Slimane Project). The most recent information regarding amounts invoiced and actually paid indicates that current recovery rates Li have averaged only 30% for all the projects on the Rharb in the last 10 years which is a disappointing record and in contravention of the Loan Agreement. Because of varying accounting periods there is a wide fluctuation from year to year as shown in the following Table: Collection of Volumetric Water Charges in the Rharb Plain Invoiced Amounts Paid Amounts % of Newly (DH x 10m3) (DH x 10m3) Invoiced Amounts Paid Ondebt Outstanding Addi. Outstanding On from Charges from Current Previous Current Previous Year Years Year Total Years Charges Total 1979 14,500 6,180 20,680 3,930 1,240 5,170 20 1980 15,060 6,500 21,560 3,910 3,060 6,970 47 /1 Defined as % of money owed to ORMVAG for a year's irrigation that is actually paid. The table shows that in 1980 payments on unpaid balances from previous years were higher than the amount remaining unpaid from the newly invoiced amount for the year so that the outstanding water charge debt was slightly reduced in 1980. 6.14 The new level of water charges that will become effective in 1984, combined with the present capital repayment level is expected to cover 100% of O&M charges and an estimated 3% of original capital costs if full recovery is achieved /1. Given the present low level of recovery a major effort by ORMVAG /1 Excluding costs of Idriss Dam and equipment replacement costs, at a 10% discount rate. If replacement costs are included, the recovery rate is negative. - 41 - with the full support of the Government is now essential if these funds are to be levied. It is noted that the new rate is still not a heavy financial burden to farmers because it typically represents only 15% of the costs of production and 10% of the value of the expected incremental production due to irrigation (see farm budgets in Table 6). Consultants 6.15 Consultants provided valuable assistance to the Direction Hydraulique for the design and supervision of the Idriss ler Dam and associated technical studies. Consultants also helped ORMVAG with technical designs of the irrigation system and supervision of special problems in construction. A special study by consultants of the drainage needs of the projet was also successfully carried out. ORMVAG changed consultants half way through the project when some difficulties developed in their working relationship. At the end of the project ORMVAG was to a large extent self-sufficient in technical matters and relied less on external assistance. Audit 6.16 ORMVAG's operations were under constant independant monitoring by- the Ministry of Finance, and ORMVAG's payments and accounts were managed by the Ministry of Finance, resulting in a continuous "a priori" audit of ORMVAG's activities. At the end of the year ORMVAG prepares an annual financial statement and report which is submitted to the Financial Controller in the Ministry of Finance. Audit reports on these annual statements, as required by the Loan Agreement, were never received by the Bank. On this, and other projects using an "a priori" auditing system of financial management, the intention has been to obtain certification of, and summary comments on, the annual financial statement by the Financial Controller of the Ministry of Finance, considering that this fulfills the requirement of an "independent" audit. Some details of the ORMVAG financial management system and relation with the Ministry of Finance are given in Annex 1. VII. ECONOMIC EVALUATION Project Benefits 7.01 At full development in 1990, the annual net value of production in the project is expected to reach nearly DH 200 million in 1980 prices before costing family labor. After deducting the imputed family labor cost and the estimated net value of production without the project, the incremental net value of production would be approximately DH 87 million. Expected future production and yields and assumptions are given in Chapter 5 and Table 5. Farmgate prices and production costs were based on actual prices experienced from 1973 to 1980 and on the Bank's commodity price forecasts for the remainder of the project time. - 42 - 7.02 Permanent employment creation by the project has already been important because of the industrial crop orientation of the project, and is expected to increase with further project development. In 1971 agriculture in the project area provided 1.1 million days of employment. In 1981 this had increased 2.8 million working days. At full development, it will reach 5.1 million working days. 7.03 The project has already had significant sugar import substitution benefits which are expected to grow to a 1980 value of nearly $53 million at full development in 1990. Through land consolidation and distribution, landless farmers have been allocated farms in the irrigated areas. Secondary economic activities stemming from the project, including agroindustries, building, and service industries are important and have contributed to a major socioeconomic upgrading of the quality of life in the Region since the start of the project. Project Costs 7.04 The total economic cost of the project (excluding Idriss Dam) in 1980 prices was approximately DH 530 million; total dam costs were DH 334.1 million. Actual expenditures have been adjusted by local inflation factors to update them to 1980 and taxes have been deducted. Annual O&M costs are expected to reach some DH 500/ha in 1980 prices. The economic cost of labor has been valued at market wage rates. Economic Analysis 7.05 Using the foregoing costs and benefits and with a project evaluation period of 50 years, the economic rate of return is 9% (compared to 11% at appraisal) /1. The project's increased costs, reduced area and lower target yields have, to some extent, been offset by higher than expected commodity prices. However, the slower than expected buildup of project benefits because of the expected slow adoption of irrigation by the project farmers and the failure to plant some high value crops such as citrus and cotton is expected to have a negative effect on project return. If average sugarcane yields increased from 70 tons to 85 tons, or the long term average sugar content of the processed cane is 12% instead of the expected 10%, the expected ERR would increase to 10.0-10.5%. However, the full adoption of wheat irrigation, compared with the 50% adoption rate assumed in the base case analysis would effect the estimated ERR only marginally. /1 Allocating 48% of the Idriss Dam costs to the project in proportion to the area served under Stage I (the methodology used in the appraisal report). If costs and benefits of the power generated from the-Idriss Dam are included in the same proportion as dam costs, the rate of return increases by roughly 1.3%. - 43 - Farm Incomes 7.06 Farm budgets showing some of the different cropping situations expected on a typical 5 ha farm of the project are shown in Table 6. Basically net farm incomes are expected to at least double with the project, compared with the cropping rotations that can develop without irrigation. There is not a major difference between the net value of production per ha of the sugarcane rotation and the four year rotation of mixed crops, but rice and cotton rotation provide less income. The effects of full irrigation of wheat on farm incomes are shown to be relatively small, typically increasing incomes by 9%. The results are summarized below; Net Farm Income of 5 ha farms (DH) Sugarcane Rotation 19,671 4 Year Irrigation Rotation 20,990 5 Year Rotation Cotton 18,164 Rice Rotation 13,885 Advanced Rainfed Farm 7,862 No useful results are yet available to show progress of actual farm incomes to date except from agrarian reform cooperatives where results are satisfactory for most members as shown in the following Table which shows the maximum, average and minimum incomes of cooperative members with 5 ha farms from 1976/7 to 1978/9; Agrarian Campaigns 1976-77 1977-78 1978-79 ------------DH/member----------- Maximum 16,800 24,500 24,600 Average 4,800 11,000 11,300 Minimum 2,600 3,500 2,400 These family incomes compare with the Bank's estimate of a rural absolute poverty income /l in Morocco of DH 1,025 per capita, equivalent to a family income of DH 6,150 for a six person family. /1 Absolute poverty income: income level below which a minimum nutritionally adequate diet plus essential non-food requirements is not affordable. Estimate is in 1980 prices. - 44 - VIII. BANK PERFORMANCE 8.01 This was the Bank's first major agricultural project in Morocco and first major new irrigation project (the FY65 Sidi Slimane Project was a rehabilitation project of only local importance). It was an ambitious attetpt to bring about a major change in the momentum of development in a potentially rich part of Morocco. The project was prepared by an FAO team financed by UNDP. The Bank's appraisal team was able to rely on the extensive preparation studies made by this team and put together a coherent and technically viable project. The level of technology that was introduced into the project was satisfactory. 8.02 From the appraisal report it is not evident that flood risks and the possible effect of frost on sugarcane were sufficiently evaluated at appraisal. The introduction of sugarcane to the Rharb Plain was a risk that paid off because it has turned out to be the most successful crop. The non-feasibility of the preparation team's proposal to convert existing sugar beet factories to crush the project's cane output could have had serious consequences had the Bank not reacted quickly to support Government proposals for a separate cane factory. Similar quick reaction by the Bank to respond to Government request for technical advice on how to deal with the first frost damage suffered by cane in 1974 was instrumental in reducing the negative effects of frost on the project. 8.03 The handling of the flooding problem by the Bank may turn out to have been slightly hasty. On the one hand there was a major and damaging flood in the project area in 1970 and a concern in Morocco and in the Bank that irrigation facilties that were to be built under the project were adequately protected. On the other hand, it seems that the 1970 flood was an infrequent event and detailed technical and economic analysis have subsequently shown that dyke protection schemes included in the Sebou II Project are marginally viable. The evidence since 1970 supports the original position of the appraisal mission that flooding is a supportable risk for the project's irrigation component, but the risk in the lower lying lands in which the rainfed component is situated was higher than anticipated by the mission and this component was a failure essentially for this reason. The Bank kept fully informed on this situation in the field and was able to provide whatever assistance was necessary at the time. 8.04 The organizational proposals made at appraisal, including setting up a strong planning unit in ORMVAG and the arrangements for consultants to assist DH and ORMVAG went well. The Government responded well by allocating generally high quality staff to the project so that an excellent dialogue was maintained between the Bank and the Borrower. Supervision was timely and satisfactory. IX. CONCLUSIONS 9.01 The project was a technical success in providing the infrastructure needed to achieve increases in the production of irrigated crops, but the relatively small rainfed component was a failure because of the flood risk on these lower lying lands. The introduction of sugar cane under the project was a success but overall project benefits may turn out to be less than anticipated because of the application of different cropping patterns compared with those anticipated, for marketing and national policy reasons, and because the farmers' hesitence to changing traditional agricultural practices was underestimated. It may have been useful if more time had been spent explaining the project to the future beneficiaries to prepare them for the change in cropping, in addition to the efforts made to introduce advanced rainfed rotation prior to the introduction of irrigation. The fact remains that in Morocco, farmers in higher rainfall areas accept the discipline of irrigation much less readily than those in the more arid south where irrigation is essential for survival so that success in these northern areas of the country is more difficult to achieve. 9.02 The project was a valuable training ground for Moroccan staff who displayed a high level of technical and management skills, and an ability to use and learn from external technical advice. Project development, including the allocation of sufficient funds for operation and maintenance, collecting water charges due, and completing land reform measures, remains a challenge which will require intense efforts by extension staff and farmers to ensure that the economic and financial potential of the investments already made is achieved. (526E)  - 47 - Table 1 KINGDOM OF MOROCCO PROJECT COMPLETION REPORT RHARB SEBOU IRRIGATION PROJECT (Loan 643-MOR) A. Farm Distribution in Project Irrigated Area in 1980 Farms/Farmers Total Area % of Area % of Farmers (ha) 8,917 Farms of 0 to 5 ha 22,845 61.9 93.0 of which 1,253 always privately owned 2,264 6.1 13.1 1,232 Agrarian Reform beneficiaries (mainly 5 ha) 6,726 18.2 12.8 6,432 Farmers on collective lands 13,855 37.5 67.0 360 farms of 5 to 10 ha 2,227 6.1 3.7 144 farms of 10 to 20 ha 1,677 4.6 1.5 88 farms of 20 to 50 ha 2,093 5.7 0.9 15 farms of 50 to 100 ha 1,015 2.7 0.1 24 farms of more than 100 ha 5,349 14.5 0.2 33 rented farms 693 1.8 0.3 9,581 36,900 B. Source of the Common Fund of Land in the Rharb Plain (ha) Colonization lots previously belonging to foreigners 37,000 Land expropriated in 1971 14,000 Land recuperated from foreigners in 1973 66,000 State land 13,000 130,000 C. Distribution of Commum Fund Land in Rharb Plain (ha) To public agencies (SODEA, SOGETA, etc) 40,000 To private farmers /a 40,700 Not yet distributed 45,000 130,000 /a to 4,500 families grouped in 140 Agrarian Reform Cooperatives of which 1,230 families with 6,700 ha are in the project area. - 4 - Table 2 KINGDOM OF MOROCCO Project Completion Report Rharb Sebou Irrigation Prolect (Loan 643-MOR) Appraisal and Final Cost Estimates Appraisal Final Estimate Ia, /b Coast /c ------ (US$ million)------ Idriss I Dam Preparation Works /d 2.5 6.5 Civil and Mechanical Works 22.5 24.9 Engineering 1.8 4.8 Subtotal (Idriss Dam) 26.7 36.2 Irrigation Works Land Consolidation and Reallocation 1.9 1.3 Land Preparation /a 7.0 15.2 Pump Stations 6.3 13.2 Canals 20.9 31.5 Drains 12.7 17.1 Roads 3.1 2.0 Electricity Supply 0.4 1.8 Subtotal (Irrigation) 52.3 82.1 Rainfed Agriculture Land Consolidation and Allocation 1.4' - Land Preparation 0.7* 0.1 Surface Drain 1.2* - Roads 2.2- - Subtotal (Rainfed) 5.5 0.1 Agricultural Management and Processing Buildings 1.4 0.4 Vehicles and Equipment 3.3 2.0 Crop Processing Facilities 5.1 - - Subtotal (Agriculture) 9.8 2.4 Control, Supervision and Studies 3.6. 4.7 Total Project Cost /h 97.0 125.5 --- ha(naet) Area Fully Developed Newly Irrigated 38,300 35,700 Improved Rainfed 26,700 - /a Includes contingencies /b 1 US$ 5 DH /c 1 US$ 4.30 DH 7- Includes expropriation /e Includes topography, mainly levelling 7f Mainly banking Includes 51.4 million for flood studies b Excludes interest during construction which was also financed by the Loan KINGDOH OF MDROCCO COMPLETION REPORT OF THE RIRB SEBOlH IRRIGATION PROJECT (Loan 643-HOR) Cultivated lectares, Average Yields and Production Cr Cultivated lectares Average Yields (tons/ha) Total Production (10 m3 tons) Proposed Production At Appraual (10 aa 0 Pre At Full CrogP 1971-72 1979-80 1989-90 1971-72 1979-80 1989-90 1971-72 1979-'80 1989-90 Protect Development Old Citrus 4,500 4,500 4,500 16.0 18.0 20.0 72.00 81.00 90.00 72 247 New Citrus 0 300 300 - 10.0 20.0 - 3.00 6.00 Sugar Cane 0 8,600 16,000 - 34.6 70.0 - 300.00 1,120.00 - 764 Sugar Beet PTI 2,200 4,500 3,000 25.0 31.0 35.0 55.00 139.50 105.00 Central 800 1,100 5,900 25.0 25.0 25.0 20.00 27.50 147.50 60 224 Wheat PTI R La 29,500 14,600 3,000 1.0 1.5 1.5 29.50 21.50 4.50 I - - 3,000 - - 2.5 - - 7.50 44 15 Central 14,200 17,200 11,800 1.0 1.1 1.2 14.20 18.90 14.20 Rice 1,000 1,400 3,800 5.0 4.0 4.5 5.00 5.60 171.00 5 25 Cotton - 200 500 - 1.8 2.0 - 0.36 1.00 1 11 Sunflower PTI R fa 1,000 800 2,000 0.9 0.7 1.0 0.90 0.56 2.00 1 lb - - 1,000 - - 1.5 - - 1.50 1 9 Central - 5,900 - - 0.7 - - 4.10 Forage PTI R fa 300 1,000 2,000 20.0 fe 25.0 35.0 0.60 25.00 70.00 1 /b - 300 3,700 - 25.0 /c 30.0 fd - 7.50 111.00 10 663 Central 200 - 5,000 2.0 fe - 3.0 0.40 - 15.00 Truck Gardening - 1,500 2,900 - 15.3 20.0 - 22.90 58.00 - Pulses PTI 3,200 400 - 0.9 0.9 - 2.88 0.36 - Central 1,300 1,300 - 0.9 0.9 - 1.17 1.17 - Family Agr. PTI 6,500 - - 1.0 - - 6.50 - Central 30 - - 1.0 - - 3.10 - - Total 67.800 57,700 74,300 Proposed at Appraisal 68,900 76,200 f/ Rainfed crop fd Maize forage fb Irrigated crop fe Vetch oats /c Berseem KINGDOM OF MOROCCO Completion Report of Lthe Rharb Sebou Irrigation Project (Loan 643-HOR) Production Coats, Gross and Net Value per ha at Full Development (1980 prices) (DI) Working Days Animals Tractors-Private Seeds Fertil- Peati- Water Misc. Product. Gross Net Value Total Hired Cost Days Cost CMV Hourd^ '-Cost izers cides Charges 101 Cobt Value of after Labor (DII) /b Pr.duct. Cost Wheat R a 10 - - - - - 6 240 125 50 - - 41 456 1,500 1,044 1 20 - - - - - 6 240 200 135 - - 174 75 824 3,125 2,295 RI 10 - - - - - 6 240 200 135 - 174 75 824 1,875 1,045 Sugar Beet R 80 30 360 6 180 215 - - 300 688 100 - 184 2,027 3,625 1,238 1 114 30 360 6 180 235 - - 300 755 200 290 232 2,552 5,075 2,163 Sugar Cane 1 155 50 600 - - - 20 800 200 619 60 600 288 3,167 7,350 3,583 Cotton I 150 50 600 8 240 200 - - 52 329 700 240 236 2,597 6,400 3,203 Sunflower R 28 - - - - - 6 240 30 130 - - 40 440 1,295 855 Ri 28 - - - - - 6 240 30 130 - 174 57 631 1,850 1,219 I 38 - - - - - 6 240 30 130 - 174 57 631 2,775 2,144 Truck Gardening I 115 40 480 8 240 175 - - 250 1.104 200 360 280 3,089 9,000 5,431 Pulses R 30 - - 8 240 - - - 200 - - - 44 484 1,665 1,181 Family Agriculture R 30 - - 8 240 - - - 200 - - - 44 484 1,850 1,366 Forage Vetch Oats R 10 - - - - - 8 320 240 29 - - 59 648 3,600 2,952 Berseea 50 - - 16 460 80 - - 240 134 - 174 111 1,219 4,200 2,981 Maize I 50 - - 16 480 -- 8 240 40 134 - 174 107 1,175 3,600 2,425 Rice I 30 - - - - - 20 800 180 630 - 800 241 2,651 5,625 2,974 Citrus I 73 - - - - - 32 1,280 - 886 580 360 311 3,417 8,000 4,583 a K Rainfed crop on rainted land RI Rainfed crop on irrigable land I Irrigated crop on irrigated land Lb Minimum of 3,000 m3/ha has to be paid on irrigable land. Cost of 0.058 Di per cubic meter Le These costs consist of taxes, interest and amortization costs; they have been estimated at 107 of the other production cost. -51 - Table 5 KINGDOM OF MOROCCO Proiect Completion Revort Rharb Sebou Irrigation Project (Loan 643-MOR) Net Value of Production at Full Development Area Yield Production Farm Gross Value Prod. Total Net Value Imputed VP Less ('000) (ton/ha) ('000 t) Gate of Cost Product. of Labor Family ha Prices Product per ha Cost Product. Cost Labor (D1H/t) ( H DH) (DH) (M DR) (M DR) Cost (M DH) FUTURE WITH PROJECT Citrus 4.8 20.0 96.0 400 38.40 3,417 16.40 22.00 Sugar Cane 16.0 70.0 1,120.0 105 117.60 3,167 50.67 66.93 Sugar Beet I !a 3.0 35.0 105.0 145 15.22 2,552 7.65 7.57 " R 5.9 25.0 147.5 145 21.38 2,027 11.96 9.42 Wheat Ri 3.0 1.5 4.5 1,250 5.62 830 2.49 3.13 1 3.0 2.5 7.5 1,250 9.37 830 2.49 6.88 R 11.8 1.2 14.2 1,250 17.75 456 5.38 12.37 Cotton 0.5 2.0 1.0 3,200 3.20 2,597 1.30 1.90 Paddy Rice 3.8 4.5 17.1 1,250 21.37 2,651 10.07 11.30 Sunflower Ri 2.0 1.0 2.0 1,850 3.70 631 1.26 2.44 1 1.0 1.5 1.5 1,850 2.77 631 0.61 2.16 R 5.9 0.7 4.1 1,850 7.64 440 2.59 5.05 Forage Vetch Oats R 5.0 3.0 15.0 1,200 18.00 648 3.24 14.76 Serseem 1 2.0 35.0 70.0 120 8.40 1,219 2.44 5.96 Malze 1 3.7 30.0 111.0 120 13.32 1,175 4.34 8.98 Truck Gardening 2.9 20.0 58.0 450 26.10 3,089 8.96 17.14 Total 74.3 329.84 131.85 197.99 22.57 175.42 FUTURE WITHOUT PROJECT Citrus 4.5 18.0 81.0 400 32.40 3,417 15.37 17.03 Rice 1.0 4.5 4.5 1,250 5.62 2,651 2.65 2.97 Wheat 43.4 1.2 52.1 1,250 65.10 456 19.79 45.31 Sugar Beet 5.0 25.0 125.0 145 18.12 2,027 10.13 7.99 Family Agriculture 10.0 1.0 10.0 1,850 18.50 484 4.84 13.66 Forage: Vetch - Oats 5.0 2.0 10.0 1,200 12.00 648 3.24 8.76 Total 68.9 151.74 56.02 95.72 8.35 87.37 Increment 5.4 178.10 75.83 102.27 14.22 88.05 Cropping Intensity 108% /a R Rainfed Crop on Rainfed Land Ri Rainfed Crop on Irrigable Land I Irrigated Crop on Irrigated Land 。”〕！〕〕〕’!!&！〕〕！〕”!!! 、呂呂寫呂俗 /，黑：＿劊i羹〕劍 ANNEX I KINGDOM OF MOROCCO COMPLETION REPORT OF THE RHARB SEBOU IRRIGATION PROJECT (LOAN 643-MOR) Audit 1. The ORMVAG Financial Management System. The audit function should be viewed in the context of the overall financial management system applied to ORMVAG. Whereas ORMVAG has substantial autonomy in the physical execution of the activities under its responsibility, the Ministry of Finance tightly controls all ORMVAG financial commitments and actually makes all ORMVAG payments and keeps ORMVAG's accounts. The Government refers to "his system as an 11a priori" audit. It functions through two key officials of the ministry of Finance who are thus independent of ORMVAG and the Ministry of Agriculture: (i) an accounts officer ("agent comptable"), whose office is on the ORMVAG premises, and (ii) his immediate superior, a financial controller ("contraleur financier"), located in the Ministry of Finance in Rabat. 2. The financial controller reviews all proposed contracts for consistency with the purposes and funding availability provided for in the ORMVAG budget and must countersign contracts before they can take effect. The accounts officer is a member of the committee in charge of selection of bidders, and once contracts are being implemented, he makes payments on behalf of ORMVAG after he has 'Verified that bills presented are consistent with the contract and with the purposes of the budget and the availability of released funds under the budget. He thus provides a further review independent of ORMVAG of the appropriateness of contracts and has the power and duty to refuse payment for expenditures if he finds inconsistencies in approved contracts. The accounts officer sends to the financial controller weekly reports on ORMVAG cash balances and monthly reports on payments on each capital contract and on receipts, commitments, and expenditures of the capital and current account budgets. On the basis of these reports and his own periodic site visits, the financial controller makes his recommendations.to Finance Ministry management on the timing and amount of periodic releases of capital budget funds to ORMVAG. 3. The "a posteriori" aspects of the ORMVAG financial management system consist of the following: The accounts officer draws up end-of-year financial statements similar to the weekly and monthly reports mentioned above, which he signs and submits to the financial controller. ORMVAG prepares an annual report containing a narrative statement of the year's activities usually covering studies and execution of works, operation of the irrigation network, agricultural and livestock production, administration, financing, and planning as well as a set ofthe accounts officer's annual financial statements. This annual report is also sent to the financial controller, who briefs the - 54 - ANNEX I Page 2 Minister of Finance on the year's activity of ORMVAG and the financial statements, which are then discussed and approved at a meeting of the Board of Directors of ORMVAG, of which the Ministers of Finance and Agriculture are members. 4. Thus in summary, ORMVAG does not undergo an annual audit of its operations and accounts on a sampling basis by a private independent auditing firm. Rather, ORMVAG's operations are under constant monitoring by the Ministry of Finance, and ORMVAG's payments and accounts are managed by the Ministry of Finance, which is tantamount to a comprehensive day-to-day audit. 66 Suk el Arba COMPLETION DATES OF IRRIGATED AREAS .Keni_r KINGDOM OF MOROCCO du Rharb SECTION AREA(Ha) DATE COMPLETED A a / t # CRAB cLcation SEBOU PROJECT COMPLET7ON REPORT Pl 20 92 0 c e a " Casablanca SEBOU-, S17C OM LTO RPR 3410 1973 Saf 0 S13 1900 1973 S11 1520 1974 s9 3345 1974 Mårrakech 0 S7 6305 1977 ss 4075 1977 63 1600 1977 le, 0 2 4si3 1595 19770 P7 2560 1977 \ KILOMETERS SEBOu P8 6495 1978 MECHRA BEL KSIRI Irrigation works completed CANE ridg9 FACTORY P Irrigation development sections S Flood escape channels Rivers @O oC 7- 2427 Sid Railways az OSl aPrimary and Secondary Roads Other Roads C,> 24 C SEBOU SECTIONS S19 ad. AND SC EXCLUDED EOUIPPED FOR OUE RR H SPRINK LER R IRRIGA TION 00 Dar Guedda C T 2351 cN Cr 2634 " r 26'4 o%To Idriss 1st Dan T -S V P EEN -IPEC- C e AL L C- an C'p T-.s PC S A e s as [ .N D,- 00 This map has been prepared by the Sid YanyåWorld Bank's staff exclus-vey for the convenmence of the readers of du Rharb the repon to ~ach it ,etehed The denominstions used end the 0t boundares showo on this map do not fmply, on the pat of the World Bank end ots affiliates, eny .-a 9udgtent on the legal stets of <O Sidi Slimane X Sidi Kacem anyte,toryorenyendorsement n 60 or ecceptance of such boundare. -