Liberia - Second Lofa County Agricultural Development Project

Document of The World Bank-. FOR OFFICIAL USE ONLY Report No. 3677-LBR STAFF APPRAISAL REPORT LIBERIA LOFA COUNTY AGRICULTURAL DEVELOPMENT PROJECT II April 5, 1982 Western Africa Projects Department Agriculture Division 4 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.  LIBERIA LOFA COUNTY AGRICULTURAL DEVELOPMENT PROJECT PHASE Ii Currency Equivalent Currency Unit = United States Dollars Weights and Measures 1 metric ton 0.98 long ton 1 long ton = 2,240 lb - 1,016 metric ton 1 hectare (ha) 2.47 acres 1 acre = 0.405 hectare 1 kilometer (km) = 0.62 mile 1 mile 1.609 kilometer Abbreviations ACDB - Agricultural and Cooperative Development Bank ADF - African Development Fund ADP - Agricultural Development Project AEA - Agricultural Extension Aide CAO - County Agricultural Officer CARI - Central Agricultural Research Institute CCA - Cooperative Credit Assistant CDA - Cooperative Development Agency CMEU - Central Monitoring and Evaluation Unit CS - Cooperative Society CSD - Commercial Services Division DCC - District Cooperative Committee EO - Extension Officer FRU - Feeder Roads Unit GOL - Government of Liberia IFAD - International Fund for Agricultural Development LCCC - Liberia Cocoa and Coffee Corporation LPMC - Liberia Produce Marketing Corporation LPPC - Liberia Palm Products Corporation M & E - Monitoring and Evaluation Unit MOA - Ministry of Agriculture MPE - Ministry of Public Works SEA - Senior Extension Aide SSU - Schistosomiasis Surveillance Unit TCU - Town Cooperative Unit WARDA - West Africa Rice Development Association Fiscal Year July 1 - June 30  LIBERIA FOR OFFICIAL USE ONLY LOFA COUNTY AGRICULTURAL DEVELOPMENT PROJECT II STAFF APPRAISAL REPORT Table of Contents Page No. I. THE AGRICULTURAL SECTOR .... ................ ................ 1 Background ............................... ..I'. ............... 1 Agricultural Sector Characteristics .. 2 Agricultural Sector Development Objectives . 2 Strategy and Constraints . ....................... .... ....... . 2 Bank Group Lending ................. ........ .4 ....... . . 3 Agricultural Institutions and Services . . 4 II. THE PROJECT AREA ............................ ... .. . ... . 6 Location and General Characteristics 6 Roads and Communication. ... . .. 6 Farming Systems ... . ... . . .... . 6 Rural Services. . ............. .......... 7 The Phase I Project ... . ..... . 7 III. THE PROJECT . ........10 General ....10 Summary Description ... . ......................... 10 Detailed Features.......... ..11 Cost Estimates .......... .............. 14 Proposed Financing . . .16 Procurement. ..... ..... . ....... .16 Budgeting, Accounts and Audit . 19 IV. PROJECT IMPLEMENTATION AND MANAGEMENT .20 Project Organization ......... ... . ...o .20 Farmers Participation ..20 Staffing... ... 21 Extension Services ....... . ... 21 Training..... 22 Plant Production and Research ..... 22 Cooperative Development .. . .....23 Land Planning, Roads ...................... ......... oo-o ..... 27 Schistosomiasis ... .. ................. ............ 28 Monitoring and Evaluation o ..... . ....... . ....... ... 28 This report is based on the findings of an appraisal mission consisting of Messrs. Drayton, Headworth, and Ms. Mackrandilal (IDA), and Messrs. Hodgkinson, Persson and Duris (Consultants), which visited Liberia in June 1981. 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 (Cont'd) Page No. V. PRODUCTION SPECIFICATIONS .................... .. . . 29 VI. DEMAND, MARKETING, PRICES, AND FINANCIAL ANALYSIS .......... 33 Demand ................................... 33 Marketing .................................. 34 Prices ............... ... .........** .*.. .... . 34 Financial Returns to Farmers ...... ......................... 35 Financial Implications for Government ...................... 37 VII. BENEFITS AND JUSTIFICATION ......................... .. ...... 37 Overall Benefits .......... . * ............ . ..*............ 37 Economic Rate of Return .... ... ... ............. ... ......... 38 Risks and Sensivity . 39 VIII. AGREEMENTS, CONDITIONS AND RECOMMENDATIONS . ................ 40 Tables in Text Table 1 Crop Development and Improvement - Phase 1 Table 2 Summary of Project Costs Table 3 Project Financing Table 4 Crop Yield Assumptions Table 5 Farmgate Prices Table 6 Farm Incomes Annexes Annex 1 Detailed Project Costs Annex 2 Estimated Schedule of Disbursement Annex 3 Project Crop Area Development Annex 4 Incremental Crop Production Annex 5 Table 1-Crop Budgets per ha at Full Development Table 2-Farm Models Annex 6 Government Cash Flow Annex 7 Table 1 Economic Costs and Benefits Table 2 Economic Analysis: Internal Rate of Return; Sensitivity Analysis Annex 8 Project Organogram  LIBERIA LOFA COUNTY AGRICULTURAL DEVELOPMENT PROJECT II I. THE AGRICULTURAL SECTOR A. Background 1.01 Liberia has an area of 111,400 sq. km. of which some 6,200 sq. km. are used for agriculture. Total population is estimated at 1.8 million, of which 1.2 million or 70% is rural. Population growth is approximately 3.3% per annum, with a rural rate of around 2.2% and an urban rate of about 5.8%, due to heavy migration from rural areas and some migration from outside Liberia. There are some 157,000 agricultural housesholds with an average size of 5.4 persons. 1.02 Liberia has a highly dualistic economy, characterized by a tradi- tional sector which is mainly agricultural, and a modern foreign-controlled enclave sector which is export oriented. The traditional sector, although employing over 70% of the total labor force, contributes less than one-fifth of GDP. The enclave sector produces iron ore, rubber and forestry products; it accounts for about 70% of export earnings, 30% of GDP, and 15% of all Government revenues. Agricultural exports from both sectors account for 36% of total exports (1980) and include rubber, forest products, coffee, cocoa and palm products. Over the last five years, the weaknesses in the economy, stemming from dependence on a few export commodities, and poor management, have become evident. Real GDP grew at an annual rate of only 1.2% over 1976-1980, implying a decline in per capita income. In contrast, GDP growth rate had averaged about 6% in the sixties, and about 4.2% between 1970 and 1974. The decline in iron ore mining and rubber exports, in the wake of recession in the industrialized countries, was the principal factor adversely affecting GDP growth, balance of trade and government revenues despite the fact that the agriculture sector (including the subsistence economy) continued to grow at an annual rate of 4.1% during this period and significant growth also took place in the service sectors. 1.03 Budgetary deficits have been significant in recent years, reaching $120 million in 1978/79 and $95 million in 1979/80. This was due to lower collection of import duties, a rise in development expenditures, and heavy outlays on the 1979 Organization of African Unity (OAU) Conference. The 1980/81 budget deficit is $97 million. A stabilization program agreed with the IMF is currently underway, and is expected to ease budgetary and liquidity problems. 1.04 Income distribution in Liberia is highly skewed. Average GNP in 1979 is estimated at US$500. However, the enclave sector yields a per capita GNP of about $1,620 compared to $780 for the rest of the monetized economy, and the great majority of the population who live in the traditional non-monetized sector have a per capita income of less than $185 per annum. About 62% of private income is claimed by the top 5% of households, and only 11% of private income is received by the lowest 40%'.  - 2- B. Agriculture Sector Characteristics 1.05 Agriculture is now the largest sector in the country contributing about 32% to the GDP (14% monetary and 18% traditional). Three distinct types of farming systems characterize the sector: (a) foreign-owned plantations of rubber and forestry producing exclusively for exports; (b) Liberian-owned commercial and state farms, engaged primarily in rubber production, but with secondary interests in coffee, cocoa and oil palm, and gradually moving into other activities, such as poultry and pig production; and (c) traditional farms consisting of smallholders (90% of all agricultural households) who produce mainly for home consumption with small surpluses sold for cash pur- poses. The principal cash crops are rubber, coffee and cocoa. Annual rubber production is currently 80,000 tons (down from 85,000 tons in the mid 1970s), of which 70% is produced by six foreign concessions. Coffee and cocoa exports were about 10,000 tons and 3,400 tons respectively in 1980/81. Rice and cassava are the main crops of traditional smallholders, with annual production of 244,000 tons (paddy) and 155,000 tons, respectively. Crop yields on traditional farms are low. Except for those within the ADP's, farmers have little access to capital and agricultural inputs; agricultural technology is rudimentary and infrastructure is inadequate. Coffee and cocoa are the main cash crops for smallholders, who also sell palm kernels from the harvested fruit of wild oil palms. Due to unsuitable climatic conditions, absence of natural pastures and prevalence of trypanosomiasis, livestock production is of minor importance in traditional agriculture. C. Agricultural Sector Development Objectives, Strategy and Constraints: 1.06 Objectives. The first National Socio-Economic Development Plan (1976-80) aimed at diversification of production, geographical dispersion of sustainable economic activities throughout the country, total invo]Lvement of the entire population in the development effort, and equitable aistribution of the benefits of economic growth and diversification so as to ensure an accept- able standard of living to people throughout the country. The 1981-85 plan, guidelines for which are now being prepared, is expected to have the same objectives and priorities. 1.07 To achieve Plan objectives, there has been a growing emphasis on agricultural and rural development, particularly smallholders. Allocations for agriculture have increased from about 4% of the public sector development budget in 1970 to about 21% in 1979/80. In the 1980/81 development: budget, the largest sectoral allocation (30%) went to agriculture, amounting to $35.6 million. The specific goals for agriculture are: (a) diversification of the production base and (b) improvements in the institutional structure. 1.08 Strategy. The main thrust of the sectoral strategy is to raise income level productivity and living conditions of small farmers through provision of improved inputs and technology in rice, some livestock and tree crop cultivation, and basic infrastructure. The land-use policy is to encour- age farmers to cultivate rice in the swamps and lowlands and to grow tree crops on the uplands. This is because swamp rice carries a yield potential two to three times that of upland rice, and, on uplands, tree crops offer a far superior monetary return--three to four times--compared with upland  - 3 - rice. Tree crops would also avoid the heavy labor of regular land clearing and help to halt erosion and loss of soil fertility. However, the change from upland rice to tree crops will take many years, and, in the meantime, the strategy is to provide improved seed and other inputs for use by rice farmers in order to increase productivity, in addition to encouragement of tree crop production. The small farmer development strategy is mainly being pursued within the framework of area-based integrated agricultural development proj- ects (ADPs) which are designed to provide basic inirastructure, such as roads, wells, health surveillance units, etc., inputs and a range of farm support services for the introduction of modern technology, and the promotion of cooperatives. So far, three such projects are in operation. Additionally, Government is pursuing: (a) the decentralization of its agricultural services and improvement of the administration of agricultural programs; and (b) development and improvement of agricultural research, extension ar.d training. 1.09 Constraints. Though some of the above strategies have begun to make an impact, there are still severe constraints on agricultural development, the most notable of which are a shortage of budgetary allocations, and Govern- ment's inability to provide ongoing analysis of these strategies, particularly in their economic and institutional aspects. Also, Government has not fully explored such other possible avenues for sector development as crop pricing incentives, the linkage between rural roads and farming improvements, research into the introduction of labor-saving techniques in the farming systems, and the promotion of other staples such as cassava to supplement rice. There is a shortage of qualified and experienced agricultural officers and crop specialists, and the existing lower level extension staff are inadequately trained, ill-equipped and poorly supervised. This situation would impede the decentralization process (Government has deferred the national decentralization program which was being prepared under the previous Government). Shortage of crops storage and marketing facilities, transport, available inputs, agricul- tural support services, and poorly developed farmers' organizations, such as cooperatives, also prevail. Although international and bilateral agencies participate in the sector development, there is need for a formal mechanism for coordinating their activities. D. Bank Group Lending 1.10 Bank Group lending in the sector supports Government's objectives towards increased smallholder participation. The Bank's first project (1972) (Credit 306-LBR for US$1.6 million) consisted of a pilot rubber development study and technical assistance, which led to Bank investment in the Lofa County Agricultural Development Project (Cr. 577-LBR for US$6 million), the Bong County Agricultural Development Project (Cr. 700-LBR for US$7 million), the Rubber Development Project (Cr. 786-LBR for US$13 million/Ln. 1544-LBR). A Forestry Development Project (Cr. 839-LBR for US$6 million) and an Oil Palm Project (Ln. 1765-LBR for US$12 million) have since been added. The Lofa project which was started in 1976 is progressing satisfactorily and is due to end in September 1981. Government has received assurance from USAID that they will provide bridging funding for the period between project completion and the start-up of Phase II. The Bong project, after a slow start (1978) and initial management problems, is also being implemented satisfactorily. The Rubber Project which became effective October 1978 aims at strengthening  Liberian-owned rubber production, but because of management problems, poor pricing, and a shortage of processing facilities, this project is has been revised. The Forestry Project was made effective in July 1978, ancd is expected to strengthen forestry institutions and to increase the production of lumber mainly for export. The performance of this project in general has been satisfactory. The Decoris Oil Palm Project became effective in February, 1981, and is expected to establish oil palm production on smallholders plots and a nucleus estate. In spite of considerable delays in meeting conditions for effectiveness, and financial constraints, project implementation is progressing reasonably well. E. Agricultural Institutions and Services 1.11 Ministry of Agriculture: The Ministry is headed by a Minister who is assisted by three Deputy Ministers, each heading a department. A Bureau of Administration and Management is headed by an Assistant Minister, and the holders of these latter four positions along with the Minister consti- tute the Ministry's primary management team. MOA is the principal institution in agriculture, and is responsible for planning and implementing agricultural programs, and regulating specialized semi-autonomous organizations, which are mainly involved in export crops. Although its budgetary allocations increased five-fold between 1973 and 1979, its impact has been limited mainly for the reasons stated in para. 1.06 above. MOA recognizes the need for major adjust- ments in the organizations, and is in the process of effecting a decentraliza- tion program which would strengthen its county offices. USAID is providing assistance to MOA in its restructuring, and is currently preparing a project for improving the extension services with technical assistance, logistics support and training. 1.12 Agricultural Research: Activities in agricultural research are primarily carried out at the Central Agricultural Research Institute (CARI) at Suakoko in Bong county. This institute is the result of a conversion of the old Central Agricultural Experiment Station, and is a semi-autonomous organi- zation responsible to a committee under the chairmanship of the Minister of Agriculture. Under an agreement with Government, USAID will implement a project with the primary objective of assisting in the establishment and functioning of this institute. USAID will provide management staff, agricul- tural scientists and overseas training for Liberians in agricultural research. UNDP specialists will also assist CARI in its operations, and provide research training for Liberian counterparts. Apart from the rice breeding program started under the Bank-supported Technical Assistance Project (Cr. 306-LBR) and continued with assistance provided under the Bong Project (Cr. 700-LBR), currently there has been no effective crops research program, and the output of research findings to date has been negligible. 1.13 Liberia Produce Marketing Corporation (LPMC): This corporation has sole responsibility for marketing coffee, cocoa, coconut and oil palm products, and establishing commercial production of a farmer support services for these crops. It also imports rice and operates processing facilities for domestic paddy. It is Government-owned, and has two subsidiaries, Liberia Palm Products Corporation (LPPC), and Liberia Cocoa and Coffee Corporation  - 5 - (LCCC), which run plantation and outgrowers schemes for producing oil palm and coconuts, and cocoa and coffee. These subsidiaries have been a drain on LPMC's reserves, are not efficiently operated, and are likely to be taken over by MOA. The costs of the subsidy on rice from 1979 until its removal in August 1981 was financed out of the stabilization funds for coffee and cocoa and the reserves of the LPMC. This drain on its resources, compounded by the recent fall in the world market prices of coffee and cocoa has placed LPMC in a financially vulnerable position. Furthermore, its operational and administra- tive costs are '-igh, and the marketing network (including the licenced buying agents system) is inefficient. A reorganization of the system is necessary to ensure LPMC's viability, and reduce the margins between export prices and farmgate prices (paras. 4.15, 6.03 and 6.04). 1.14 Agricultural Credit: The Agricultural Cooperative Development Bank (ACDB) which replaced MOA's Credit Division in 1978, provides short, medium and long-term loans to both individuals and farmers' organizations, and rural industries. It also provides facilities for the mobilization of rural savings. ACDB has headquarters in Monrovia and field offices in Gbarnga (Bong County), Voinjama (Lofa County) and Ganta (Nimba County). It has been unable to reach smalholders to any significant extent, mainly because of an inadequate branch network and inexperienced staff. Only Lofa, Bong and Nimba agricultural projects (para. 1.17) provide credit to smallholder farmers, with the ACDB serving as Bankers. Commercial banks lend mainly to concessions and commer- cial farms, and this represents about 20% of the total lending in the sector. 1.15 Cooperatives: Prior to July, 1981, a Department of Cooperatives existed within MOA with full responsibility for cooperative activities in the country. The Department had been poorly staffed and ill-equipped to provide the much needed guidance and enforcement of the provisions of the Cooperative Societies Act. As a result, cooperatives in general have been poorly supervised. Effective from July 1, 1981, Government established a Cooperative Development Agency (CDA) to replace the Department of Coopera- tives. The CDA will function as an independent agency, headed by a Registrar of Cooperatives. Currently, USAID is assisting Government in establishing staff and providing logistics support. However, this agency would require sustained commitment and support from Government in order to function effec- tively. 1.16 Other Services: Apart from the Bank financed agricultural develop- ment projects (ADPs) of Lofa and Bong, there is a Nimba County ADP in its pilot phase, which is funded by the Federal Republic of Germany. This project is being implemented by a mixture of expatriate and MOA staff, and runs over a 4-year period -- 1979-1982. The International Fund for Agricultural Develop- ment (IFAD) has funded the Rice Seed Production Project, for which the Bank has been appointed Cooperating Institution. This project will produce improved rice seed for sale and distribution to farrmers throughout Liberia. The project became effective November 4, 1981, and iimplementation is about to commence.  - 6 - II. THE PROJECT AREA Location and General Characteristics 2.01 The proposed project area (map IBRD No. 15550) represents an exten- sion of the Phase I area to include the entire Kolahun and Zorzor districts, thus encompassing the whole of the Upper Lofa County. Upper Lofa c:onsists of an area of 8,000 km2, and an estimated population of 185,000 people, of which 90% or 166,500 are engaged in agriculture. Population density averages about 16 persons/km2. The county is administered from the principal town, Voinjama, by a County Superintendent, who is appointed by the Head of State. The mean annual rainfall is 2,500 mm in the project area. There is only one rainy season (April/May to November) during which some 90% of the total annual rainfall occurs. The average monthly temperature varies only slightly around 240 C. (For further details on physical features and climatic conditions see Working Paper No. 2). Roads and Communication 2.02 An unpaved road in poor condition links the main towns in the county to Suakoko in Bong County. This road is in a poor condition. A tarmac road provides easy access between Suakoko and Monrovia. There are some 900 kms of feeder roads of fair to good condition throughout the county. Most: of these feeder roads were developed in the project area of the Phase I project. A Ministry of Public Works' Feeder Roads Unit (FRU), under the Bank financed Third Highway Project (Cr. 1156 LBR) and National Feeder Road Project (Cr. 1664-LBR), constructed some 200 km of feeder roads between 1977 and 1981. Feeder roads construction has been slowed to a standstill because of Govern- ment's recent budgetary constraints. Farming Systems 2.03 Shifting cultivation is the prevailing farming system in the project area. Fallow periods vary mainly as a consequence of population pressure, ranging from 5 to 12 years. Upland rice is the main crop and is generally sparsely intercropped with vegetables, cassava and pulses. After one harvest, a crop of cassava or groundnuts may be grown before the land reverts to fallow. 2.04 Swamp and bottomland rice is traditionally cultivated, particularly in the Foya and Kolahun areas. Women generally grow rice in these lowland areas on a semi-continuous basis, abandoning them only in years where the upland rice field is a considerable distance away. Under the Phase I project, improved swamp rice cultivation has been successfully introduced, replacing the traditional practice in many areas. 2.05 Cocoa and coffee are grown as smallholder cash crops. Traditional cultural practices are unsatisfactory, and are characterized by overshading, lack of pruning, poor spacing and little or no maintenance. Although in recent years farmers have shown greater interest in these tree crops for their cash earning, many still view these crops as a means of "engaging" the land  - 7 - under traditional custom for themselves and their children. In this case very little attention is paid to the planted trees. Under Phase I, the project introduced improved planting and cultivation methods for these crops. There is little rubber grown in Upper Lofa. Rural Services 2.06 In the Phase I project area wells have been constructed to supply water for household use. Where these do not exist,, villagers rely on the numerous streams in the county for their water. Health conditions are ge- nerally poor, and similar to those found elsewhere in Liberia. There is a Government hospital in Voinjama, and a mission hospital in Zorzor. Addi- tionally, there are some 30 health clinics in the project area. These facilities are inadequate to meet the needs of the areas they serve. Malaria, measles, dysentery and a wide range of internal and external parasites are common sources of illnesses in the project area. Protein and other dietary deficiencies lead to a high infant and child mortality rate. While onchocer- ciasis is known to exist, serious infections are rare. Schistosomiasis is more widely spread mainly because of the large number of water sources in the county, (streams and swamps). Under Phase I, the project's Schistosomiasis Surveillance Unit has carried out routine checks on swamps and population, and its findings indicate that community water contact sites are a bigger source of infection than swamps where only rice cultivation occurs. The Unit has provided treatment for infected farmers and their families. The Agricultural Development Project - Phase I 2.07 The Phase I project (Cr. 577-LBR) was the first major agricultural development project in the country. It was financed by IDA, USAID and the Government of Liberia. The project became effective in May 1976 and the closing date has been extended by six months to June 1982. The primary objective of the project was to increase production of smallholder rice, cocoa, and coffee in two districts of Upper Lofa by means of an intensive extension system with supporting services such as credit, input supply and cooperative development. In addition, the project included feeder road rehabilitation, well construction and the provision of some buildings. The project has been generally successful in physical achievements, in mobilizing farmers and motivating extension staff. The Monitoring and Evaluation Unit of the Project estimates the rate of return of the project at 15% compared with an appraisal estimate of 25.9%. Physical objectives and achievements are summarized in Table I.  - 8 - Table I Crop Development and Improvement - Phase 1 Upland Rice Swamp Rice Coffee Cocoa Total (ha) (ha) (ha) (ha) Farmers Appraisal 5,600 1,900 2,300 1,500 8,000 Actual 5,218 1,865 1,164 1,175 7,430 Civil Works MPW LCADP Road Road Construction Construction Training Other and Rehabilitation and Rehabilitation Wells Latrines Centers Buildings (km) (km) (No.) (No.) (No.) (No.) Appraisal 600 - 100 - 2 20 Actual 352 372 195 73 2 25 Crop Development: 2.08 The cocoa rehabilitation program was dropped since there were not enough trees that could be economically rehabilitated. The original upland rice package of improved seed and fertilizer evoked very little response and was deemphasized in favor of the more popular package of improved seed alone (provided through seed exchange or cash sale). Although targets have been almost achieved for the swamp rice program (98%) there have been problems in maintaining production especially where population density has been low (see para 5.02). Civil Works: 2.09 Due to a shortage of operating funds the Ministry of Public Works (MPW) was unable to carry out the entire roads program. They constructed 220 km and rehabilitated 132 km. The project's roads unit, originally designed to carry out small road maintenance for minor access tracks, was able to construct some 230 km of roads and recondition 142 kms of roads and tracks. The unit also constructed about 300 stream crossings associated with the road network. At least 30% of the construction costs were contributed by the communities in the form of voluntary labor. The wells program surpassed appraisal targets by 95%; the latrines program was added during implementa- tion; these programs also involved community labor amounting to about 50% of costs. The project also constructed a farmer training center, a staff train- ing center, a workshop, input storage sheds (10), and district and other offices (15).  9 Institutions: 2.10 Since there was no viable management structure capable of implement- ing the project, a semi-autonomous project management unit responsible to MOA was established and staff was internationally recruited for the key positions (project manager, training officer, agricultural manager, land planning manager and monitoring and evaluation manager). Within 3 years, full management responsibility had been handed over to local counterparts. The management record throughout the project period has been good. The number of senior staff positions has grown more quickly than envisaged at appraisal to reach a total of 26 at June 1981. Emphasis on training has been considerable, about 465 agricultural and credit staff received in-house training while about 8,000 farmers attended project courses. A mcdified Training and Visit system was introduced in the project in mid 1980. A Monitoring and Evaluation Unit was established and has been performing satisfactorily. 2.11 The project attempted to build up a viable cooperative system to handle credit input supply and marketing of output. The cooperative structure consists of 200 Town Cooperative Units (TCU) (averaLge membership of 20 farmers) affiliated to five larger cooperative societies (CS). The system has been reasonably successful in marketing (mainly as a buying agent of the export crops on behalf of the LPMC). However, due to organizational and management problems, they have been unable to assume responsibility for credit and input supplies. Credit recovery was very good in the first year (averaging 95%), however it fell to 50% in 1980/81 season due to the liquidity crisis in the country when farmers sold their produce for cash at very low prices to private traders since the cooperatives could not pay with cash. 2.12 Lessons of Experience and Proposed Actions: (a) Crop Development: While the technical packages have been accepted to a large extent in the project area, there have been problems in sustaining farmers commitments to the improved techniques, especially in swamp rice production where there has been a noticeable incidence of abandonment after 2 or 3 years. It is now recognized that the intensity of contact between the extension staff and farmers has to be more gradually phased out over a longer period than had been originally planned. Furthermore, it is necessary to provide additional maintenance credit periodically to repair swamp development works. (b) Civil Works: With respect to the roads program, financing would be provided in the next phase for the operational costs of MPW (para 3.11). (c) Institutions: (i) The T & V system has proved to be effective; however, assessment and appropriate modifications would be continued in the next phase. Stronger links would also be established among research, exten- sion and the monitoring and evaluation units to effect improvements in the technical packages and to incorporate farmer preferences more fully and quickly. (ii) the institutional arrangements for management and implementa- tion of the project would be more closely integrated into the MOA structure  - 10 - (para. 4.01). (iii) a more concerted effort supported by technical assistance would be directed towards development of the cooperative systems (para. 4.13), and the establishment of an efficient marketing system (para. 4.14) to ensure a viable system for handling credit, input supply and produce marketing at the end of Phase II. III. THE PROJECT General 3.01 In view of the agricultural potential of Lofa County and the good results of the Lofa Phase I project, Government asked the Bank to prepare and finance a second phase. The Bank's Regional Mission for West Africa in collaboration with the management of the project undertook preparation and government submitted the report to the Bank in January, 1981. The project was appraised in May-June 1981. 3.02 The proposed four-year project would consolidate the achievements under Phase I, and extend agricultural services to other farmers in the present project areas and to those in areas hitherto untouched. At the end of the project an additional 8,000 farm households are expected to benefit directly from Phase II, bringing the total number of farm families for Phases I and II to some 16,000. Swamp and upland rice production would be increased; new plantings of coffee and cocoa would be carried out, while a limited effort would be made to rehabilitate existing coffee. Particular attention would also be paid to: introducing additional food crops into the farming system; reorganizing and strengthening the cooperatives to allow them to take over input distribution, credit, and primary produce marketing func- tions; providing farm management assistance to farmers; and targetting activi- ties especially for women-farmers (para. 4.06). 3.03 In defining project content, particular attention has beetn given to the need to minimize costs in view of Government's financial con,straints, and to reduce the demands on Government's budget at the end of the project implementation period. Staff requirements for Phase II and recurrent for Phase I (to be financed solely by Government - para. 3.16) have been kept to a minimum. Furthermore, there would be greater involvement of farmers through improved cooperatives in order that they may take over responsibility for input distribution, seedling production as well as marketing activities. Summary Description 3.04 The project would specifically provide for: (i) improving 6,300 ha of upland rice, developing 1,100 ha of swamp rice, 3,300 ha of new coffee, 1940 ha of new cocoa, 600 ha of cassava and rehabilitating 290 ha of existing coffee;  - 11 - (ii) expanding and strengthening the extension services with the use of the Training and Visit system and reaching women-farmers through female extension workers; (iii) reorganizing training for staff and farmers to effect the extension program, and the improvement of cooperat:Lves; (iv) producing coffee and cocoa seedlings and cassava setts for sale to farmers; strengthening the adaptive research for carrying out locational crop varietal and cropping systems trials aimed at crop diversification and improved cropping practices; (v) reorganizing cooperatives and providing guidance and support to enable them to take over responsibility for credit; input supplies and marketing, and to function as viable enterprises; (vi) continuing schistosomiasis monitoring and control measures in connection with swamp rice development, and the construction of 160 village wells and 100 latrines; (vii) constructing and upgrading 174 km of feeder roads and 60 km of farm tracks, and maintaining some 600 km of existing feeder roads; (viii) establishing a central monitoring and evaluation section of MOA to provide guidance coordination and training of a number of project- specific monitoring and evaluation units:, (ix) supplying consultancy services and technical assistance, for monitoring and evaluation, cooperative development, marketing, LPMC's management, roads, research and coffee and cocoa processing. Detailed Features 3.05 Administration, Extension and Training. The project would fund staff, vehicles, equipment and operational costs for project management, finance and audit services (para. 4.01) required for Phase II (US$1.5 millioln base cost). In addition, the modified training and visit system of extension which is already in use would be strengthened through closer coordination and supervision, and through regular progress reviews. A total of 116 extension staff would be funded under Phase II, including 8 Hiome Economic Assistants who would be absorbed from MOA to provide agricultural and home economics service to women-farmers. Training of extension and other project staff would empha- size the training and visit system, the development: of cooperatives and preparation of farmers for increased participation in managing the development affairs of the area. Such training would be carried out at the existing staff training center at Voinjama. Farmers training, while mainly carried out under the T and V system, would include one-day and short: residential courses at the Farmers Training Centre at Kolahun. To strengthen these services the project would fund the staff, vehicles, audio-visual equipment and materials, operating expenses, some short term overseas training and consultancy for T and V review (US$4.2 million base cost).  - 12 - 3.06 Crop Development: Cultivation of food crops would be improved and cash crops increased. These improvements would be implemented through the project's improved extension service in combination with farmer training, and supported by inputs and credit supplied as loans through the cooperatives. This program would be based on recommended technical packages arrived at mainly through the experiences of Phase I, and described in Section 5 of this report. 3.07 Plant Production and Adaptive Research: The supply to farmers of coffee and cocoa seedlings would be improved. Since LPMC ceased supplying coffee and cocoa seedlings, the project has had sole responsibility for producing its seedlings requirement. The project would fund the purchase of coffee and cocoa seed from Ivory Coast and Sierra Leone, and the setting up of nurseries throughout the project area for producing the seedlings. However, during this Phase, a phased program would be introduced for establishing town nurseries run by the farmers themselves. It is estimated that by the end of the project, out of a total of 84 nurseries, 50 would be town nurseries. Cassava setts would be produced by the project for distribution to farmers. Rice seed would continue to be purchased by the project from contract farmers, until the IFAD Smallholder Rice Seed Project is able to supply the project requirements. A program of adaptive research would be promoted aiimed pri- marily at diversifying the range of crops produced in the uplands, and improving the cropping systems currently employed by farmers (Working Paper No. 2). It would also serve as the coordinator of locational and on-farm trials of CARI in the Lofa area. Financing of the plant production and research activities would include staffing, vehicles, equipment, operating expenses, maintaining trial locations, and consultancy for helping to set up and supervise a suitable research program (US$1.9 million base cost). 3.08 Cooperatives Credit and Inputs: Major emphasis would be given to the development of existing cooperative societies (CS) and to Town Cooperative Units (TCU) with a view to handing over responsibility for input supply, credit and produce marketing to the cooperatives by PY3. In PY1 and 2 the project's Commercial Services Division would continue to provide these ser- vices. Credit assistants, bookkeepers and inventory clerks would be provided to service new farmers on an area basis. The project would continue to support the strengthening of cooperative management by recruiting a coopera- tive specialist, through a training program and through the financing of CS managers on a reducing scale (75%-50%-25%) and bookkeepers (50%), over three years. Funds also would be provided for one technical assistance personnel, vehicles and operating costs; and where necessary, for additional staff. The Agricultural Cooperative and Development Bank (ACDB) would assist in training of cooperative staff and would administer a Revolving Loan Fund (para. 4.18) on behalf of participating cooperative societies. 3.09 The project would provide incremental farm inputs to farmers on cash and credit for both farm development and seasonal requirements. Medium- term loans would be provided to rehabilitate existing farms and to establish new farms of swamp rice, coffee, and cocoa. These loans would be given in kind for tools and equipment, coffee and cocoa seedlings, fertilizers, and  - 13 - agricultural chemicals during the development period, and in cash for hired labor for swamp land development, and establishment of coffee and cocoa farms. Seasonal credit would be provided in kind for upland rice and swamp rice to cover seed and fertilizers, and for coffee and cocoa to cover ferti- lizer, agricultural chemicals and sprayers after the development period (para. 4.16). Interest rates for seasonal and development credit would be brought in line with those of ACDB, and in keeping with inflation rate (para. 4.16). Delivery of farm inputs would be made through the cooperative societies and would be sold at sufficient mark-up to cover costs (para. 4.16). To ensure farmers a permanent supply of credit, the project would establish a Revolving Loan Fund to finance inputs, which would be administered by ACDB on behalf of GOL under a Financing Agreeent (para. 4.18). ACDB would maintain a separate account for each cooperative within the Revolving Loan Fund. Imported re- current farm inputs required for the Phase I project would be procured on behalf of the cooperatives through LPMC (acting on a commission basis), whilst rice seed, coffee and cocoa seedlings would be prc,cured locally. Funding for Cooperatives Commercial Services and inputs is expected to total US$7.9 million (base cost). 3.10 Schistosomiasis Surveillance: The Schistosomiasis Surveillance Unit (SSU) would be maintained by the project and woulcd continue to monitor schis- tosomiasis organisms in relation to swamp rice activities of the project. Staff, replacement, vehicles and equipment, and operating costs including drugs for treatment of the disease would be provided (US$0.4 million). 3.11 Road Construction, Wells and Latrines: The project would provide finance for the construction and upgrading of some 174 km of additional feeder roads and some 60 km of farm access tracks to service new project areas. Of the 174 km of feeder roads, 100 km would be done by the Ministry of Public Works' Feeder Roads Unit (FRU), for which the project would fund the fuel, lubricants and machine spares required. The remaining 74 km would be constructed by the project's roads unit which would also maintain 600 km of existing feeder roads. The feeder roads construction program would be com- pleted over a 2-year period. The project and the Public Works' FRU would utilize existing road-building machinery, and only minor pieces of equipment would be added to the project's equipment to improve its road building capa- bility. Self-help unskilled labour would be provided by villagers as in Phase I. As was done under Phase I, the project would provide for the construction of 160 village wells and 100 village latrines. Finance would be provided for hand pumps and culverts for constructing the wells while the villagers would be responsible for providing sand, for digging and general construction of the well under the project's supervision. Roads, wells and latrine construction are expected to cost US$2.2 million (base cost). 3.12 Monitoring and Evaluation: The project would continue to finance the activities of the existing monitoring and evaluation (M and E) unit. Additionally, the project would assist Government in establishing a Central Monitoring and Evaluation Unit under MOA, which would provide coordination, training and guidance to the several project based M & E units which already exist. The project would fund technical assistance (one position), personnel, vehicles, equipment and operation and maintenance expenses for the central unit.  - 14 - 3.13 Technical Assistance and Consultancy Services: The project would provide funds for internationally recruited staff and for consultancy ser- vices. International staff (totalling 6 man-years) would be required for the improvement of cooperatives in the project area (para. 4.13), for the improve- ment of LPMC's management, especially in its financial systems ancd control (para. 4.15), and in establishing the Central M & E unit (para. 4.24). Short-term consultancies would be funded for: (a) Coffee and cocoa processing - The quality of coffee and cocoa beans is generally poor, resulting in marketing losses. Much of this poor quality can be attributed to improper harvesting and processing methods. Some 3 man-months of consultancy would be provided to assist in introducing improved techniques. (b) Crop Research and Development - Some 6 man-months would be financed to assist in guidance to the research program and various areas of crop research, such as improved cropping systems for the uplands, new technology for smallholders and variety and fertilizer usage in tree crops. (c) Training and Visit Extension System - The modified system to be used would be reviewed periodically to ascertain its effectiveness (3 man-months). (d) Management Training - Conducting 2 management training seminars for senior and mid-level staff to incorporate effective principles, specifically for implementing the project (4 man-months). (e) Monitoring and Evaluation - Some 3 man-months would be required for reviewing the progress of the Central M & E unit. (f) Study of the LPMC - About 3 man-months would be financed under a Project Preparation Facility to review the marketing and financial operations of the LPMC. (g) Feasibility Studies - To carry out feasibility studies for develop- ment within the sector ($100,000). (h) Roads - Review and advise on the road construction and maintenance program (2 man-months). 3.14 Assurances were obtained at negotiations that prior to engaging any consultant or technical assistance staff, the detailed terms of reference for their employment would be reviewed with IDA, and consultants' reports would be promptly reviewed with IDA for examining possible implementation implications. Cost Estimates 3.15 Project costs, net of identifiable taxes and duties (from which the project is exempt), are estimated at US$28.0 million of which US$13.7 million or 49% would be direct foreign exchange requirements. The baseline cost estimates have been derived from mid-1981 prices. Cost estimates for  - 15 - civil works (swamp development, roads, wells and buildings) have been based on those experienced in the Phase I project with appropriate adjustments. Incre- mental farm inputs are costed at farmgate level. Local staff salaries and emoluments reflect the current project scales as agreed to by Government. Internationally recruited staff costs of US$80,000 per man-year for technical assistants, and US$10,000 per man-month for short-term consultants, exempt from income taxes, reflect prevailing conditions. P'hysical contingencies have been calculated at the rates of 10% for buildings, and 5% for civil works, equipment, non-labor farm inputs and operational costs, (and amount to 3% of total base costs). Anticipated annual price increases, amounting to 29% of total base costs plus physical contingencies reflect projected annual infla- tion rates of: 7% for all personnel costs, and 10% for local civil works and operational costs; 7.8% in 1982, 8.0% in 1983, 7.5% in 1984, 7.0% in 1985, and 6% in 1986 for the foreign exchange component. A stLmmary cost table is presented in Table 2 with further details in Annex 1 and Working Paper 6. Table 2: SUMMARY OF PROJECT COSTS (US$ millions) Percentage of Local Foreign Total Base Costs Administration 0.8 0.7 1.5 7 Agricultural Extension 2.1 1.1 3.2 15 Training 0.5 0.5 1.0 5 Plant Production and Research 1.5 0.4 1.9 9 Cooperatives and Commercial Services 2.2 1.8 4.0 19 Farm Inputs 1.5 2.4 3.9 18 Schistosomiasis Control Unit 0.2 0.2 0.4 2 Roads, Wells and Latrines 0.7 1.5 2.2 10 Land Planning 0.3 0.3 0.6 3 Central Monitoring and Evaluation Unit 0.6 0.5 1.1 5 Project Monitoring and Evaluation Unit 0.4 0.2 0.6 3 Consultancy and Technical Assistance 0.2 0.4 0.6 3 Project Preparation Facility (PPF) 0.0 ().1 0.1 1 TOTAL BASE COSTS 11.0 10.1 21.1 100 Physical Contingencies 0.1 0.5 0.6 3 Anticipated Price Increases 3.2 3.1 6.3 30 TOTAL PROJECT COSTS 14.3 13.7 28.0 33 3.16 Recurrent costs in the Phase 1 project (Credit 577-LBR) have been defined as those costs necessary to maintain the level of production achieved under that project. These costs which are estimated at US$1.0 million per year (1982 prices) are not included in the project costs discussed above. The composition of these recurrent costs are discussed further in para 6.08 and Working Paper 6. At negotiations, assurance was obtained that Government would make the necessary allocations in the Agricultural Budget, provide foreign exchange requirements and increase the funds as necessary to maintain  - 16 - these services at a comparable level. The recurrent costs for maintaining the Phase I and II project would be about US$1.5 million at the end of the invest- ment period. Proposed Financing 3.17 Given the financial constraints of the Government of Liberia, ninety percent of project costs would be covered by IDA, and the African Development Fund (ADF) on a parallel financing basis. The remainder of the project costs would be covered by the Government of Liberia. The proposed financing plan is shown in Table 3 (further details are in Working Paper 7). The proposed IDA credit of US$15.5 million would be on standard terms and would finance 55% of the total project costs. The credit would finance US$8.7 million (64% of total) foreign exchange costs of vehicles, operations and maintenance, build- ings and farm inputs for the credit, cooperatives and input supply services; vehicle operational costs of the Extension and Central M&E services, and personnel and supporting costs for consultancy services. The IDA c:redit would also cover US$6.8 million of the local costs involved in these components including US$4.95 million for local personnel for the credit, cooperatives and input supply services. The ADF credit would be on the same terms as the IDA credit and would cover US$5.0 million (56% of total) of foreign exchange costs of vehicles, and operational costs of six divisions and the associated local costs. The Government's contribution of US$ 2.9 million (10% of total projects costs) would cover mostly local personnel and operational costs. A condition of IDA credit effectiveness would be that all conditions precedent to the effectiveness of the ADF Loan Agreement had been fulfilled. 3.18 In view of the financial constraints facing the Government of Liberia, it would be essential for the successful implementation of the project that prefinancing for certain categories of project expendiLtures be provided. An amount of US$200,000 financed as an advance from the IDA credit, would be deposited in a special project account at the National Bank of Liberia. The account would be replenished upon receipt of a disbursement application supported by: (i) a statement of account transactions and balances certified by the National Bank; (ii) a reconciliation of withdrawaLs with statements of expenditures and receipts for permitted expenditures; and (iii) a reconciliation of balances with disbursements by and pending cla:Lms to IDA. Should any disbursement be made from this account, which is not acceptable to IDA, the Government would deposit the corresponding amount in the special account. Assurances to these effects were obtained at negotiations. 3.19 Procurement: All goods financed under the IDA credit would be procured in accordance with IDA guidelines. Contracts valued at US$75,000 or more, for vehicles and equipment (US$1.6 million) and for fertilizers (US$2.0 million) would be procured through international competitive bidding (ICB). Purchases would be grouped into packages of at least US$75,000, whenever possible; contracts valued at less than US$75,000 but more than US$10,000 for these items (US$0.6 million) would be procured through local competitive bidding or limited international bidding under procedures acceptabLe to IDA. Domestically manufactured goods would be allowed a preference of 15% or the level of applicable import duty, whichever is lower. Contracts of less than US$10,000 for small items such as spare parts, office supplies, fueal, tools,  TABLE 3 LIBERIA: LOFA COUNTY AGRICULTURAL DEVELOPMENT PROJECT II Financing Plan (US$ Millions) IDA ADF GOL Local Foreign Total Local Foreign Total Local Total Administration 0.80 0.90 0.30 2.00 Training 0.50 0.70 0.10 1.30 Plant Production 1.70 0.50 0.30 2.50 Land Planning 0.30 0.40 0.10 0.80 Roads, Wells and Latrines 0.70 1.90 0.30 2.90 Schistosomiasis Control Unit 0.20 0.30 0.10 0.60 Field Monitoring & Evaluation 0.40 0.30 0.10 0.80 Cooperatives and Credit 2.25 2.25 4.40 4.90 Buildings 0.05 0.25 0.10 0.40 Farm Inputs 1.40 3.50 0.60 5.50 Extension 2.30 1.50 0.30 4.10 Central Monitoring and Evaluation 0.70 0.40 0.10 1.20 Consultancy and T.A 1/ 0.10 0.70 0.10 0.90 Project Preparation Facility 0.10 0.10 TOTAL 6.80 8.70 15.50 4.60 5.00 9.60 2.90 28.00 Percentage of total cost 55 35 10 100 1/ Includes T.A for Monitoring and Evaluation and Cooperatives  - 18 - pesticides and seedlings (US$3.75 million) would be procured through limited local tendering based on at least three quotations. Contracts for buildings (US$0.3 million) would not be attractive to foreign contractors due to their small sizes and dispersed locations and would, therefore, be awarded on the basis of local competitive bidding in accordance with procedures satisfactory to IDA. Consulting services (US$0.3 million) would be procured in accordance with IDA guidelines (Ref. Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency. August 1981). Long term technical experts (US$0.6 million) would be recruited under terms and condi- tions satisfactory to IDA. Hired labor for farm development (US$1.4 million) would be obtained from the local markets. The services of local personnel (US$4.95 million) would be recruited from existing Phase I staff or the local market in accordance with Government procedures. 3.20 Goods and services financed by the ADF (US$9.6 million) would be procured in accordance with ADF's procedures. The GOL contribution would be mainly for local costs of staff salaries and operating expenses (US$2.3 million), and production inputs (US$0.6 million). 3.21 Disbursements The proceeds of the IDA credit of US$15.5 million would be disbursed over four years as follows: Category Terms Amount I. Production Inputs 100% of foreign exchange costs. 90% of local-costs. 4.2 II. Civil Works - Buildings 100% of foreign exchange costs. 70% of local costs 0.3 III. Vehicles and Equipment 100% of foreign exchange costs. 90% if purchased locally 1.7 IV. Consultancy Services 100% of foreign exchange costs 0.8 and Technical Assistance 85% of local costs V. Staff 90% of costs of local salaries for the Credit and Cooperatives, Extension, and Central M&E Divisions 4.5 VI. Operating Expenses 100% of foreign exchange costs 90% of local costs for the Credit and Cooperatives Division 2.2 VII. Initial Withdrawal for Special Account 0.2 VIII. Project Preparation Faci- lity 0.1 IX. Unallocated 1.5  - 19 - 3.22 A disbursement schedule (Annex 2) has been prepared on the basis of the disbursement profile for Liberia, adjusted to the project's 4-year imple- mentation period. Disbursement against vehicles and equipment, civil works, salaries and allowances of internationally recruited consultants, production inputs, fuel and spares would be fully documented. Disbursements would be made against statements of expenditure, (which would be checked during the course of project supervision) covering the local costs of local staff salaries and minor miscellaneous operational expenditures. The project's auditors would check the reliability of statements of expenditures and would include a statement to this effect in the annual statement of accounts. Disbursements into the Project Special Account would be made according to the procedures discussed in para 3.19. Assurances were be obtained from Government at negotiations that all supporting documents for statements of expenditures and withdrawals from the special account would be maintained and made available upon request for inspection by IDA. It is expected that disbursements would be completed by December 31, 1986. 3.23 Budgeting, Accounts and Audits: Following present practices, the Phase II project administration would prepare annual budgets and estimates of quarterly cash requirements for both the present and previous projects, based on appraisal estimates but amended where necessary to reflect changes in costs and project development policies. The administration of Central Monitoring and Evaluation Unit (CMEU) would also prepare its budget and quarterly cash requirements on the same basis. The budgets would then be submitted to the Steering Committee (para 4.02) for approval, then sent through the Ministry of Agriculture to the Ministry of Economic Affairs. After approval by the Ministry of Economic Affairs, the Ministry of Finance would make the appro- priate allocations in the Agricultural Budget and, thereafter, would release to the project all necessary funds quarterly in advance, as per cash-flow statements. The Government would also make timely allocations in the budget for the importation of recurrent farm inputs and other goods required under the proposed and previous projects. 3.24 The Government of Liberia would cause the Ministry of Agriculture to: (i) establish and maintain separate project-related accounts for Phase II project including the CMEU, in accordance with sound accounting practices as already established under the previous project; (ii) have the accounts and statements of expenditures audited annually by independent auditors acceptable of the end of each project year; (iii) ensure that the reports of the auditors are of such scope and detail as IDA may reasonably request; and (iv) furnish such other information concerning its accounts as IDA may reasonably require. Assurance ensuring the adoption of the above accounting and auditing proce- dures was obtained at negotiations. Under the Phase I project GOL has satisfactorily complied with these conditions, and the accounting procedures in place are acceptable to the Association.  - 20 - IV. PROJECT IMPLEMENTATION AND MANAGEMENT Project Organization 4.01 The Ministry of Agriculture (MOA) would have overall responsibility for the project, with implementation responsibility delegated to a Project Manager supported by technical and administrative units. He would be desig- nated the County Agricultural Officer (CAO) for Lofa County, and would be responsible for all project-related and other MOA staff, who operate outside the Phase I project area. These presently parallel staff would be merged with existing project staff into a single structure. A few ongoing MOA activities, such as livestock, will not benefit from direct support under the proposed project, but the CAO will oversee such activities with resources available from MOA. Five existing technical divisions would implement the project: Agriculture, Training, Cooperative Development, Plant Production and Research, and Land Planning. They would be supported by three existing divisions for financial control (finance and audit), project management, and monitoring and evaluation. The Schistosomiasis Surveillance Unit would continue to be supported technically by the Ministry of Health and the Liberian Institute for Biomedical Research in its monitoring and control activities (Organization chart, Annex 8). MOA is in the process of restructuring and decentralizing its regional activities but final details are not yet available. The CAO would be responsible for planning changes in the project organizatiLon and procedures as necessary to better fit any new MOA structure. An assurance was obtained at negotiations that Government would review with IDA any proposals to reorganize MOA's services in Lofa. Assurances were also obtained at negotiations that during project implementation, the CAO, the Agricultural Development Manager, the Agricultural Manager, the Financial Controller, and the Commercial Services Manager would have qualifications and experience satisfactory to IDA. 4.02 For the purpose of providing policy guidance to the project, the Project Steering Committee, already in place, would continue to function with the Registrar of the CDA and the Managing Director of ACDB becoming additional members of this committee. Similarly, the Project Advisory Committee consist- ing of local officials and Chiefs would continue to provide implem(entation guidance and facilitate the expansion of project development activities into the new areas of the county. Farmers Participation 4.03 The project would build upon farmers already reached by the exten- sion service under Phase I by increasing farmer participation. Further, the project would promote increasing farmer involvement in local development matters, and would rely heavily on the use of existing local groupings, the Town Cooperative Units (TCUs) and district cooperative societies (para 4.12). Farmers would also be encouraged at village or town level to produce coffee and cocoa seedlings with supervision provided by the project, as a means of reducing the cost of such seedlings to them (para. 4.09). Single women-farmers  - 21 - and farmers' wives would also be reached by the extension services to encourage their direct participation in project activities (para 4.06). A farm manage- ment officer would be appointed to the project for advising all levels of farmers in the business and farm planning aspects of their enterprises. Staffing 4.04 Adjustments would be made to the Phase I staff structure in view of the experiences gained over the implementation period, and to bring it more in line with the MOA structure (para 4.01). The complement of admin- istration staff would be reduced, and some deputy positions would be removed. Some 38 additional agricultural staff would be obtained from existing MOA staff (totalling 79) in the county. Government has indicated that the surplus staff would be transferred out of Lofa. An assurance was obtained at negotia- tions that Government would effect the necessary reduction in staff consistent with efficient operation of the project. Because a satisfactory level of management has been attained under Phase I, it is not envisaged that any major personnel changes would be required. In view of the need to develop strong and efficient cooperatives, and because of the scarcity of suitable experienced Liberians in cooperatives, assurances were obtained at negotiations that an agricultural cooperative specialist would be recruited internationally for this purpose under terms and conditions satisfactory to IDA (para. 4.14). Extension Services 4.05 Extension Organization. The extension service under Phase I has started to implement a modified version of the training and visit system, which should increase the efficiency of the service through better farmer contacts, and increasing the number of farmers per extension worker from a ratio of 60 to 1, to 110 to 1. This ratio is based on the experience gained under Phase I, and takes into account the distant Locations of farms under shifting cultivation, and distances which have to be covered on foot to reach these and swamp locations. Also in this project some new areas would be of low population density. Basic extension work would be carried out by 135 Agricultural Extension Assistants (AEA) who would be located throughout the project area, and would advise farmers on the use of the project's tech- nological packages. The work program of the extension staff would be based on regular contact with farmers. As is already the practice, each AEA meets with established groups of farmers every week to present instructions on the technological packages. On alternate weeks, the same group meetings take place in the field. The AEAs work is supervised by 14 Senior Extension Assistants (SEA), and the SEAs in turn would be responsible to 5 Extension Officers (EO), who would be assigned on a district basis. An Agricultural Manager assisted by a Deputy Agricultural Manager would have overall respon- sibility for extension activities. There are no subject matter specialists (as in the T & V system) in the project area at this time. The project's research section would be in close contact with the extension service, and the latter would liaise with MOA's Extension Department, with CARI and other agricultural projects to acquire further improvements in cropping practices, etc., which could be applied in the project area. To further strengthen the application of a modified T & V system, a suitable consultant would be employed to provide guidance and to set up review procedures (3 man-months).  - 22 - 4.06 Under the proposed project, 2 Senior Home Economics Workers and 6 Home Economics Assistants would link with SEAs and AEAs to provide extension service specifically to independent female farmers and more particularly farmers' wives who, though it is acknowledged can play an important role in the adaption of improved packages, have been somewhat constrained socially from direct contact with male extension workers. Apart from assisting in promoting the technological packages of the project to the women, the Home Extension Assistants would also advise on and encourage improved home gardening, diversification of crops to provide for more variety in the diet, and would demonstrate utilization and storage techniques for these crops. Senior Home Economics staff from MOA, Monrovia and senior project staff would 'provide guidance and technical direction to these workers, and the project would supply them with technical material and equipment to assist them in their demonstration programs. Training 4.07 The Training Division would be headed by a Manager who would report to the CAO, and would be assisted by a Senior Training Officer and two Train- ing Officers. The program of training new staff for project implementation and of providing updated training to existing staff would continue with emphasis on the Training and Visit extension method. MOA staff (including Home Ecbnomic Assistants), who will be working with existing project staff, would receive a ten-week orientation and training course at the Voinjama Staff Training Center. The Training Division would invite other MOA specialists, CARI and WARDA staff to give lectures and demonstrations in order that project staff would be made aware of technical developments in agriculture. Selected farmers who would serve as contact farmers for assisting in implementing the training and visit system would be given residential training at the project's Kolahun Farmers' Training Center. The Training Division would organize two management seminars to be conducted by consultants for management staff. The first would assist managers to implement the project, through identification of objectives, techniques to be used and methods for assessing results. The second seminar would be a follow-up to the first. Management courses would also be run for junior supervisory staff. Plant Production and Research 4.08 As exists at present, the Plant Production and Research Division would be headed by a Manager, who would be responsible for providing the project's requirement of cocoa and coffee seedlings, rice seed and cassava setts. Research would be principally adaptive in orientation. 4.09 Plant Production: This section would be staffed with a P'lant Production Officer, Nurserymen and Nursery Assistants, and would produce coffee and cocoa seedlings in project established nurseries located in the districts. Each nursery would be run by a nurseryman under the supervision of a nursery assistant. The project would promote on a phased basis the establishment of town or village nurseries, to be run by farmers themselves undet the supervision of Nursery Assistants. Assistance could be given in choosing a suitable location, provision on credit of plastic bags and seed,  - 23 - and transport at cost for the required soil for filling. Farmers would be taught nursery management and would be required to arrange for the daily tending of nurseries. By Year 4, it is expected that some 50 such nurseries (out of an estimated total of 84) would be established in the project area. Where individual farmers have the resources, they would be encouraged to set up their own nurseries. 4.10 Until the IFAD-funded Rice Seed Unit is able to meet the project's requirements, the project would continue its arrangements as under Phase I by which it obtains basic (foundation) seed from CARI, multiplies it on its own swamps and on selected private farms, with the resulting seed sold to project farmers. Cassava setts of improved varieties (mosaic tolerant) would be produced for distribution to farmers in areas where mixed cropping with cassava is practised. 4.11 Research. The Research section of the Plant Production and Research Division would be directly under the Manager of the Division. Adaptive research would be emphasized together with simple replicated experiments. Liaison would be maintained with other Liberian scientists and on-farm trials would be organized. Upland cropping systems at trials currently in progress would continue to ascertain techniques and cropping cycles for beneficial utilization of the upland, e.g., rice/cassava, rice/groundnuts mixtures, minimum tillage and continuous cropping versus shifting cultivation. Loca- tional testing of swamp rice varieties would continue, while testing of crops, particularly vegetables, for swamp slopes and paddies (where a second rice crop is not possible) would be introduced. Tree crops (cocoa and coffee) research would be carried out relating to husbandry variety, fertilizer, insect pest and disease control, and improved techniques for harvesting and processing these crops. The project would fund short-term consultancies of up to 6 man-months to provide guidance in setting up and supervising a research program for the project area, if possible in conjunction with CARI in these areas of deficiency. The project would negotiate with the Liberia Rubber Development Unit and the Firestone Company for establishing trials on rubber in the project area in order to assess its potential as an additional cash crop for the Lofa area. Cooperative Development 4.12 Organization: One existing cooperative society (CS) in the new project area would be added to the five under Phase I (para 2.18). Member- ship presently exceeds 6,000. They have low standards of management, and accounting and auditing is weak. The TCUs (para 2.18) which are affiliates of these societies and have no legal status, each comprise a small group of farmers (10 to 30) who have collective responsibility for credit. CSs and TCUs would be improved and handle input supply, credit and marketing opera- tions. Each CS would follow the provisions of the Cooperatives Societies Act, and fulfill the minimum requirements relating to elections of Boards of Directors, organization, staffing, accounting and auditing. The TCUs would remain small in order to maintain the group approach. They would continue to be affiliated to cooperative societies, and although they would not be  - 24 - eligible for registration, would each have a small management committee. This committee would comprise of the Town Chief and two elected elders, with the AEA and a Cooperative Credit Assistant (CCA) in ex-officio capacities. The committee's primary function would be to process and recommend loana applica- tions to the CS, and assist in loan recovery. 4.13 To bring about the improvements the newly formed CDA (para 1.15) would appoint a senior cooperative officer as Regional Assistant Registrar of Cooperative Societies of Lofa, Bong and Nimba counties combined, and a Cooperative Officer specifically assigned to the project area. The Regional Assistant Registrar would head a small field staff which would provide audit, supervision and inspection. There is only a small number of Liberians who are properly trained in cooperatives, and an even smaller number with enough experience. The project's cooperative specialist would organize the coopera- tives in the project area so that by the end of the project they would become fully responsible for inputs supply, credit and marketing. He would also assist in training CS staff and, where required, provide guidance and advise CDA staff in cooperative operations. More detailed recommendations for reorganization and strengthening of these cooperatives have been proposed in the report of the consultants on "Liberia Cooperative Credit and Marketing System With Particular Reference to Lofa County Agricultural Development Project", and a dialogue is in progress between Government and IDA on these recommendations. Assurances were obtained at negotiations that Government would: (a) by October 31, 1982 agree with IDA on detailed measures for improving the Lofa cooperatives based on the above-mentioned report, (such as included above and in para 4.12), (b) provide adequate staff and logistics support to the CDA in the project area to permit it to function in keeping with the Cooperatives Societies Act, (c) appoint by December 31, 1982 an Assistant Registrar to the region and (d) review with IDA by August 31, 1985, the progress made in the Lofa cooperatives, and, if necessary make proposals for their further improvement. 4.14 Input Distribution and Crop Marketing. To facilitate these activi- ties in the expanded project area, 19 additional sub-centres, each serving about 300 farmers, would be constructed at the better located TCU's where traditional weekly markets are held. These sub-centres would continue to be constructed with participation from the local population, and would serve as the focal point for project activities for the area, such as cooperatives meetings, storage and distribution of inputs, marketing, and extension meetings. Where subcentres are too distant, existing village stores would be used. Each subcentre would be managed by a TCU member who would be appointed by the participating TCU's, and trained by the project. Until the cooperatives take over full responsibility for inputs, the Commercial Service Division (CSD) of the project would continue to procure, transport, store and distribute inputs (fertilizer, chemicals and tools) on behalf of the societies. The CSD would carry out the operations with a modified Phase I staff structure, headed by a CSD manager, and it is expected that, in implementing the detailed proposals to be agreed for the reorganizing and strengthening cooperatives (para. 4.13), this staff could be utilized in the cooperatives, thereby transferring the expertise gained in the project. Detailed proposals for improving crop marketing through the cooperatives have been put forward in the study referred to in para. 4.13. These proposals seek to correct anomalies in the existing buying arrangements and ensure that an equitable price is paid to the farmer.  - 25 - 4.15 However, it is recognized that the role of LPMC in these operations, and particularly in relation to produce pricing, also requires reviewing. As discussed in para 1.13, LPMC is currently facing financial problems, which, though principally resulting from the situation mentioned in that paragraph, are also due to inefficiencies in its organization and management. Through an advance obtained under the Project Preparation Facility, Government has agreed to undertake a study of the entire marketing operaltions of LPMC (from farmgate to export), and, assurance was obtained that by September 30, 1982, Government would agree with IDA a plan of action for improving the operations to ensure LPMC's viability and provide the farmers with a fair price for their produce. Assurances were obtained at negotiations that by June 30, 1984, Government would carry out the agreed plan of action in respect of the management and operations of LPMC. Technical assistance would be provided in the project for a qualified and experienced management specialist to assist LPMC in this implementation. 4.16 Farm Credit. Farm credit services developed under Lofa Phase I would be maintained with minor modifications: (a) an increase in the credit limit to US$2,500 per farmer for combined development and seasonal credit; (b) an extension of the grace period for development loans from four to five years for new cocoa planting; and (c) increase the development loan to include assis- tance to farmers for hiring labour for brushing and ring weeding in the establishment period. A farmer may apply for up to a maximum of one ha development credit (either for swamp rice, coffee, or cocoa or a combination of any of these crops). He would, however, be able to apply for a credit of up to 2 ha for upland rice if he has not signed for any development credit for cocoa, coffee, or swamp rice or up to 1 1/2 ha for upland rice if he has already signed for one-half ha development credit. A farmer with one ha of development credit would still be able to apply for up to one ha of upland rice credit. However, farmers would provide at least 5% of the investment costs in cash or labor for all crops. Except for cash payment for hired labour for development purposes, all loans would be in kind such as, tools, equipment, fertilizers, pesticides, herbicides, etc. Seasonal credit would also be available for upland rice where fertilizer is used. Interest charges to farmers would be increased from 10 to 15% per annum for seasonal loans and from 10 to 12% per annum for medium/long term loans. 1/ Assurances to this effect were obtained from Government at negotiations. 4.17 Loan and Repayment Terms for upland rice would continue as for seasonal credit, while other crops would be modified as follows: a) Swamp Rice - Development loan averaging US$305 per ha disbursed over two years and repaid in 2 annual installments following 1 year's grace period. Interest to be capitalized during the grace period. I/ The domestic inflation rate climbed from arolnd 7% during 1976-78, to 11.5% in 1979, and reached 13.5% in 1980--mainly because of expansionary effects of expenditures on the 1979 OAU Conference. More recently the inflation rate has declined, and is estimated at 10% for 1981.  - 26 - b) Cocoa Plantings - Development loan US$1,065 per ha disbursed over 4 years and repaid in 7 annual installments following a 5-year grace period. Interest to be capitalized during the grace period. Seasonal credit would be available from Year 5 onwards. c) Coffee New Plantings - Development loan US$415 per ha disbursed over 4 years and repaid in five annual installments following 5 year grace period. Interest to be capitalized during the grace period. Seasonal credit would be available from Year 4 onwards. 4.18 As was done in Phase I, credit procedures would be based on the active involvement of the AEA's who would initiate contact with the farmers, and the CCA's who would process applications through the TCU's and the CS's. On the basis of the total loan approvals, a forecasted quarterly dLsbursement schedule would be prepared for each cooperative. Details on credit procedures are in Working Paper Cl. 4.19 Financing Arrangements and the ACDB: The financing arrangements under the project are designed to provide adequate working capital for the cooperative system and to forge closer relationship between the ACDB and the cooperatives as a step towards establishing a viable cooperative system with internal financial control and supporting facilities. It is, therefore, proposed that the total value of the farm inputs to be financed under the project (about US$ 5.5 million, including contingencies) would be considered as equity of the Government of Liberia in the ACDB which, in turn, becomes equity of the ACDB in the Cooperatives. This provision of equity would per- mit (a) the ACDB to be represented on the Board of each cooperative and be involved in its management and (b) the establishment of a sound resource base for the cooperatives, since in the initial period their cost operations compared to their projected income streams would not permit accumulation of adequate savings. 4.20 The farm inputs financed under the project would be provided as loans to farmers which would be disbursed by the project's Commercial Services Division under the procedures described in para. 4.18 above; the division would also continue to manage the accounts of the cooperative societies rLntil such time that the societies are strong enough for the books and staff to be fully transferred to them. The total value of the loans disbursed through each cooperative society would be issued as equity of the ACDB in the paLrticular cooperative. The shares of the ACDB in the cooperative would be designated as "Nominal Shares" since they would not be entitled to the same borrowing and profit-sharing privileges as the other members, but are guaranteed a minimum payment for services rendered (see para. 4.21 below). When a cooperative society has reached a strong financial position it may buy out or reduce the holdings of the ACDB in its equity, thus releasing funds for investment elsewhere by the ACDB. (For further details on these arrangements, see Working Paper No. Cl). 4.21 Repayments: The ACDB is the Banker of the Cooperatives. When loans are repaid they would be deposited in revolving accounts in each cooperative's name at the ACDB. The ACDB would deduct 4% of these repayments as a service  - 27 - charge. The ACDB would supervise withdrawals from these accounts to ensure that they are properly authorized and confirm to the agreed disbursement schedule of the particular cooperative (para. 4.18). It would be a Condition of Effectiveness that GOL had executed a Financing Agreement with ACDB, satisfactory to IDA, which would include, inter alia, (a) the transfer of funds provided under the project (about US$ 5.5 million) as equity of the GOL in the ACDB and as equity of the ACDB in the cooperatives. (b) the representation of the ACDB on the DCC and (c) the administration of the revolving accounts of the cooperatives by the ACDB with a service charge not exceeding 4% of annual collections. Land Planning, Roads, Wells and Latrines 4.22 These two activities would continue to be run by the Land Planning Division headed by the Land Planning Manager. While he will have overall responsibility for the Division, his Deputy will be in charge of road con- structing and maintenance. The land planning activities consisting of survey- ing, designing, and laying out irrigation and drainage works for swamp rice, as well as determining areas whose soils are suitable for coffee and cocoa would continue as under Phase I. Two Senior Land Planning Assistants, and 10 Land Planning Assistants would carry out these operations under the direc- tion of the Land Planning Manager. Additionally, they would determine the location of farm access tracks to be constructed in relation to tree crop development. 4.23 The CAO would be responsible for coordinating the road construction work of the two road units (para. 3.13) and would liaise with the County Superintendent and other officials in determining the location of these roads. The feeder roads would be planned on the basis of the crop development program of the project, and, as far as possible, the new project areas would be given priority. The Deputy Land Planning Manager with the Project's Roads Unit would implement the agreed portion of the road construction program (74 km of feeder roads and 50 km of farm access tracks), and would ensure that each road is constructed in line with MPW design and specifications, and is suitably recorded on maps. The construction of the feeder roads and a portion of the farm access tracks is expected to be completed in 2 years. By Year 3, the project's roads unit should be primarily concerned with completing the farm access tracks and maintaining some of the existing feeder roads network. The CAO would at this stage arrange for the phasing out of this unit which should be completed by the end of Year 4. As was done under Phase I, local communities would provide self-help labour to assist in the construction of roads and farm access tracks. During this project, these communities would be encouraged to undertake road maintenance on an organized self-help basis in cooperation with the Ministry of Local Government. In this way, some road maintenance can be assured after the project period. However, an assurance was obtained at negotiations that Government would take over the responsi- bility for maintaining all feeder roads constructed under the project. 4.24 An adjunct to the project's Roads Unit is a small group of artisans who are responsible for implementing the wells and latrines construction program. This group would continue under Phase II under the direction of the  - 28 - Deputy Land Planning Manager. As is normally done, project staff would consult with town chiefs on the location of both wells and latrines, they, in turn, would arrange for the availability of local labour, the obtaining of local material and would assist in getting the townspeople to use these facilities properly. A suitable person would be chosen from within the commun'ty to be responsible for carrying out minor repairs to the handpump of the well. The project would train these persons, and would provide back-up assistance in case of major pump failures. 4.25 Schistosomiasis. The Schistosomiasis Surveillance Unit (SSU) would continue to operate as under Phase I, under the guidance of the Director of the Liberian Institute for Biomedical Research (LIBR). As already composed, the Manager of the Unit would submit his program to the Director LIBR who would advise on its content and implementation. Additionally, the Manager would liaise with the local Ministry of Health officials and would keep them informed of developments in their monitoring and treatment activities. Monitoring and Evaluation (M & E) 4.26 Project Specific. The project's M & E Unit would be strengthened to permit more detailed planned ad hoc surveys to be carried out, and to improve survey methods. The Unit would continue to be headed by a Manager assisted by an Agricultural Economist, a Statistician, 2 Senior Assistants and some 10 Enumerators. This staff would be augmented by part-time assistants, mainly students, when required. The M&E Unit is working to a program developed during the first phase including suggestions made by visiting consultants. The unit would have regular quarterly meetings with management, and would inform it of important findings as soon as they are available. A post-project evaluation exercise would analyze total project impact, and would be carried out principally by the Unit. 4.27 Central Monitoring and Evaluation Unit. The Central M & E Unit would be established in MOA's Planning and Development Department, which is headed by a Deputy Minister of Agriculture. This Unit would be run by a Director, and would consist of a Deputy Director, two Agricultural Economists, a Rural Sociologist and a Statistician. Support staff for these senior level officers would be provided. Since the field of M & E is new in Liberia, the project would fund the employment of qualified and experienced interna- tionally recruited Director for this unit. He/she would be employetd for a period of two years, during which time, a suitably qualified local Deputy would be trained to take over this post. Upon assuming the Directorship, the Deputy Director position would no longer exist, as the staff complement would he adequate. The CMEU would carry out the following functions: (a) develop appropriate and realistic evaluation procedures, (b) coordinate and give technical guidance to all project specific M & E's, (c) train project M & E staff (d) collate data collected by the Unit, projects and other related agencies, and record the analysis and interpretation of achievements with progress reports to MOA and the project's steering committees and (e) under- take field investigations for baseline studies, M & E of on-going projects and ex-post evaluation of such projects. In order to obtain a greater understanding of the role, value and use of M & E, the CMEU would conduct special seminars with Project Managers and other Project Management staff, as well as with MOA officials.  - 29 - 4.28 In view of the innovative nature of the functions of the CMEU, and the relevance of its work to other Ministries with responsibility in the field of rural development, a Central Advisory Committee on Monitoring and Evaluation would be established to review on a quarterly basis its program of work and activities, and to discuss the results of major studies which have national implications. The committee would be chaired by the Deputy Minister of Agriculture for Planning and Development, and would consist of senior representatives of the Ministries of Planning and Economic Affairs, Finance, and Local Government. Representatives of other Ministries, such as Health, and Public Works may be co-opted from time to time whenever items of interest to these Ministries are to be discussed. The Director and Deputy Director would be ex-officio members of the committee. 4.29 Reporting Requirements. Reporting under P'hase I has been good. Project Management under the guidance of the CMEU, would continue to prepare quarterly and annual reports for its own use and that of the Steering Com- mittee and MOA. These reports would be submitted promptly to the Bank for review after each reporting period. At negotiations, Government gave assurance to this effect. V. PRODUCTION SPECIFICATIONS Crop Development 5.01 Upland Rice. Although swamp rice product:ion is gradually increas- ing, the practice of growing upland rice is still extremely strong, and the two proven technological packages (seed exchange and seed with fertilizer) offered under Phase I would continue in this project. Seed exchange would be the main package for those new project areas which have normal fallow periods (approximately 10 years). LAC 23, the proven improved variety, would be provided in exchange for the traditional unimproved variety. This arrange- ment has yielded as much as 50% more than traditional varieties under Phase I. The residual fertility in the soil derived from a normal fallow period in Voinjama, Kolahun, and Zorzor Districts would be adequate to support this level of production without fertilizer. By the end of Phase II some 5,500 ha would be expected to benefit from the seed exchange package. For areas where the fallow period is short (less than 6 years), such as in Foya and some parts of Zorzor, a credit package consisting of improved LAC 23 seed and fertilizer (NPK 15:15:15) would be used. Some 800 ha are expected to receive this package by the end of the project. Packages: Seed exchange -- 60 kg per ha of improved seed; Credit -- 60 kg per ha of improved seed and 100 kg/ha of fertilizer NPD (15:15:15). Yields are expected to rise from 1,000 kg/ha under traditional cultivation to an average of 1,400 kg/ha with seed exchange, and to 1,400-1,600 kg/ha with the credit package. 5.02 Swamp Rice. From experience gained under Phase I, the project would emphasize its swamp rice development program in areas where the population density exceeds 70 persons per square mile. It has been found that these areas can supply and attract enough labor to support continuous swamp rice  - 30 - production. The average swamp holding per farmer under the project is ex- pected to be 0.5 ha. However, based on a demonstrated ability to provide adequate labor, approximately 5-10% of swamp rice-farmers are expected to develop 1 ha each under the project. The swamp layout and design used under Phase I have proved suitable for the project area, and considerable expertise has been built up within the project to make implementation of a Phase II program less difficult. However, Phase I experiences show that there is the need for close supervision to be given farmers in the maintenance of irrigation and water control structures in the second year. Also, the development credit package would cover a two-year period to assist farmers in carrying out further development work, such as tree-stump removal, and repairing and completing water control structures. The credit package would comprise a development loan for land clearing (tools and hired labor) after initial brushing by the farmer, and seasonal loans for seed and fertilizer. The recommended improved varieties and IR 5 for new swamps, and those free from iron toxicity, and Suakoko 8 for iron toxic swamps. The recommended seeding rate is 45 kg/ha, and a system of established nursery and seedling transplanting would be practised. Fertilizer would be applied in the form of 100 kg each urea (45% N) and TSP (45% P) and, 50% Potash, where potash deficiency is evident. Some pesticide is likely to be required against stem borer and caseworm, and herbicide use is estimated for 25% of the area. While farmers continue to practise panicle harvesting, for easy storage, the project would promote the use of whole stalk harvesting and threshing where farmers intend to sell the paddy rice directly after harvesting. Some pedal threshers are in use in the project area, and credit would be provided for groups of farmers desiring to purchase them. Yields are expected to be 2,500 kg/ha (versus 1,000 kg by traditional methods) in Year 2 and 3,250 kg/ha in Year 3 and on, at which time, some 25% of the area is expected to be doublie cropped. 5.03 Coffee - New Planting. Based on Phase I experience, the project would promote an expanded program of coffee planting, particularly in areas where enough farmers in close proximity to each other would participate, and, where possible, cultivate contiguous blocks. Generally, such blocks would be established near towns and would justify and permit the construction of access tracks, and town nurseries for seedlings' production. New improved agronomic practices would be introduced, based principally on a pruning cycle of 4 or 5 years, in which farmers' plantings would be phased in at 1/4 or 1/5 ha per year, (thus minimizing the need for credit and hired labor, and evening out production with 3/4 or 4/5 ha always in production while 1/4 or 1/5 pruned). Selected seed of known progeny would be purchased from th,e Ivory Coast, and the seedlings produced under the direction of the project. Seed- lings would be planted on the incline at a 300 angle from the vertical to promote the sprouting of shoots, from which the best 4 or 5 would bie chosen. Although some experience has been gained under Phase I, there is yet insuf- ficient data for refined fertilizer recommendations to be made. Based on current evidence, a reasonable recommendation is 50 kg urea in Years 1 to 3 and 200 kg in Year 4 and on. Further research would be carried out in conjunction with CARI to determine more precise requirements. Yields of traditional coffee are under 200 kg/ha in Year 3, 450 in Year 4 and would average 600 kg/ha after Year 8. Full details of the agronomic practices to be used are set out in Working Paper No. C2.  - 31 - 5.04 The project would also select suitable areas for trials in which farmers would intercrop upland rice with coffee. While this new system would mean almost zero-shade planting of coffee (which wou:ld be new to the area), it would have the advantage of the farmer combining in one place both his food crop, upland rice, and a cash crop--coffee. For this method to succeed, coffee planting must take place about the same time that the rice is planted, that is, with the first rains. This gives the coffets seedlings the entire rainy season to develop, and, with good cultural practices, should ensure commercial production by Year 4. The farmer and his family would be more inclined to take care of the young coffee plants in ithe vital first year, since traditionally they would be occupied largely with activities associated with the upland rice. Maintenance of the coffee wouLd not require hired labor. 5.05 Coffee Rehabilitation: A combination of activities are required to adequately rehabilitate coffee trees. However, unless the genetic potential exists and the trees are not too old, these measures would be wasteful. Further, farmers have not fully accepted rehabilitation as a means of increas- ing coffee production from their old trees. The project would continue its rehabilitation program of carefully selecting farms on good soils, acceptable tree density (more than 1,000 trees/ha), well-formed stems capable of respond- ing to pruning, and proper shade reduction. Some 290 ha would be rehabilitated by Year 4, with a slow build-up in Years 1 and 2 for demonstrating to farmers the techniques of rehabilitation. Yields are expected to be increased from less than 100 kg/ha to 250 kg/ha. At this yield potential level fertilizers would not be applied. 5.06 Cocoa. Project staff would continue to carefully choose cocoa growing areas with ample shade in place since farmers generally prefer to plant cocoa this way. Arrangements would be made for cocoa seed to be obtained each year from existing sources (local and Sierra Leone). This seed material is generally of the hybrid type (Amelonado x Amazon). However, it is proposed that CARI should test varieties, and establish its own clonal seed gardens for Liberia in view of the expansion of cocoa production in the country. By Year 4 of the project, some 1,940 ha of cocoa would be planted under the project. Under Phase II, extension staff would advise farmers to plant cocoa between April and June, and to weed 4 times a year. From Year 4 onwards, shade trees would be thinned to reduce the risk of black pod infec- tion. As with coffee, there is very little data available on the fertilizer requirements of cocoa in Lofa. However, since Lofa's cocoa planting areas are mainly in forest, only phosphorus would be applied in the immaturity period (300 kg TSP for just 3 years). Thereafter, mixed fertilizer would be applied based on soil analytical work, and fertilizer trials to be carried out by the ongoing project's research unit in consultation with the Tree Crops Unit at CARI. Plant health measures would consist of capsid control by spraying in July-August and November/December with Lindane or Gammalin 20. Cocoa yields are expected to start at 150 kg/ha in Year 3 and peak at 750 at year 7 (versus less than 250 kg under traditional methods).  - 32 - 5.07 Coffee and Cocoa Harvesting and Processing. Although harvesting of these crops is relatively simple, farmers often pick immature and overripe cocoa pods both of which adversely affect processing of the beans, while in coffee, farmers pick ripe and unripe cherries in one or two rounds, instead of only ripe cherries in three or four rounds. The result for both cocoa and coffee is a product of mixed quality with a lower grade than obtainable with ripe picking. Processing techniques are also inadequate, and help to reduce the quality of the produce. Simple proposals for improving harvesting, fermentation and drying of cocoa, and processing of coffee cherries, have been put forward in Working Paper No. 2. Apart from the above recommendations, there is a need for a better understanding in Liberia of both processing and grading of coffee and cocoa to provide better export products. The project would employ a consultant to advise project staff and LPMC on post-harvest operation for these two crops. Extension staff would advise farmers in these harvesting and processing techniques, and, with the cooperation of LPMC, would inform them of the necessity to sort the cocoa and coffee before selling. Farmers would also be informed of the grading system for each crop, and the price they may expect based on grading. Cassava 5.08 Improved varieties of this crop have been introduced into the project area from IITA Nigeria, but their use is not widespread. The pro- ject would sell on credit to upland rice farmers, particularly in the Zorzor area, 400 setts of these selected varieties, which, apart from substantially increasing yields are also tolerant to the prevalent cassava mosaic disease. (The yield increase is partly attributable to this characteristic). This initial planting would provide adequate material for extending the cassava area in the second year after the upland rice has been harvested. This system prolongs the use of the cleared land into a second year. Farmers would be expected to space plant 1/10 of the upland rice area with cassava. Yields would average 10,000 kg/ha versus 4,000 with unimproved varieties. Farm Labor 5.09 The average family size in the project area is about 7 persons, of which the combined daily contribution of working members would be equivalent to 4 man-days. The crop development programs are planned around 1Labor avail- ability as a limiting factor based on data collected by the M & E Unit. Annual labour requirements per hectare based on M & E surveys for development range from about 264 mandays for swamp rice to 70 mandays for coff-ee and cocoa; requirements per hectare for cultivation range from 290 mandays for upland rice (seed exchange) to about 65 mandays for coffee (5 year phased planting program). Traditionally, migrant labor from Guinea is available in the more intensively farmed areas. This labor pool has been successfully utilized under Phase I by grouping workers into gangs. The system would be introduced into the new project areas. Wages are US$ 2.50 per day plus some food.  - 33 - Environmental Considerations 5.10 The project seeks to minimize the adverse effects of existing agricultural practices on the environment, and on the health of the community. The long tradition of shifting cultivation through annual removal of forest trees may be alleviated somewhat by the introduction of improved rice seed and fertilizer which should increase productivity. Swamp rice cultivation should similarly reduce the need for this annual land clearing. However, swamp rice is associated with schistosomiasis, and although swamps are commonly used for fishing, washing, and many other activities, the project would continue the monitoring of swamps for and treatment against schistosomiasis. A program of health education and the construction of wells and latrines in towns would be carried out by the project. Table 4: LOFA COUNTRY AGRICULTURAL DEVELOPMENT PROJECT II CROP YIELD ASSUMPTIONS (kg/ha) Before 3rop Development PY1 PY2 PY3 PY4 PY5 PY6 PY7 PY8 PY9 PY10 Jpland Rice 1,000 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 Swamp Rice 1,000 2,250 2,500 3,000 3,250 3,250 3,250 3,250 3,250 3,250 3,250 coffee (new) - 0 0 200 450 800 650 800 250 500 800 toffee (rehab) 70 70 50 100 250 200 250 100 200 - - -'ocoa - 0 0 150 300 500 750 800 800 800 800 Zassava 4,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 VI. DEMAND, MARKETING, PRICES AND FINANCIAL ANALYSIS Demand 6.01 At full development (by 1987 for the food crops and 1994 for the tree crops) the project would generate incremental annual production of about 6,400 tons of paddy (equivalent to about 4,170 tons of rice), 3,600 tons of cassava, 1,940 tons of cocoa, and 2,400 tons of coffee. The incremental production of food crops would be easily absorbed into the domestic market. The country is a net importer of food, including rice which is the major staple. Average per capita consumption of rice is about 85 kg and slightly higher at about 100 kg per annum in the project area. Annual rice imports have averaged about 56,000 tons over the past five years and a deficit is expected to continue despite the rice components in the ongoing and planned agricultural development projects. The incremental production of rice and cassava would be consumed within and around the project area. Coffee and cocoa are export crops and are therefore important sources of foreign exchange.  - 34 - The country is not expected to face any problems in marketing the incremental production. It is a member of the International Coffee Organization (ICO) and its current quota has been lowered to about 8,000 tons which is in excess of its estimated domestic production of 6,500 tons. However, due to price differentials and the use of the dollar as the domestic currency iunofficial inflows of coffee from neighbouring countries can push total exports up to 9,800 tons, as in 1979/80. These unofficial inflows are expected to decline given (a) the current levels of producer prices paid by the LPMC (which are now in line with those of the neighbouring countries) and (b) the removal of the subsidy on rice which was being bartered for coffee and cocoa at the borders. Furthermore, the Government of Liberia has signed a fiveB year contract with Libya (which is not a member of the ICO) for an annual delivery of 2,000 tons of coffee. Liberia is not a signatory to the International Cocoa Agreement and therefore has no quota restrictions on its sale of cocoa. However, its export of some 4,500 metric tons (1980/81) is confined to EEC countries and the US, and the projected increased production from this project is insignificant, relative to world production of 1.6 million tons (1980), and can be easily absorbed in the traditional markets. Marketing 6.02 The food crops would be marketed through the existing network of private traders, which is adequate for handling the increased volume of production. The rice marketing system is highly competitive and given the demand situation farmers receive from private traders prices that are well above the government minimum price of 12 cts per lb of paddy; prices range from 50% above (at harvest) to 90% above (at other times) the minimum price. There are several private and three LPMC owned rice mills in the area and processing capacity is considerably in excess of requirements; recovery rates average about 65%. 6.03 The export crops - coffee and cocoa - would be marketed through the LPMC marketing system of licenced buying agents. At present there is considerable concern about the competitive efficiency of the system and the operational efficiency of the LPMC (paras. 1.13, 3.13 and 4.15). Actual producer prices are often far below official prices due to situations of farmer indebtedness and pledging of crops to the agents as well as cheating on weight. The measures to be taken under the project for improving the marketing system and the operations of the LPMC have been discussed in paras. 4.13 and 4.15. The expansion and strengthening of the cooperatives to handle the marketing of output and inputs and as a vehicle for credit (paras 4.12-4.15) would also reduce the present imperfections in the marketing system. Prices 6.04 Given the projected demand and supply situation for rice in Liberia, it is expected that market prices for rice and paddy will continue to be high in the project area. The projections for the farmgate paddy price are based on a weighted average base price of US$330 per ton in 1981 and the IBRD projected price trend for rice (see Working Paper No. 5). In the case of the  - 35 - export crops (coffe and cocoa), it is expected that the LPMC with improved cost control measures (para. 4.15) would be able to maintain official producer prices at between 65-70% of f.o.b. prices. The main objective of the expansion of the cooperatives under the project is to channel all credit, input supply and marketed output through the system, therefore the spread between the official producer price and the farmgate prices for coffee and cocoa is not expected to be more than 6% to cover transportation costs and weight and quality discounts (See Working Papers 1 and 8). 6.05 The financial and economic prices for farm produce used in the farm budgets and calculation of the economic rate of return (ERR), respectively, are shown in Table 3 below. They are based on existing domestic prices and trends and IBRD forecasts. In the farm budgets a markup of 7% has been added to non-labor farm inputs to cover the operational costs of the cooperatives. In the ERR calculations, border prices were adjusted by the economic costs of transportation, distribution and processing to determine the net economic prices. Further details on these costs and prices, and the underlying assump- tions are set out in Working Paper No. 8. Table 5: FARMGATE PRICES 1/ per metric ton Real 1982 prices Financial Economic 1982 1985 1990 1982 1985 1990 Output: Rice (paddy) 340 389 403 323 372 385 Coffee 1,440 1,233 1,348 1,642 1,412 1,547 Cocoa 1,342 1,093 1,206 1,558 1,276 1,404 Cassava 65 65 65 65 65 65 1/ For underlying assusmptions see Working Paper No. 8. Financial Returns to Farmers 6.06 The relative profitability and returns to resources in the various cropping activities in the development program are shown in Annex 5, Table 1. The wide variations in returns reflect the differences in the intensity of resource use in the tree crops as compared with rice as well as the varia- tions in yields obtained in the different types of rice cultivation. All project farmers would achieve increases in returns per hectare of land and per man-day of family labor. All incremental family labor would earn more than the estimated opportunity cost of US$1.00 per man day; average returns per man-day of family labor at full development would range from US$1.20 for upland rice farming (seed exchange only) to $10.10 for cocoa farming (new planting after loan repayment).  - 36 - 6.07 The total income effect on project farmers would depend on crop combinations and labor requirements. Mainly because of labor constraints at peak seasons a project farmer would only be able to develop and farm about 2 ha of land. The crop combinations and returns of four representative types of farming systems are presented in Annex 5, Table 2; the corresponding family and per capita annual incomes are summarized in Table 6 below. Table 6: FARM INCOMES (US$ real 1982 prices) Farm Model 1/ A B C Farming Activity: Coffee Cocoa Swamp Rice Upland Rice Upland Rice Upland Rice Cropped Area (ha) 2.0 2.0 2.0 Approximate No. of Farmers 4,000 1,940 1,100 Farm Incomes Present 350 350 335 1992 W 400 400 400 1992 W 950 2/ 1,370 3/ 1,325 Per Capita Incomes 4/ Present 67 67 64 1992 w 77 77 77 1992 W 183 2/ 263 3/ 255 W = without project W = with project 1/ For underlying assumptions see Annex 5 Tables 1 and 2. 2/ Excludes the annual repayment of the development loan ($169.0 p.a. for 5 years from Yr.6 - Yr.10. See Annex 5 Tables 1 and 2 and Working Paper No. 9). 3/ Excludes the annual repayment of the development loan ($415 for 6 years from Year 7 - Year 12. See Annex 5 Tables 1 and 2 and Working Paper No. 9). 4/ Average family size of 5.2 members. There would be wide differences in the incremental incomes streams among farming types due to variations in the costs and periods of development. The increases in incomes would range from about US$550 for a coffee/up:Land rice farm to about US$970 for a cocoa/upland rice farm after repayments of the development loans. Coffee would be the major crop developed under the project despite the apparently greater profitability of cocoa and rswamp rice.  - 37 - The expansion of swamp farming is limited by the arcluous nature of cultivation, the availability of swamps, a preference for upland farming and a fear of schistosomiasis. The expansion of cocoa is constrained by the availability of suitable soils, the relative difficulties in processing and the higher incidence of disease as compared with coffee. Farmers also indicate a pre- ference for coffee because of relatively low labour requirements. Financial Implications for Government 6.08 There are no direct taxes levied on the commodities that would be produced under the project, but in the case of export crops, producer prices are only about 65-70% of fob prices. The LPMC has been paying part of these revenues as dividends to Government. However, given the present financial situation of LPMC (para.1.13) and the depressed markets for coffee and cocoa (present and forecasted), it is estimated that incremental dividends would only be between 2 and 5% of the f.o.b. (Monrovia) prices. Revenues from indirect taxation are estimated at between 10 and 15% of the value of produc- tion. Evidence from Phase I and similar projects elsewhere in Liberia suggests that there would also be some secondary economic acitivities that would be induced by the project in the marketing, construction, rice processing, trading and other servicing sectors, thereby generating incremental revenues from direct and indirect taxation. 6.09 The Government cash flow (Annex 6) is negative,during the implemen- tation period, which is typical for such a project. The annual Government net cash deficit (excluding recurrent expenditures of about US$1.0 million for Phase I) averages US$0.6 million during the four year investment period. The recurrent expenditures of Phase I consist mainly of personnel and the supporting expenses for administration, extension and credit and input supply services (for further details see Working Paper No.6). The combined annual recurrent costs of the Phases I and II projects would be about $1.6 million at the end of the investment period, and would cover mainly administration and extension services and roads maintenance necessary for maintaining the produc- tion levels of both projects. While incremental revenues would not permit full cost recovery, they would cover the recurrent costs of the project. Incremental revenues from Phase II are expected to reach US$1.1 million by 1990, while those from Phase I should be at least US$1.2 million. VII. BENEFITS AND JUSTIFICATION Overall Benefits: 7.01 It is estimated that there would be between 7,000 and 8,000 farm families (30% total rural families in Upper Lofa) who would earn significantly higher incomes (para. 6.06) under the various crop improvement and credit programs. At full development of their respective crops, and after repaying all development loans, about 55% of the farm families would earn family incomes of around 2.5 times the present average of US$350 per annum for the area, while about 45% would increase their incomes by about 3.5 times. The  - 38 - improvement of the road network and provision of village wells and latrines would reach beyond these direct beneficiaries to a considerably larger propor- tion of the rural population. There would also be spin off effects from the strengthening of the institutional services and the expansion of credit and marketing services. Additional employment would also be created by the increased activities that would be induced by the project in other sectors such as trading, rice processing, construction, and transportation. It is estimated that at least 50% (12,000) of the rural families in the county would benefit in some way from the proposed project. 7.02 As Liberia is a net importer of food, (para. 6.01) the incremental food crop production would represent considerable potential for annual net foreign exchange savings. By 1990 the incremental annual output of rice would be worth, at border prices, at least US$3.2 million per annum (in real 1982 terms) net of the foreign exchange costs of farm inputs. While incremental annual foreign exchange earnings (net of imported inputs) from the export crops would be about US$7.4 million (in real 1982 terms) by 1992. 7.03 The training programs and institution building to be introduced under the project would improve local capability and facilitate planning and implementation of future development programs. The creation of a Central Monitoring and Evaluation Unit would consolidate and streamline the current monitoring and evaluation efforts of the various ADPs. It would also permit a greater exchange of information and the formulation of common policies among the ADPs. The project is justified on the basis of these direct and indirect benefits which would accrue to the lowest income groups, even though it is not expected to generate sufficient revenues to permit cost recovery. Economic Rate of Return: 7.04 The Economic Rate of Return is estimated to be 17% (Annex 7, Table 1). The important assumptions underlying the analysis are: (a) Benefits: Only the direct benefits that would be generated by the project from the incremental crop production (Annex 7, Table 1), are included. Yields, acreages and production are as in Chapter 5. The economic farmgate prices are shown in Table 3, the basis of their derivation are in Working Paper No. 8. (b) Costs: All investments in training and infrastructure, as well as operations and maintenance costs and infrastructure that are directly related to the generation of the identified benefits are included in the analysis (see Annex 7, Table 1). For operations after the four year development period, it is assumed that smaller support services would be required to maintain the momentum achieved. A breakdown of the recurrent operational costs is shown in Annex 7, Tab:Le 1. (c) Shadow Pricing: Hired labor is priced at the market wage of US$2.50 per manday. Family labor is priced at US$1.00 per manday since the more mobile members have already joined the hired labor market, and the returns to family labor in their alternative uses presently range between $0.55 per manday for upland rice cultivation and $1.00 per manday for other farming activities such as vegetable and cereal cultivation, livestock rearing and off-farm work.  - 39 - (d) Project Life: The economic life of the project is assumed to be 25 years including a 4-year implementation period. Risks and Sensitivity: 7.05 The proposed project would be the second phase in the area and would build upon the institutional structures and techniques developed in the first phase so that normal risks associated withl projects of this kind would be minimized. However, two constraining factors could be: (a) delays or failure in strengthening and expanding the marketing and credit services through the cooperative network; and (b) delays or failure in improving the efficiency of the Liberian Produce Marketing Corporation (LPMC). 7.06 Therefore, the project would undertake a gradual handing over of its credit and marketing functions to the cooperatives and provide managerial training and other supporting assistance (paras 3.11 and 3.17). The opera- tions of the LPMC would be analyzed under PPF financing and agreement on a suitable plan of action for improving its operations would be agreed with IDA (para 4.15). The project would also provide financing of technical expertise to implement the program (para. 4.15). 7.07 Sensitivity analysis was undertaken to evaluate the impact of various adverse factors on the economic rate of return (ERR) and determine which variables would be most crucial to the success of the project. As a measure, switching values 1/ using an opportunity cost of capital (OCC) of 10% were computed. The numerical results indicated that in its present design the project is fairly resilient to the possible risks and would remain economically viable under various adverse conditions in any of its components. The percentage changes between the appraisal estimates and the switching values for the main variables were: for the total benefit stream -23%, for the development costs +85%, for farm production costs +73%, and -57% for the coffee program and -64% for the rice programs which are the main components in the benefit streams. The project can withstand simultaneous decreases of up to 20% in the economic farmgate prices of each of the three major products -- coffee, cocoa and rice, other factors constant. The project would become economically unviable if the developmental and recurrent costs increased by more than 15% and at the same time total benefits fell by more than 15% due to shortfalls in yields or adoption rates or a combination of both. A more detailed sensitivity analysis of possible outcomes is pre- sented in Annex 7, Table 2. 1/ The switching value is the value of the variable tested at which the net present value (NPV) of the project, discounted at the OCC, is zero; in other words, the value beyond which the ERR would fall below the OCC. A switching value may be interpreted as a measure of how far a specific variable may differ from its most likely value before the project becomes economically unviable.  - 40 - VIII. AGREEMENTS, CONDITIONS AND RECOMMENDATIONS 8.01 The following assurances were obtained from Government at nego- tiations: (a) that Government would engage consultants with qualifications, experience, terms of reference and under terms and conditions satisfactory to IDA; consultants' reports would be reviewed by IDA before implementation (para. 3.14); (b) that Government would make the necessary allocation in the budget, provide foreign exchange requirement and finance the cost:s needed to maintain existing Project services, and fund increases as necessary to maintain these services at a comparable level (para. 3.16); (c) that the project's special bank account into which IDA would deposit an advance of up to US$200,000 would be operated under terms and conditions acceptable to the Bank (para. 3.18), (d) that the project would continue to use accounting and auditing procedures satisfactory to IDA (para. 3.24); (e) that the Government would review with IDA any proposals for reorganizing MOA as they affect the project area (para. 4.01); (f) that qualified and competent staff satisfactory to IDA would be appointed to the positions of CAO, Agricultural Development Manager, Agricultural Manager, Financial Controller, and Commer- cial Services Manager (para. 4.01); (g) that Government would effect the necessary reduction in MOA staff consistent with efficient operation of the project (para 4.04); (h) that personnel for the position of Cooperative Specialist would be internationally recruited with qualifications and experience and under terms and conditions satisfactory to IDA (para. 4.04); (i) that Government would take the required measures to improve the cooperatives in the project area (para. 4.13); (j) that by June 30, 1984, Government would carry out the agreed plan of action, in respect of management and operations of LPMC (para 4.15); (k) that Government would set interest rates on seasonal and develop- ment loans at 15% and 12% respectively, and would annually review these with IDA, and, if necessary, would revise these rates charged under the project to reflect domestic inflation, and the costs of administering the credit program (para. 4.16); and  - 41 - (1) that by the completion of the project, Government would take over responsibility for maintaining all feeder roads constructed under the project (para. 4.23). 8.02 The following would be conditions of effectiveness: (a) that all conditions precedent to the effectiveness of the ADF Loan Agreement had been fulfilled (para 3.17); and (b) that Government had entered into a financ:ing agreement with the ACDB for establishing and operating the Revolving Loan Fund (para. 4.21).  - 42 - Working Papers C1 Credit Cooperatives and Marketing C2 Crops and Research C3 Roads C4 Monitoring and Evaluation C5 Reporting Format C6 Project Costs - Development and Recurrent C7 Financing Arrangements C8 Economic and Financial Prices C9 Crop and Farm Budgets  AnnexI LIBERIA LOFA COLNTY AGRICULTURAL DEVELOPMENT PROJECT EOss '0005 PER PEG PY3 GY4 L.oTAL FOREIGN EXChANGE Personnel 176.3 176.3 176.3 17t,.3 705.2 Vehicles and Equipment 47.9 Ll.Z E.S 56.6 117.2 1O5.5 Operations and MiOntenance 175.5 175.5 175.5 175.5 702.0 561.6 Sub-total 399.7 363.0 353.3 408.4 1,524.4 667.1 Agricaltural Extension Personnel 477.5 477.5 477.5 477.5 1,910.0 Vehiclen and Equipment 193.9 83.9 120.1 151.7 549.6 494.6 Dperatlon and Maintenance 177.0 177.0 177.0 477.0 708.0 637.2 Sub-total 846.4 738.4 774.6 806.2 3,167.6 1,131.8 Training Personnel 109.4 109.4 109.4 109.4 437.6 Vehinlen and Equipment 57.2 10.2 40.2 26.4 134.0 120.7 Operatlonn and Maintenance 104.0 104.0 104.0 104.0 416.0 374.4 Sub-total 270.6 223.6 253.6 239.8 987.6 495.1 Plant Prnduction and Reneseoh 362.4 362.4 362.4 362.4 1,449.6 Personnel 362.4 362.4 362.4 362.4 1,449.6 Vehicles and iquip=en7 20.7 49.2 48.2 26.2 144.3 129.9 Operations and Maintenance 82.8 77.8 77.8 77.8 316.2 284.5 Sub-total 465.9 489.4 488.4 466.4 1,910.1 414.4 Ceopera-ti-e and Cam-erc1al Services Persennel 389.5 439.0 490.5 550.0 1,869.0 ehinces and Equipment 259.9 118.7 81.6 2f0.0 720.2 648.1 Operations and 2aintenance 038.0 261.0 280.0 302.0 1,081.0 972.9 Buildings 75.0 75.0 75.0 75.0 300.0 180.0 Sub-total 962.4 893.7 927.1 1,187.0 3,970.2 1,801.0 Par= Inputs Fectili-ers 100.0 285.0 600.0 708.0 1,775.0 1,597.5 Seedling., Seed, Tools 185.0 200.0 270.0 30'0.0 975.0 867.5 Hired Labor 150.0 265.0 330.0 395.0 1,140.0 Sub-total 440.0 750.0 1,200.0 1,000.0 3,890.0 2,465.0 Schistoso=ianis Coerrel lnit Pernonnel 62.8 62.8 62.8 62.8 251.2 - Vehicles and Eqip=ent 27.2 17.2 2.0 19.2 65.6 59.1 Operationn and Xiantenance 37.6 37.6 37.6 07.6 150.4 135.2 Cab-total 127.6 117.6 102.4 119.6 467.2 194.3 Reeds, Wells and Latrines Peronneel 147.6 147.6 147.6 147.6 590.4 Vehicles and Eqaipsent 34.0 12.2 1.0 4.0 51.2 46.1 Operations and Maintenanne 608.0 608.0 190.1 190.1 1,596.2 1,436.6 Sub-total 789.6 767.8 338.7 341.7 2,277.8 1,482.7 Land Planning Persoenel 68.3 68.3 68.3 68.3 273.2 Vehicles and Eqciprent 45.6 25.9 26.4 25.9 123.8 111.4 Operations and Maintenance 47.5 47.5 47.5 47.5 190.0 170.8 Sab-total 161.4 141.7 142.2 141.7 587.0 282.2 Cenneal Mnlitnrisg and Evaluation Enit Personne 200.4 218.6 153.8 263.8 736.6 160.0 Vebinle- and Eqaip-ent 72.5 7.0 1.0 28.2 108.7 97.8 Operations and Maintenance 54.0 56.0 56.0 56.0 222.0 199.8 Sab-total 326.9 281.6 210.8 .148.0 1,067.3 457.6 Pr-jeot Monitoring snd ERaluetion Ueit Personnel 83.8 84.8 85.8 85.8 340.2 Vehicles and Equipeent 48.9 - 1.0 39.2 69.1 80.2 Operatclans and Maintenance 40.2 40.2 40.2 40.2 160.8 144.8 Sob-total 172.9 125.0 127.0 165.2 590.1 125.0 Cnn-ultancy and Technical Assistance 240.0 210.0 30.0 90.0 560.0 406.0 Prnject Preparation Facility 100.0 - - - 100.0 80.0 Total Bane Costs 5,305.4 5,101.8 4,948.1 5,714.0 21,069.3 I1.i02.2 Phybscal Coningencies 145.1 141.3 142.9 174.8 607.1 401.4 Price Contingencies 836.3 1,273.2 1,710.7 ',504.2 6,324.4 3,082.5 Total Prnjact Costs 6,289.8 6,516.3 6,801.7 8,393.0 28,000.8 13,666.1  Annex 2 Page 44 LIBERIA LOFA COUNTY AGRICULTURAL DEVELOPMENT PROJECT II Estimated Schedule of Disbursement _/ (US$ Million) IDA/IBRD Fiscal Cumulative Year Quarter Disbursement Disbursement FY 83 1st Quarter 0.1 0.1 2nd " 0.3 0.4 3rd " 0.4 0.8 4th " 0.5 1.3 FY 84 1st Quarter 0.7 2.0 2nd " 0.9 2.9 3rd " 0.9 3.8 4th " 1.0 4.8 FY 85 1st Quarter 1.1 5.9 2nd " 1.2 7.1 3rd " 1.3 8.4 4th " 1.3 9.7 FY 86 1st Quarter 1.4 11.1 2nd " 1.3 12.4 3rd " 1.0 13.4 4th " 0.8 14.2 FY 87 1st Quarter 0.7 14.9 2nd " 0.6 15.5 1/ Based on the Regional IDA disbursement profile for agriculture adjusted to reflect the 4 year implementation period of the project.  Annex 3 LIBERIA LOFA COUNTY AGRICULTURAL DEVELOPMENT PROJECT II PROJECT CROP AREA DEVELOPMENT (Ilectarcs) Cropfyear 1 2 3 4 TOTAL Upland rice (seed exchange) 1250 1350 1450 1450 5500 Upland rice (credit package) 200 200 200 200 800 Swamp rice 220 280 290 310 1100 Coffee . (New plantings) 460 850 920 1100 3330 Coffee (Rehabilitation) 20 20 100 150 290 Cocoa (new plantings) 225 465 600 650 1940 Cassava - 100 200 300 600 .  LIBERIA LOFA COUNTY AGRICULTURAL DEVELOPMENT PROJECT II Incremental Crop Production-'/ (tons) Pfl PY2 PY3 PY4 PY5 PY6 PY7 PY8 pY9 PY10 PY11 PY12-25 RICE: Swamp 495 1,180 2,067 3,o48 3,348 3,576 3,576 3,576 3,576 3,576 3,576 3,576 Upland! Seed Exchange 500 1,043 1,620 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 Credit 160 320 480 640 640 64o 64o 64o 640 640 64o 640 TOTAL 1,155 2,540 4,819 5,888 6,183 6,416 6,416 6,4i6 6,416 6,416 6,416 6,416 J- COFFEE: New Planting _ _ 160 520 1,160 1,680 2 320 2 360 2,400 2,400 2,400 2,400 Rehabilitation o -0.4 0.2 2.2 6.2 28.7 44.2 40.7 32.6 17.5 19.5 0.0 TOTAL - .4 160.2 522.2 1,166.2 1,708.7 2,364.2 2,400.7 2,432.6 2,417.5 2,419.5 2,400 COCOA: New Planting _ - _ 34 138 343 691 1,092 1,495 1,810 1,940 1,940 CASSAVA - 600 1,800 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 Based on the assumptions on yields (Chapter 4 Table) and the Annual crop development program in Annex  LIBERIA LOFA COUNTY AGRICULTURAL DEVELOPMENT PROJECT II Crop Budgets Per Ha at Full Development 1/ US $ real 1982 prices Upland Rice and Cassava Upland Rice Seed Exchange Swamp Rice Cocoa New Planting Coffee Rehabilitation Coffee New Planting Credit Package 1984 Package - 1983 1985 1986 1991 1997 1986 1988 1991 1993 1982 W W 1982 W W W W W W 1982 W W W W Yiejd.2/ tons/ha 1.0/0.4 1.0/0.4 1.8/1.0 1.0 1.0 1.4 3.25 3.25 1.0 1.0 0.070 0.30 0.25 .60 .60 Price3/ US$/ton 340/65 368/65 368/65 340 351 351 390 390 1206 1206 1440 1233 1233 1348 1348 Gross Value of Production 366.0 394 727.4 340 351 491.4 1267.5 1267.5 1206.0 1206.0 100.0 370.0 308.0 809.0 809.0 Costs of Production4/ Seed/Seedlings - - 15.0 - - 10.0 9.0 9.0 - Fertilizers - 55.0 115.0 120.0 180.0 180.0 220.0 220.0 Pesticides - - - 5.0 6.0 20.0 20.0 Tools, Equipment, Bags 15.0 15,0 15.0 15.0 15.0 15.0 18.0 19.0 10.0 10.0 5.0 5.0 5.0 10.0 10.0 Hired Labor 5/ 100.0 100.0 112.5 155.0 155.0 155.0 175.0 175.0 10.0 10.0 25.0 25.0 25.0 87.5 87.5 Interest 6/ 23.0 23.0 35.0 34.0 34.0 34.0 50.0 51.0 40.0 40.0 6.0 6.0 6.0 50.0 50.0 Costs of Development 7/ - - - - 220.5 - 415.0 - - 117.0 - 169.0 - TOTAL COSTS 138.0 138.0 232.5 204.0 204.0 214.0 600.5 380.0 675.0 260.0 36.0 153.0 36.0 536.5 367.5 Net Value of Production 228.0 256.0 494.9 136.0 147 277.4 667.0 887.5 531.0 946.0 64.0 217.0 272.0 272.5 441.5 Family Labor (mandays) 8/ 252 252 182 230 230 230 170 170 95 95 20 40 30 63 63 Return per manday of Family Labor 0.9 1.0 2.7 0.6 0.6 1.20 3.9 5.2 5.6 10.0 3.2 5.4 9.1 4.3 7.0 1/ For the technological packages and assumptions underlying these budgets see working paper C2. For purposes of comparison data is provided for the first year of full development (maximum yield) and the first year after rep.yaent of development loan (for tree crops and swamp rice). 2/ For yield asso,mptions see Table 4. 3/ For assumptions on prices see Working Paper No. C8- 4/ These are the variable costs of production only and do not include development costs. H/ Hired labor is costed at the prevailing wage rate of US$2.50/manday. 6/ For 10-12 months at 15% for seasonal credit provided under the project, at 20% for credit from traditional sources. 7/ For the purpose of this analysis, annual development costs are assumed to be the annual repayment of the development loan (capital & interest). For the actual annual development costs see the crop investment analysis in Working Paper C9. 8/ Family labor for production only, labor for development is incurred in the earlier years. See investment analyses in Working Paper C9. W - with project F W - wthollt project  LIBERIA LOFA COUNTY AGRICULTURAL DEVELOPMENT PROJECT II Farm Models I/ Net Value of Production Total Family Labor Real 1982 Prices Cropped Area _ndays - 1992 Net Return Per Manday (ha) 1982 W 1992 W 1982 1982 W 1992 W A. Coffee 3/ 1.0 65 - 440 40 - 63 Upland Rice Seed Exchange 1.0 135 200 350 230 230 230 Other 4/ 150 200 150 150 200 150 TOTAL 350 400 950 420 430 443 0.8 0.9 2.1 B. Cocoa -/ 1.0 65 - 945 50 - 95 Upland Rice Seed Exchange 1.0 135 200 350 230 230 230 Other 4/ 150 200 75 150 200 75 TOTAL 350 400 1370 430 430 400 0.8 .9 3.4 C. Swamp 1.0 - - 925 - - 170 Upland Rice Seed Exchange 1.0 135 200 350 230 230 230 Other 4/ 200 200 50 200 200 50 TOTAL 335 400 1325 430 430 450 0.8 0.9 2.9 W With project 4= Without project I/ These farm models are representative of crop combinations in the project area. 2/ Estimation of net value of production are based on data in the crop budgets in Table and the Investment Analvsis on WPT X 3/ Present coffee production are from very old trees that will be non-productive by 1992. The "With project" value of production excludes the annual repayment of the development loan ($169 p.a. for 5 years from year 6-yr.10. See Investment Analyses Working Paper C9. 4/ Includes income from other crops -- cassava, yams, maize, vegetables, citrus, etc. and off-farm income. 5/ The existing cocoa trees would be non-productive by 1992. The "With project" value of production excludes the2 annual repayment of the development loan ($415for 6 years from year, 7 yr. 12. See Investment Analyses Working Paper No.C9. X X (DX4  LIBERIA LOFA COUNTY AGRICULTURAL DEVELOPMENT PROJECT - PHASE II Government Cash Flow (US$ '000) PYI PY2 mY3 PY4 PY5 PY6 PY7 PYB PY9 PYYO PY11 PY21 PHASE II CASH INFLOWS IDA Credit 3135 3315 3935 5115 ADF Credit 2515 2515 2155 2415 Indirect taxes, dividends from LPMC 1/ 60.0 135.0 295.0 495.0 670.0 840.0 1050.0 1135.0 1310.0 1375.0 1140.0 1400.0 TOTAL INFLOWS 5710.0 5965.0 6385.0 8025.0 670.0 840.0 1050.0 1135.0 1310.0 1375.0 1140.0 1400.0 CASH OUTFLOWS Project Costs Agricultural Extension and Training 1322.3 1213.8 1395.4 1519.4 Cooperatives, Credit and Input Supply Systems 1151.8 1144.6 1270.7 1747.6 Farm Inputs 537.8 989.7 1703.0 2275.2 Roads and Land Planning 1145.8 1179.8 659.1 708.9 Administration 474.8 462.4 482.4 599.3 Plant Production 541.3 611.6 653.8 666.0 Schistosomiasis Control Unit 151.2 149.2 138.5 174.3 Monitoring and Evaluation 2/ 591.5 507.9 459.5 602.3 Consultancy and PPF 363.3 257.3 39.3 - Recurrent Costs Agricultural Extension and Administration 250.0 250.0 250.0 250.0 250.0 250.0 250.0 250.0 Road Maintenance 300.0 300.0 300.0 300.0 300.0 300.0 300.0 300.0 Debt Service IDA Credit 3/ Committment Fee 77.5 61.8 45.3 25.5 0.5 Service Charge 20.0 45.0 65.0 90.0 116.2 116.3 116.3 116.3 116.3 116.3 116.3 104.6 Principal Repayment 155.0 465.0 Debt Service ADF Credit 4/ Service Charge 15.0 30.0 45.0 60.0 72.0 72.0 72.0 72.0 72.0 72.0 72.0 64.8 Principal Repayment 96.0 288.0 TOTAL OUTFLOWS 6392.3 6653.1 6957.0 8468.5 737.8 738.3 738.3 738.3 738.3 738.3 989.3 1472.4 Net Surplus (Deficit) (682.3) (688.1) (572.0) (443.5) (68.7) 101.7 311.7 396.7 571.7 636.7 150.7 (72.4) Memo Item Recurrent Costs Phase I Administration 427.6 460.0 493.8 528.0 530.0 530.0 530.0 530.0 530.0 530.0 530.0 530.0 Cooperatives, Credit and Input Supply Systems 126.5 135.9 145.8 155.9 - - - - - - Agricultural Extension and Training 317.8 343.8 370.3 496.4 500.0 500.0 500.0 500.0 500.0 500.0 500.0 500.0 TOTAL 871.9 939.7 1009.9 1180.3 1030.0 1030.0 1030.0 1030.0 1030.0 1030.0 1030.0 1030.0 1! Indirect taxes on expenditures of project beneficiaries and dividends paid by the LPMC are estimated to be between 10-20% of the total value of production generated by the project. 2/ Includes both the central and project units. 3/