Morocco - Fifth Agricultural Credit Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4654-MOR STAFF APPRAISAL REPORT KINGDOM OF MOROCCO FIFTH AGRICULTURAL CREDIT PROJECT November 22, 1983 Europe, Middle East and North Africa Region Projects Department Agriculture II Division 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.  CURRENCY EQUIVALENTS Usli = 8.00 DiLrhams (DH) Dirhalm (DH) 1 = US$ 0.125 WEIGHTS AND MEASURES Metric System GLOSSARY OF ABBREVIATIONS ADB - African Development Bank (Banque Africaine de Development) BNDE - Industrial Development Bank (Banque Nationale de Developpement Economique) CNCA - Agricultural Credit Bank (Caisse Nationale de Credit Agricole) CLCA - Local Agricultural Credit Bank (Caisse Locale de Crgdit Agricole) CIH - Housing and Tourism Bank (Credit Industriel et Hotelier) CMV - Centres de Mise en Valeur CRCA - Caisse R4gionale de Crgdit Agricole CT - Centres de Travaux DRCA - Direction Regionale de Crgdit Agricole FADES - Arab Fund[s for Economic and Social Development FERTIMA - Societ4 Marocaine de Fertilizants HYV - High Yielding Varieties IBRD - International. Bank for Reconstruction and Development ICC - Internal Credit Commission ICOR - Incremental Capital Output Ratio IFAD - International Fund for Agricultural Development (Fonds International pour le Developpement Agricole) INRA - National Institute for Agricultural Research IRCA - Inspection Regionale de Credit Agricole KfW - Kreditanstalt fUr Wiederaufbau of thie Federal Republic of Germany MARA - Ministry of Agriculture and Agrarian Reform (Ministere de l'Agriculture et de laL Reforme Agraire) MIS - Management Information System OCP - Office Chgrifien des Phosphates ODI - Office de Dgveloppement Industriel OED - Operation Evaluation Department of the World Bank ONICL - Grain and Pulses marketing Agency (Office National Interprofessionnel des Cereales et L6gumineuses) ORMVA - Regional Development Office SONACOS - National Seeds Distribution Company (Socigtg Nationale de Commercialisation des Semences) GOVIERNMENT OF KINGDOM OF lMOROCCO FISCAL YEAR: January 1 to December 31 CNCA FISCAL YEAR: September 1 to August 31  FOR OFFICIAL UJSE ONLY STAFF APPRAISAL REPORT KINGDOM OF MOROCCO FIFTH AGRICULTURAL CREDIT PROJECT Page No. I. INTRODUCTION ............................................ 1 II. THE AGRICULTURAL SECTOR ................................. 1 A. Economic Background ................................. 1 B. Place of Agriculture in the Economy .... ............. 2 C. Agricultural Performance and the 1981-85 Development Plan .......................... 3 D. Sector Issues Relevant to Agricultural Credit ....... 4 E. Bank Agricultural Sector Strategy and Performance under Previous Project .... ............ 10 III. THE FINANCIAL SECTOR .................................... 11 IV. THE CAISSE NATIONALE DE CREDIT AGRICOLE .... ............. 13 A. Background, Organization and Staffing .... ........... 13 B. Lending Policies and Procedures ..................... 14 C. Lending Operations .................................. 17 D. Financial Situation and Performance .... ............. 19 E. CNCA Objectives and Development Strategy .... ........ 23 F. CNCA Projected Lending Program and Financing Requirements (1983/84-1985/86) .................... 24 V. PERFORMANCE UNDER PREVIOUS AGRICULTURAL CREDIT PROJECTS 24 A. First and Second Agricultural Credit Projects (Loan 433-MOR, Loan 861-MOR, Credit 338-MOR) ..... 24 B. Third Agricultural Credit Project (Loan 1361-MOR) 25 C. Fourth Agricultural Credit Project (Loan 1704-MOR) 25 VI. THE PROJECT ............................................. 27 A. Objectives .......................................... 27 B. Description ......................................... 28 C. Project Cost Estimates .............................. 29 D. Financing ........................................... 31 E. Procurement ......................................... 32 F. Disbursement ........................................ 33 This report is based on the findings of an appraisal mission which visited Morocco in March 1983, consisting of Messrs. Jean Paul Chausse, B. van de Poll (Bank), and C. Bartoli (Consultant). This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Table of Contents (Continued) Page No. VII. PROJECT IMPLEMENTATION .., ................................ 34 A. Accounts and Audit: .40 VIII. PRODUCTION, MARKETS, FINANCIAL ANALYSIS . .41 A. Production Generated by the Project .41 B. Markets and Prices ................................... 42 C. Financial Analysis ................................... 43 IX. PROJECT BENEFITS AND JUSTIFICATION ..47 A. Benefits . ........ 47 B. Economic Analysis .......... , , 49 C. Project Risks . . . . ........ 51 X. AGREEMENTS TO BE REACHED AND RECOMMENDATIONS . . 51 MAPS IBRD 17220, 17221 ANNEXES 1. CNCA's Lending Program 2. On-farm Investments Financed under the Project 3. Financing of On-farm Investments 4. Project Cost: CNCA Component 5. Schedule of Disbursements of Bank Loan 6. Structure of Interest Rates 7. CNCA's Financial Statements 8. Implementation Schedule and Terms of Reference for CNCA's Management Studies 9. Selected Documents Available in Project File  STAFF APPRAISAL REPORT KINGDOM OF MOROCCO FIFTH AGRICULTURAL CREDIT PROJECT I. INTRODUCTION 1.01 The Caisse Nationale de Crgdit Agricole (CNCA) has requested Bank assistance to finance, with other cofinanciers, the Fifth Agricultural Credit Project. The Project would follow four successful Bank-financed agricultural credit projects implemented by CNCA. It would support Government's development objectives through: (a) improving agricultural production by financing on-farm investments; (b) shifting an increased share of investment in agriculture to the private sector; (c) improving access by small farmers to institutional credit; (d) promoting the mobilization of domestic savings; and (e) strengthening CNCA's management efficiency and financial situation. 1.02 The Project would be implemented by CNCA and finance on-farm investments undertaken by individual farmers and farmers' cooperatives, investments for the creation or extension of small- and medium-scale agroindustries, as well as the extension and rehabilitation of CNCA's branch network and technical assistance to CNCA for the improvement of its Management Information System (MIS). The Project would be implemented over a three-year period (September 1983 to August 1986). 1.03 The total cost of the Project is estimated at US$602.0 million, of which US$191.0 million (32.0%) in foreign exchange. A Bank loan of US115.4 million to CNCA would finance part of CNCA's medium- and long-term lending and institutional development during the Project period. The balance would be financed by CNCA's own resources, sub-borrowers'contributions, Government's grants and by loans from the Kreditanstalt fur Wiederaufbau (KfW) of the Federal Republic of Germany, the Arab Fund for Economic and Social Development (FADES) and the African Development Bank (ADB). 1.04 The Project was identified and prepared by CNCA with the assistance of Bank missions supervising the Fourth Agricultural Credit Project (1704-MOR). The Project was appraised in March 1983 by a mission composed of Messrs. Chausse, van de Poll (Bank staff), and Bartoli (consultant). II. THE AGRICULTURAL SECTOR A. Economic Background 2.01 To improve its rapidly deteriorating external financial situation, the Government implemented an austerity program during the 1978-80 period. However, government policies mostly centered on the reduction of investment outlays and did not adequately address the fundamental structural weaknesses  -2- of the Moroccan economy, such as the continuous stagnation in agriculture and an inefficient industrial development based on capital intensive, import-substitution projects. The resulting short-term downward adjustment of the economy was obtained at the expense of growth and employment: GDP growth during the 1978-80 period slowed to 3.6% p.a. in real terms, from an average of 6.7% p.a. during the 1973-77 period. In 1980, the IMF and the Moroccan Government negotiated a three-year Extended Facility (EFF) Agreement in support of a program aimed at containing the growth of domestic expenditures and restructuring the supply side policies through the adoption of a tax reform, the reform of management and financing of public enterprises, tariff increases, interest rate increases and the reduction or elimination of a wide range of subsidies. However, Government efforts to stabilize the economy were hampered by climatic, political and economic constraints among which (a) the impact of the 1979 oil price increase; (b) a severe drought in 1980/81 which reduced agricultural production and induced a substantial increase in imports of foodstuffs; (c) a steady appreciation of the US dollar against the Moroccan dirham; (d) the rise in international interest rates which further increased the country's debt service burden; and (e) a further decline in 1982 of the world market price of phosphates, Morocco's principal export. 2.02 Because of Morocco's inability to meet IMF's credit ceilings, the EFF was suspended and replaced in 1982 by a one-year Stand-by Agreement. The IMF approved a new Stand-by Agreernent in September 1983, seeking a further reduction of the budget defici t through comprehensive actions on both the revenue and expenditure side. In the short- and medium-term, the constraints on Morocco's economy will impose a severe limitation on investments and growth. Planned public investmenlts under the 1981-85 Development Plan have been drastically curtailed ancd the future growth of the economy will depend, to a large extent, on the sectoraL allocation and the efficiency of investments undertaken. Over the next few years, Morocco must address three major issues: (a) improvement of t:he balance of payment by concentrating investments in priority sectors and in projects which are export oriented or aimed at import substitution; (b) increased domestic resource mobilization; and (c) improvement of access to employment opportunities and basic services in rural areas to slowdown rural migration. The present Project would help Government in meeting all three objectives. B. Place of Agriculture in the Economy 2.03 Morocco's population is E!stimated at 20 million (1982) of whom about 60% live in rural areas. During the last ten years, population growth has averaged 2.6% p.a. (4.4% in urban areas and 1.4% in the rural areas). About 52% of the total labor force (2.75 million) is employed in agriculture. With maximum total labor requirements of Moroccan agriculture estimated at about 2.0 million permanent jobs, effective employment in the agricultural sector is about 70% of the total labor force!. While the proportion of total Moroccan population estimated to live below the absolute poverty level dropped from 43% in 1970 to 38% in 1980, the improvement occurred mainly i-n urban areas. The proportion of rural families living at or below absolute poverty level (US$238 per capita in 1978-80) remained constant at 45% and the absolute number of rural poor actually grew by about 1 million, reaching 5.4 million in 1980.  -3- 2.04 The value of agricultural output has grown at an average annual rate of 1.5% (in constant prices) during the 1970-80 period, a lower rate than for the output of other sectors of the economy. During 1978-80, it grew at a faster rate of 2.1% p.a., but dropped sharply by 23% in 1981 because of a severe drought. Agricultural output has not kept pace with the country's demand. This has led to a rapid increase in imports of agricultural products and a decline in the relative contribution of agriculture to the country's GDP. Agriculture contributed 16.6% to Morocco's GDP in 1979-81 (in current terms), down from 20.5% in 1969-71. In 1979-81, cereals and pulses contributed 36% to total agricultural GDP, with livestock contributing 33%, citrus and vegetables 11% each, and industrial crops and forestry about 6%. 2.05 In 1981, agricultural exports accounted for 28.6% of the value of total exports, down from 54.1% in 1971.1 Agricultural imports accounted for 24.4% of total imports in 1981 against 26.2% in 1971.! There has thus been a serious deterioration of the agricultural trade balance which is mostly due to a substantial increase in foodstuff imports. The situation can be illustrated through the evolution of self-sufficiency ratios for major basic foodstuffs. Table 1.1. SELF-SUFFICIENCY RATIO FOR BASIC FOOD PRODUCTS (1965-1980) (in percentage) 1965-69 1970-74 1975-79 1980 Cereals 87 86 75 72 Meat 100 100 98 100 Milk Products 54 60 58 64 Edible Oils 38 31 19 23 Sugar 28 46 50 53 Self-sufficiency ratios have been maintained for meat, and improved for milk products and sugar. However, there has been a deterioration in the ratio for edible oils and cereals. Imports of bread wheat alone accounted for 45% of total agricultural imports during the 1979-81 period. C. Agricultural Performance and the 1981-85 Development Plan 2.06 Agricultural Performance, in recent years, has varied between products. While production in the irrigated areas has risen rapidly, development in the rainfed sector has stagnated and yields have progressed only marginally. Cereals, olives and meat production has shown no real improvement and the production of pulses actually declined during the 70s. Low overall yields in rainfed agriculture are mainly the result of climatic and land tenure factors but also of poor farm technology and limited investment, due in part to inadequate government support services, particularly extension, and the lack of a coherent price policy. For those 1/ In current prices.  -4- crops for which price policy has not allowed farmers to generate sufficient net income (oil seeds, cotton, maize), or where farming techniques have not improved (cereals and pulses), government objectives of increased production has met with limited or no success. Progress has been most rapid when prices have permitted net income per hectare to be attractive and where effective support services have allowed the introduction of modern farming techniques. This has happened mostly in irrigated areas, where the introduction of sugar beet and sugar cane cultivation and forage crops for milk production, under the supervision of Regional Development Offices (ORMVAs), showed rapid progress. Government Objectives and Strategy for the Agricultural Sector 2.07 These objectives, as summarized in the 1981-85 Development Plan, are: (a) the improvement of self-sufficiency through increased production of staple food; (b) increased agricultural exports through intensified production of off-season vegetables and fruit; (c) reduction of social and regional income disparities through increased investment and employment creation in depressed rural areas; and (d) better valorization of agricultural production through processing of agricultural produce and improved marketing systems. 2.08 The strategy proposed to achieve these objectives includes: (a) increasing the share of agriculture in the public investment program; (b) giving greater emphasis to investments in the rainfed and small-scale irrigation subsectors; (c) implementing price policies which will ensure attractive returns to farmers and stimulate production; (d) revising the 1969 Agricultural Investment Code and strengthening the planning, project preparation and monitoring capabilities of the Ministry of Agriculture; (e) improving the land ownership structure to encourage intensive use of the land; and (f) shifting a larger share of the financing of investments in agriculture to the private sector and expanding the role and lending program of the Agricultural Credit Bank (CNCA). 2.09 The priority given by the Government to the agricultural sector is reflected in planned public investments for agriculture (dams excluded) amounting to 22.5% of total investments in the 1981-85 Plan, as compared to 17.4% in the 1978-80 Plan. In practice, given Morocco's budgetary problems and actual implementation rates in 1981 and 1982, public investments in agriculture during the Plan period may not exceed 60% of Plan's targets or about DH 6.0 billion (in current: prices). This would shift an even greater role in the sector's development: to private investments and CNCA's financing. D. Sector Issues Relevant to Agricultural Credit Land Tenure 2.10 Land owned in free holc[ (5.4 million ha) represents about 74% of all cultivable areas in Morocco, land collectively owned 13.8%, the balance belonging to the state (7.2%) or being held under various other forms of ownership such as religious fourndations. As indicated in the table below, the distribution of land is very unequal.  -5- Table 2.1: DISTRIBUTION OF FARM BY FARM SIZE Average Average No. No. of % of Cultivable % of Size of of Plots Farm Size Farms Total Area Total Farms per Farm (ha) ('000) T F ('000 ha) (T% (ha) (unit) Without Cultivable Land 450.3 23.4 - - - 0-15 1,089.5 56.5 1,776.2 24.5 1.6 5.5 5-10 219.9 11.4 1,508.0 20.8 6.9 6.8 10-20 114.1 5.9 1,529.7 21.1 13.3 7.7 20-50 44.0 2.3 1,218.0 16.8 27.7 8.8 50-100 7.7 0.4 514.8 7.1 66.4 8.8 More than 100 2.6 0.1 703.3 9.7 278.0 9.7 TOTAL/AVERAGE 1,928.1 100.0 7,250.00 100.0 4.9 6.0 Source; Agricultural Census, 1974. More than 23% of all farms do not have any cultivable land. About 80% of all farms have 5 ha or less and own less than 25% of the cultivable land, while 0.5% have more than 50 ha and account for 16.8% of total cultivable land. For the country as a whole, average farm size is about 5 ha. Farms are highly fragmented, with 1.93 million farms divided into 11.6 million parcels (six per farm), and the average size of parcels (0.64 ha) is too small for efficient rainfed farming. Most private farmers do not hold a recognized legal title to their land and cannot offer the real guarantees required for long-term credit for land improvement, irrigation works or constructions. In addition, absentee landlords often hold land for speculative purposes and either do not cultivate it or rent it to tenant farmers who have no security of tenure and no incentives to invest or improve the land. About 1.0 million ha of arable, collective land is distributed among 193,000 holdings (5.2 ha per lot). On collective land, the farmers do not own individually their land and have therefore little inducement to undertake improvements. 2.11 The Government has proposed several land reform measures which would alleviate the above problems. They include limitation on the partition of land below a minimum size, land consolidation, creation of viable, privately owned holdings on collective land, formalization of tenant contracts and imposition of a land tax to ensure that land is not left unproductive. Implementation of these measures has so far been slow. Land consolidation has been undertaken on about 500,000 ha in the modern irrigated perimeters. To date, cadastral survey operations have been completed over 750,000 ha (about 10% of the total arable land) and are underway over an additional 1.5 million ha, including 880 000 ha financed under Bank-financed Loukkos and Oulmes- Rommani Projects.!/ Detailed information on land holdings is essential for the planning of rural development, the establishment of a sound basis for land taxation and the distribution of agricultural credit. Cadastral operations and land registration and titling should be accelerated. 1/ Loans 1848-MOR and 2217-MOR  -6- Research and Extension 2.12 Despite some positive results, particularly in the development of new wheat varieties, the impact of research on agriculture has not been sufficient. Reasons include (a) too little attention paid to practical problems of farm production systems; (b) inadequate transmission of research results to farmers by the extension system; (c) poor coordination of the research programs; and (d) a general shortage of human, physical and financial resources. To overcome these prDblems, the Government created in 1980 the semi-autonomous National Institute for Agricultural Research (INRA). With Bank assistance, preparation of a Research Master Plan is underway as a first step to improve INRA's organization and define research policies and priorities. 2.13 Agricultural extension in Morocco is organized around 225 agricultural centers. Excepi: for industrial crops in modern perimeters, extension efforts have not been successful in diffusing improved technology. Many of the efforts of the extension agents have been directed to distributing inputs to farmers, collecting statistics and enforcing regulations. Other shortcomings include (a) the frequent lack of practical experience and communication skills of the agenits; (b) weak research/extension links and technical back-up; (c) organ-ization weaknesses including imprecise work programs, poor messages and lack of supervision; and (d) shortage of vehicles, equipment and operating budgets, with low salaries and poor incentives. The result is a cadre of agents who are not motivated, ineffective and lack respect from their clients. A reform began in 1980 witlh the establishment within MARA of a Directorate of Extension and the definition of a program aiming at (i) clearly defining extension objectives and messages; (ii) better integrating research and extension; (iii) improving the training received by extension agents; and (iv) increasing the accountability of extension agents while establishing a better incenitive structure. Preparation for an Extension Master Plan started early in 1983 with Bank assistance and is expected to be completed by mid-1984. The P'lan would, in particular, develop a cost-effective approach to extension in rainfed areas of Morocco. Mechanization 2.14 Morocco's use of tractors and combine harvestors is limited. In 1981, there were a total of 23,500 tractors and 2,400 combines in the country, which amounts to one tractor per 330 ha of cultivable land and one combine per 3,000 ha. This is very low, even in comparison with neighboring countries with similar climatic conditions (one tractor per 110 ha and 50 ha of cultivable land respectively in l'unisia and Algeria). Moreover, 44% of the total number of tractors in Morocco are used in the modern irrigated perimeters which account for less than 13% of total cultivable area. It is estimated that about 60% of the total mechanized work is carried out by contract with more than 80% of ccntract work carried out by private farmers. Because of Morocco's relativetly short rainfall period (October-April), with few rainy days and an annual rainfall between 100 mm-800) mm, it is extremely important that land preparation and planting is carried out at the most opportune time. If planting under semi-arid conditions is not carried out immediately after the first rains, a substantial part of the limited growing season is wasted. Since ploughirng with the use of animal traction can only commence after some 150 mm of rain has fallen to loosen the soil, sowing in areas using animal traction usually occurs later than in the mechanized  -7- areas. This late sowing results in lower yields because less moisture is available for use by the plant and because the growing season is shorter. Tractors, on the other hand, can prepare the land before the rains start and generally do a much better job of seed bed preparation which allows better infiltration and moisture storage. Applied research in Morocco indicates that, as a result of timely land preparation carried out by tractors and early sowing, cereal yields can be increased by as much as 0.3 t/ha. Farmers with holdings of between 5 and 20 ha are becoming increasingly interested in tractor rental as a way of improving farm production and decreasing the amount of fallow land. At present, about 25% to 30% of the arable land in Morocco is still under fallow. 2.15 During the last decade, combine harvesting of cereals, together with baling of straw, has become increasingly attractive to medium- and large-scale farmers because of the seasonal labor scarcity and the high labor cost of migrant farm laborers. The inability to harvest in time generally results in considerable grain losses. Grain losses are highest when the crop is left standing, waiting to be hand harvested, as this is the critical period when grain shattering and cattle encroachment occurs. Stationary threshing machines are also gaining popularity and are replacing the traditional threshing by animals in order to decrease grain losses on the threshing floor. Poverty and Low Debt Service Capacity 2.16 The majority of farm families operate at or near subsistence level and do not participate in the monetized economy. It is estimated that nearly 2/3 of the total cereal production in Morocco is used for subsistence purposes, with less than 10% being marketed through official channels.'/ A survey undertaken by MARAJ/ estimated the financial surplus generated by different farm categories and available for investment in 1974. It is summarized below (in 1960 dirhams): Farm Size Disposable Financial Total (hectare of Number of Income per Minimum Surplus Einancial cultivable Farmers Farm Family Consumption per Family Surplus land) ('000) (DH) (DH) (DH) (DH Million) 0 345.6 782 782 - - less than 5 834.5 1,251 1,251 - - 5 to 10 168.4 3,873 3,246 627 105.6 10 to 20 87.1 6,970 4,870 2,100 182.9 20 to 50 34.0 12,580 6,490 6,090 207.1 50 to 100 5.9 28,525 12,985 15,540 91.7 More than 100 1.5 115,735 19,475 96,260 144.4 Total 1,477.0 2,260 731.7 1/ Subsistence 62%, marketing through rural markets 33% and through official channels 5%; Source: ONICL. 2/ "Evaluation de la capacite de financement du developpement par l'agriculteur"; MARA 1977.  -8- The study indicated that, in 1974, a substantial financial surplus of DH 732 million was generated, representing about 18% of the country's agricultural GDP, and that the agricultural sector had important self-financing capacities. The debt capacilty of rainfed farms below 10 ha appears severely limited, in particular in areas with average annual rainfall of less than 400 mm. On average, farms of less than 5 ha did not generate any financial surplus and could not accumulate savings and undertake investments without credit. However, their debt service capacity is minimal and prevents them from having access to institutional agricultural credit. Price Regulations and Subsidies 2.17 The Government purchases hard wheat and barley at official support prices, while the prices of bread wheat, industrial crops and milk are fixed. This price intervention is suppliemented by controls on imports and interest rates. Subsidies are provided to maintain low retail prices for basic foodstuffs (flour, bread, sugar, edible oil and milk)1' as well as for agricultural inputs (fertilizers, improved seeds) and investments. The Moroccan price control mechanism is cumbersome and inefficient. Support prices for wheat and barley are higher than prices on the international markets. However, because of poor official marketing arrangements, stabilization of cereals producer price is ineffective, as only a small proportion of total production is marketed through official channels and can benefit from support prices. On the free market, cereal prices show sharp seasonal fluctuations, with prices at harvest dropping to as low as 70% of support price. 2.18 There are indications that the vast majority of agricultural input subsidies go to a minority of wealthier farmers. Therefore, these subsidies, which amounted to about DH 240.0 million in 1981, have had little impact on stimulating the use of modern inputs by small farmers. For this reason, the Government has decided to review and amend as necessary the dispositions of the 1969 Agricultural Investment Code. A study of the impact of current subsidies on agricultural produclion and government budget, and of the required reforms to the Investment Code is being financed under the Loukkos Development Project (Loan 1848-MOR). 2.19 Input Availability. Fertilizer use has increased by about 11% p.a. since 1956, reaching 264,000 t oi nutrient element in 1980. This represents about one-fifth of the consumption required according to technical norms. Fertilizers are used mostly by farmers in large irrigated perimeters, Agrarian Reform Cooperatives, state agricultural companies and large farmers. Prices of fertilizers are fixed by the Government and have so far incorporated a substantial subsidy element (40% to 50% of the cost). The public sector dominates in the upstream supply chain while the private sector is more important downstream. The public sector handles all imports, manufactures over two-thirds of the locally produced fertilizer and distributes about one-half of all fertilizer consumed in Morocco. The Office Cherifien des 1/ Subsidies distributed through the Caisse de Compensationl and ONICL for basic foodstuffs exceeded DH 2.0 billion (US$250.0 million) in 1982.  -9-. Phosphates (OCP) serves as the apex organization of the state enterprises, with its subsidiary Maroc-Chimie processing phosphate-based fertilizer products. FERTIMA distribute OCP/Maroc Chimie's products in addition to having a monopoly over the import of other fertilizer products. The private sector carries out some of the manufacturing (Societe Chgrifienne des Engrais) and distribution functions in parallel with the public sector organizations. Nine private companies participate on a limited scale in the wholesale business and many small licensed private entrepreneurs account for much of the retail trade, along with FERTIMA which has 200 distribution outlets in MARA's Centres de Travaux (CTs) and Centres de Mise en Valeur (CMVs). However, the present distribution network is insufficient. In addition, inadequate pricing structure and lack of storage capacity at intermediate and retail levels are unfavorable to early purchases by farmers and retailers. As a result, there are problems with fertilizer availability during periods of high demand. 2.20 Seeds of high yielding varieties (HYV) of cereals, pulses, forage crops, potatoes and sugar beet are sold mainly by the state-owned company, SONACOS, through the 200 outlets of the CT-CMV network. In 1980, the use of HYV seeds reached 50,000 t, almost exclusively for cereal production. This is enough for about 1.2 million ha or around 35% of total area cultivated in cereals (about 4.0 million ha). Use of HYVs has stagnated in Morocco (48,900 tons 1977) with large annual fluctuations (33,400 tons in 1979). Although Moroccan farmers are aware of advantages of using HYVs, increased use is constrained by several factors among which. (a) limited availability because of insufficient production and problems with distribution similar to those for fertilizers, and (b) limited purchasing power and debt capacity of small farmers. Savings Mobilization 2.21 Over the last few years, domestic savings mobilization in Morocco has been poor and declining (16% of GDP in 1977, 11% in 1981). In 1981, gross domestic savings financed only 46% of gross investment, the balance being provided by external sources of finance. Improvement in the overall domestic savings ratio will depend essentially on improvement in the current budget balance. However, efforts must be intensified to mobilize private savings. A constraint in this mobilization is the low level of interest rates (10.5% on 18-month deposits), which, with inflation at an estimated 10.5% in 1982, discourages financial savings. 2.22 Rural resource mobilization appears very small. Taxes collected from the rural sector are low, amounting to DH 50 to 60 million annually, or less than 1% of the total agricultural GDP and less 4% than the net financial surplus!! generated by the sector. Agriculture contributes around 17% of total GDP, but less than 2% of total tax revenues. In contrast, CNCA has been relatively successful in mobilizing deposits. Deposits with CNCA have grown from DH 136 million in 1975 to DH 544 million in 1982, a rate of growth of 22% p.a. However, a large part of these deposits are institutional deposits (from State-owned companies) and private rural savings are still not adequately tapped by CNCA despite the establishment of banking facilities in many of its branches. Reasons for this low mobilization of rural savings include; (a) limited savings capacity of a large portion of farmers; (b) preference of 1/ See para. 2.16.  -10- Moroccan farmers for real assets, in particular, livestock, over financial assets; (c) diversion by some large farmers of agriculture-generated savings into urban-based investments or consumption; and (d) interest rates on deposits have been low and negative in real terms. The proposed Project would assist CNCA in its deposit mobilization efforts by financing the extension and rehabilitation of its branch network and providing technical assistance to define and implement a more aggressive banking strategy (para. 7.02). Issues of Agroindustrial Development 2.23 At present, some excess capacity exists for the processing of oilseeds and olives, milk pasteurization, animal feed production, canning and cotton ginning. Sugar beet and sugar cane processing factories and refineries of vegetable oil and sugar work at near full capacity, as do industrial and artisanal flour mills, slaughterlhouses and most small-scale agroindustrial enterprises. Cold storage is used to full capacity. Financing of large-scale investments (sugar factories!, industrial flour mills, grain storage) is available from Government, foreign suppliers and the Moroccan Industrial Development Bank (BNDE). However, small-scale agroindustries do not receive adequate attention. About 60% of total investments in the sector envisaged under the 1981-85 Plan (DH 4.2 billion) are allocated to three sectors (sugar processing, cereal storage and fertilizers).- Agroindustrial projects promoted by the Office de D4veloppement Industriel (ODI), an arm of the Ministry of Commerce and Industrv, are primarily large-scale investments. Expansion of small- and medium-scale agroindustries is constrained by (a) lack of entrepreneurs' technical and financial competence and experience in dealing with financial institutions and Government; and (b) laclk of finance. As a result, most agroindustrial investments are medium and large scale rather than small scale, capital intensive rather than labor-intensive and located in urban rather than rural areas. lJnder the proposed Project, CNCA would promote the development of small- and medium-scale agro-industries lDy targetting its lending to this subsector and providing technical assistance to rural entrepreneurs (para. 7.12). E. Bank Agricultural Sector Strategy and Performance under Previous Project 2.24 The Bank's strategy in i:he agricultural sector has supported the government objectives of increasing agricultural production wherever economically justified while placing, for economic and isocial reasons, an increased emphasis on developing rainfed areas where a large untapped potential exists and most of the poorest members of the rural population live. In the future, renewed emphasis will be given to (a) highly productive projects which will increase foreign exchange earnings or savings; and (b) strengthening agricultural services at the national level in order to provide an efficient support for regional projects and to address certain sector-wide policy issues. 2.25 Bank Group lending for agriculture in Morocco began in 1965, and to date, 58 projects have been undertaken and supported by US$1,958.5 million Bank/IDA funds (US$24.0 million of IDA credits). They include six irrigation 1/ Including 75% of total planned public investments.  -11- projects; Sidi Slimane (FY65), Sebou I (FY70), Souss Groundwater (FY75), Doukkala I (FY76) and Doukkala II (FY77), all completed, and Small- and Medium-Scale Irrigation (FY83); five rainfed agricultural development projects in the Meknes (FY75), Fez-Karia-Tissa (FY78), Loukkos (FY80), Middle Atlas (FY82) and Oulmes Rommani (FY83) areas; an agroindustrial and flood control project (Sebou II, FY74); a Vegetable and Marketing Project (FY80); a Forestry Project (FY82); and four Agricultural Credit Projects (FY66, FY73, FY77, and FY79), three of which have been completed. Project performance to date is generally satisfactory. A major issue in the irrigation projects has been inadequate cost recovery, but recently decreed increases in water charges are contributing to a satisfactory solution. A Performance Audit Report for the Sebou I Project was issued on June 21, 1982, stressing the project's success in institution building as well as in increasing production. The Project Completion Report for the Doukkala I Project was issued on June 4, 1982. The project was successfully completed with actual production and cropping intensity exceeding appraisal targets. Among rainfed projects, which are mostly still in early stages of execution, implementation has also been satisfactory, with the exception of the Meknes Development Project, the first of the series, which has experienced substantial delays due to the complicated land redistribution and consolidation program and inexperience in organization and management of complex rural development projects. This has now been overcome and the implementation of the consolidation program is progressing satisfactorily. Performance of the Agricultural Credit Projects has been good. OED reports are available for three of them.!/ These reports stress the contribution made by the projects to agricultural development, their success in establishing an efficient credit institution and the successful expansion of credit to small farmers. A more detailed analysis of the results of the four Agricultural Credit Projects is presented in Chapter V. III. THE FINANCIAL SECTOR 3.01 Morocco has a well developed financial sector. It consists of (a) fifteen commercial banks having a combined network of about 630 branches; (b) five specialized credit institutions including CNCA; and (c) two savings banks. Morocco has a Central Bank (Banque du Maroc) and a capital market (Casablanca stock exchange) where shares of private companies are listed and traded. Medium- and Long-term credit is provided to investors mostly by three specialized institutions: the Housing and Tourism Bank (CIH), the Industrial Development Bank (BNDE) and the Agricultural Bank (CNCA). Each of these institutions caters to its respective economic sector and has received Bank loans. Commercial Banks 3.02 At the end of 1981, the fifteen commercial Banks had total assets of DH 26.2 billion (US$3.3 billion). The degree of concentration is high with the seven largest banks accounting for some 90% of total assets. Their branch network is very unevenly distributed geographically, 25% of all branches being 1/ First Agricultural Credit Project reviewed in Background Paper No. 4 of OED's Report on Agricultural Credit Programs; Second in Report 2543, June 25, 1979, Third in Report 3248, December 23, 1980.  -12- located in Casablanca and another 50% in cities along the Atlantic coast. In 1981, commercial banks extended D)H 14.1 million in credits to the economy (or 62% of total credits), of which 93% were short-term. In spite of government encouragements, banks have been cautious in extending investment credit, partly because of the possibility of making high profits on short-term lending. At the end of 1981, their medium-term lending (DH 1,043 million) represented 14% of total medium- and long-term credits to the economy and had not increased in current terrns from 1977 levels (DH 1,009 million). It represented 5% of their deposits (DH 21,640 million) and only 16% of their term deposits (DH 6,580 mill.ion). Transformation of short-term deposits into longer-term lending by commercial banks has therefore not occurred. Commercial banks' lending to agriculture is mostly short-term. They participate, under the strict control of the Ministry of Finance, in the syndicated financing of production and marketing operations of state-owned agricultural enterprises. They also offer seasonal and investment credit to individual farmers. However, (a) their branches are mostly located in urban centers; (b) they are profit--maximizers and avoid making small loans with relatively high processing costs; (c) they lack adequately trained agricultural staff; and (d) their lending is usually restricted to borrowers keeping also sizeable deposit baLances and offering sufficient guarantees. As a result, their agricultural lending to individual farmers is minimal. Specialized Credit Institutions 3.03 Specialized credit iinstitutions are responsible for the bulk of medium- and long-term lending. In 1981, they provided 86% of all medium- and long-term credit to the economy, up from 84% in 1974. They have developed their activities more rapidly than the financial system as a whole. Since 1974, credit extended by these institutions has grown at an average annual rate of 22% p.a. (in current terns), against 18% for total credit to the economy. Distribution of Credit by Sector 3.04 An analysis of credit distribution by sector!/ indicates that, between 1976 and 1981, loans to agriculture have increased less rapidly than loans to other sectors (7.4% against 14.7% p.a. in current terms). As a result, the share of agriculiture in total recorded credits has decreased from 13.1% in 1976 down to 9.8% in 1981. However, recorded credits underestimate actual lending and it can be estimated that, at the end of 1981, the agricultural sector, which contributed an average of 16.6% of the total GDP over the 1979-81 period, accounted for about 13% of total credit to the economy. Interest Rates 3.05 The Government sets intierest rate ceilings on both deposits received and loans granted by Morocco's financial institutions. Interest rates on deposits have been increased recently to attract savings; sight deposits yield no interest, except current accounts with CNCA (up to 5% p.a.); term deposits yield from 4.5% p.a. for 1-month deposits, to 10.5% p.a. 1/ Recorded credits only. Loans below a certain amount are not reported to the Central Bank.  -13- for 18-month deposits. The cost of rediscounting facilities with Bank of Morocco ranges from 3% for agricultural loans to 7% (basic rate). The yield of Treasury bills varies between 8.5% p.a. for 6-month bills, to 10.5% for 5-year bills. Local currency bonds carry interest rates up to 11.5% and are mostly issued by specialized financial institutions (CIH, BNDE, CNCA) or public enterprises. 3.06 For the first time since 1975, lending rates were raised across the board in October 1980 then again in April 1982. Maximum rates charged by commercial banks on rediscountable loans (including agricultural loans) are now 10% for short-term loans and 11% for medium-term loans. BNDE is now charging a single rate of 14% p.a. on all its loans. Until September 1, 1983, CNCA interest rates ranged from 7% to 10% p.a. on short-term loans and from 8% to 10% on medium- and long-term loans. With inflation rate at 12.5% in 1981 and 10.5% in 1982, interest rates on deposits and loans have generally been negative in real terms. This has discouraged savings, encouraged credit use and, because of limited resources for lending, required some credit rationing. However, interest rates on CNCA's loans have been increased as of September 1, 1983 (para. 7.13) and are now positive in real terms. IV. THE CAISSE NATIONALE DE CREDIT AGRICOLE A. Background, Organization and Staffing Organization 4.01 Established in 1961, CNCA is a wholly government-owned institution with independent legal status and financial autonomy. Its objectives are to promote agriculture in Morocco by extending credit for agricultural inputs, investments and marketing to individual farmers, farmers' groups and cooperatives and companies. To do so, CNCA prepares and implements annual lending programs which have to be approved by both the Ministers of Finance and Agriculture. 4.02 CNCA is administered by a board of directors and a managing committee. The board of directors is chaired by the Minister of Agriculture and includes representatives of the Ministries of Agriculture, Finance, Interior, of the Bank of Morocco and of farmers. The managing committee is chaired by CNCA's Director General and includes representatives from the bodies which are represented on the board of directors. CNCA's chief executive officer is the Director General. He is appointed by Royal Decree and is in charge of CNCA's day-to-day operations. He appoints CNCA's staff with the exception of the Financial Comptroller who is nominated by the Minister of Finance. The comptroller is responsible for supervising CNCA's financial transactions and ensuring that they comply with pertinent laws and the decisions of the board. 4.03 CNCA's credit is extended from the headquarters in Rabat, 36 Regional Branches (CRCAs)l/ and 95 Local Branches (CLCAs).2 / Since the appraisal of the Fourth Credit Project in 1979, seven new CRCAs and four more CLCAs have been created. In addition, 90 seasonal credit outlets, attached to CLCAs, 1/ Caisses R4gionales de Credit Agricole. 2/ Caisses Locales de Crddit Agricole.  -14- have been opened during FY81/82 and 50 more in FY82/83. There are eight Inspection Directorates (IRCAs)!/ in charge of banking inspection, coordination of credit activities, and undertaking special surveys and studies. In addition, CNCA has recently opened six deposit branches in major urban centers. Staffing and Staff Training 4.04 As of December 31, 1982, CNCA staff numbered 1,830. Staff productivity is relatively high. The number of loans granted annually per operational staff is about 23C0 for CRCAs and 500 for CLCAs. However, with the exception of FY81/82 which was an exceptional year following the 1980/81 drought, staff productivity has not increased over the last few years. This reflects the fact that most bookkeeping operations at branch level are done manually and that any increase! in the number of loan applications can be accommodated only by a proportional increase in staff. Future productivity gains will require some branch level bookkeeping operations to be computerized. 4.05 The level of education of- CNCA's staff is relatively high. Most administrative and account off-icers are high school graduates or have a diploma in accounting. Middle and higher management staff are university graduates. Every newly appointed employee receives induction training from two to seven weeks depending on his position. In 1972, following a well-conceived strategy, a comprehensive training program was launched to update CNCA's staff professiornal skills through courses, seminars and on-the-job training. Management personnel was encouraged to enroll in correspondence courses. In recent: years, however,-CNCA's training efforts have been somewhat curtailed and concentrated on initial training of new recruits. Only a few higher management staff members have received training for short periods of time on specific subjects. CNCA management has recently started to give renewed attention to the training needs of it-s staff. A new department has been created to be in charge of training activities. This department is preparing a detailed assessment of training needs of the various categories of staff (para. 7.08). B. Lending Policies and Procedures; 4.06 Decentralization of lending responsibility, simplification of procedures and expansion of the range of investments financed have been the main characteristics of CNCA's cretdit policies since 1975. CNCA's objective has been to provide maximum access to credit, make the provision of credit rapid and simple and adapt credit norms to regional agro--economic conditions. Lending operations are governed by "Credit Guidelines" which are revised every year in collaboration with MARA. These guidelines are comprehensive and cover types of credit available, appraisal criteria, financing norras, sub-borrower contributions, interest rates, loan approval authorities, security for loans and maximum credit ceilings available to borrowers. Lending procedures are different for commercial farmers, clients of headquarters or CRCAs, than for small farmers, clients of CLCAs: Headquarters and CRCAs' loans are subject to considerably more stringent appraisal criteria than CLCAs' loans for which procedures are streamlined. Short-term loans are usually granted for periods 1/ Inspections Rggionales de CredLit Agricole.  -15- of 3 months (harvest loan) to 12 months and finance farm inputs and produce marketing; medium- and long-term loans extend from 2 to 20 years and finance a wide range of on-farm investments. Head Office and CRCAs 4.07 The head office lends to a few large farmers whose borrowings exceed CRCAs loan approval authority, state-owned companies producing or marketing agricultural products, irrigation development offices and agroindustrial enterprises. CRCAs lend to individual farmers with a fiscal income (FI)11 above DH 3,000 (actual net farm income of about DH 12,000 or US$1,500) and to Agrarian Reform Cooperatives. CNCA has achieved a good balance between thoroughness of appraisal and the objective of reaching a large number of farmers with limited staff resources and operating costs. Field appraisal is systematically undertaken for investments in land improvement, irrigation, pure bred livestock, plantations, poultry farming and for all loans disbursed by installments. On-farm appraisal is also carried out for other purposes when considered necessary. Credit norms are set to cover about 70% of estimated crop production costs and investment cost. 4.08 Loan applications are reviewed and approved by CRCAs' credit committee, chaired by the CRCA director and meeting weekly. However, Internal Credit Commissions (ICC) were created in 1976/77 to simplify and speed up application processing. They are composed of the CRCA director and two of his staff who can meet daily, if necessary, to approve short-term loans. The type of guarantee required from borrowers is based on CRCA staff judgement of credit risk. Short-term loans to individuals are generally secured by crop liens and sureties and medium- and long-term loans by a chattel mortgage on equipment. Loans for land improvement, irrigation and constructions are secured by a mortgage. CLCAs 4.09 CLCAs make loans to small farmers with a fiscal income between DH 50 and DH 3,000, which corresponds roughly to annual net farm income of about DH 200 (US$25.0) to DH 12,000 (US$1,500). Comprehensive lists of farmers' Fl are kept with CLCAs and consulted for every loan application. As in the case of CRCA clients, loan amounts are determined on the basis of norms revised annually. However, there is a ceiling on maximum borrowings intended to keep borrowing within estimated debt capacity of CLCA clients. For farmers having legal title to their land, maximum short-term borrowing is limited to DH 15,000 (US$1,875) and maximum medium-term loans outstanding to DH 35,000 (US$4,375). For borrowers who cannot present evidence of ownership (which represent about 95% of CLCA clients), short-term loans are limited to 150% of their FI and annual medium-term loan installments to 120% of FI. The ceiling on borrowing capacity minimizes CLCA lending risk. This is important, because loan appraisal is based on desk review. Systematic field appraisal and supervision of small farmers' loans (average short-term loan is DH 1,000 or US$125) would not be administratively or financially feasible. However, the fiscal income ceiling is necessarily arbitrary and often not related to 1/ Net income estimated for tax purposes. Depending upon the crops grown, real annual net farm incomes range from 3 to more than 20 times fiscal incomes.  -16- investment cost or actual farmer's repayment capacity. As a result, credit provided to CLCA clients often constitutes less than 70% of production or investment costs. 4.10 In 1981, in the context of the Bank-financed Fez-Karia-Tissa Agricultural Project (Loan 1602-MOR), CNCA introduced a pilot scheme to test new credit policies for CLCA c'Lients. Under the new policies, the overall ceiling on credit repayment capacity has been set at 50% of farmers' projected annual gross farm income. Lending norms have been set to represent from 70% to 90% of production or investment costs. Under the new lending policy changes, the unit size of short-term loans to CLCA clients has about doubled in the Project area. Results of field surveys to determine the impact of increased availability of credit on input use and production are not yet available. However, recoveries in the Project area have been satisfactory, indicating that farmers' debt repayment capacity had not been grossly exceeded. Interest Rates 4.11 Current interest rates (as of September 1, 1983) on CNCA's subloans are presented below: Annualized HQs and CRCAs CLCAs Fee /a Rate Short-term loans Short-term loans Crop Marketing 7.0% p.a. Harvest Loans 2.5% 10.3% p.a. Industrial Crops 11.0% p.a. Other 7.5% 10.8% p.a. Cereals & Pulses 9.0% p.a. Other 11.0% p.a. Medium- & Long-term Loans Medium- & Long-term Loans All Medium-Term Loans 12.0% p.a. All loans 10.0% 11.1% p.a. All Long-Term Loans /b 13.0% p.a. /a For CLCA loans, a front-end fee is charged on loan amount instead of an annual interest rate. /b Maturity period more than 1L0 yesars. In addition, an appraisal fee of 0.5% is char-ed on CRCAs and HQs loans.l/ Interest rates on CNCA's loans are now equival nt to those charged by commercial banks for agricultural loans, whi ` range from 8% to 10% on short-term credit and from 11% to 13% p.a. for medium-term credit. CNCA's interest rate for agroindustrial subloans is 12% or 13% p.a. depending on loan maturity. This is slightly lower than the net interest rate paid by agroi dustrial enterprises on medium-term loans from BNDE which is around 14% p.a.2/ Bank projections indicate a decline in the domestic rate of 1/ On loans of more than DH 5,000. In 1981/82, the proceeds of this fee amounted to DH 4.3 million. 2/ Including off-setting Government interest subsidy of 2% and appraisal and foreign exchange risk fees amounting to about 2% of loan amount.  -17- inflation to 9% in 1983-1984 and 7.5% in 1985. CNCA's current lending rates would therefore be positive in real terms during the project period. However, the institutional rigidity of interest rates with respect to short-term fluctuations in domestic inflation and external financing conditions is an issue. If real on-lending rates were to become negative, credit rationing would result, with large, low risk borrowers obtaining most of the credit. Increase in the cost of CNCA's resources might also undermine CNCA's financial viability. A mechanism permitting the adjustment of loans' interest rate when CNCA's financial situation so requires is proposed in para. 7.13. C. Lending Operations 4.12 In 1981/82, total CNCA lending reached DH 1,499 million, up from DH 835.0 million in 1977/78 for an average rate of growth of 15.8% over the period. In real terms, lending increased at an estimated 6.0% annual rate. Table 4.1: CNCA LENDING OVER THE 1977-1982 PERIOD Average Growth Rate 1977/78 1978/79 1979/80 1980/81 1981/82 77/78-81/82 --------(DH Million)---------------- (%) Short-term Lending 455.1 432.3 540.9 579.8 817.3 15.8 of which: HQs & CRCAs 434.1 408.0 491.2 514.6 690.0 12.3 CLCAs 21.0 24.3 49.7 65.2 127.3 56.9 Share in Total Lending 55% 55% 58% 61% 55% Med. & Long-term Lending 379.5 351.1 396.7 371.8 681.9 15.8 of which: HQs & CRCAs 203.3 192.6 214.0 181.3 378.3 16.8 CLCAs 176.2 158.5 182.7 190.5 303.6 14.6 Share in Total Lending 45% 45% 42% 39% 45% Total Lending 834.6 783.4 937.6 951.6 1,499.2 15.8 of which: HQs & CRCAs 638.5 602.3 707.6 699.3 1,089.0 14.3 CLCAs 196.1 181.1 230.0 252.3 410.2 20.3 Share of CLCAs 24% 23% 25% 27% 27% Total lending in real terms /a 834.6 725.9 802.8 742.1 1,050.7 5.9 /a Using GDP deflator. Over the period, the share of short-term credit in total credit remained stable around 55%. Short-term credit represented about 65% of total lending by HQs and CRCAs but only 26% of total CLCA lending. However, the latter has increased very rapidly over the period (average rate of growth of 57% p.a.). Because of this increase, credit received by CLCA clients represented 27% of total CNCA lending in 1981/82 against 24% in 1977/78.  -18- 4.13 Short-term loans to private farmers have primarily financed crop production (50%) and animal feed (27%). Short-term credit to State agricultural companies, which represented 20% of total short-term lending, was used mainly (66%) to finance, through the ORMVAs, industrial crop production (cotton, sugar beet and sugar cane) in irrigated perimeters. About 45% of total medium- and long-term credit went to CLCA clients, 42% to individual CRCA clients and the balance to Agrarian Reform Cooperatives (4,), State companies (5%) and agroindustries (2%). Four types of investment represfented more than 75% of total lending; livestock (25%), construction (19%), mechianization (17%), and draft animals (16%). Credit Coverage 4.14 Between 1970/71 and 1981/82, total amount of lending to individual farmers increased from DH 185 million to DH 1,210 million, an average rate of growth of 18.6% p.a in current terms (about 10% in real terms). During the same period, loans to small farmers increased faster, at an average annual rate of 24%, reaching DH 435 million in 1981/82. Not included in that figure are loans to Agrarian Reform Cooperatives, whose members are, by definition, small farmers, and loans granted through ORMVAs to private farmers (many of whom are small-holders) for the production of industrial crops. The extent of CNCA's credit penetration in rural areas is illustrated in the table below; Table 4.2; NUMBER OF POTENTI]AL AND ACTUAL CNCA INDIVIDUAL CLIENTS /a No. of Actual Clients as % Individual Farmers Potential Actual CNCA Clients of Potential Clients Fiscal Income Clients 1973 1977 1982 1973 1977 1982 -------(number)