Madagascar - Lac Alaotra Rice Intensification Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-3405,MAG REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN AN AMOUNT EQUIVALENT TO US$18.0 MILLION TO THE DEMOCRATIC REPUBLIC OF MADAGASCAR FOR THE LAC ALAOTRA RICE INTENSIFICATION PROJECT February 28, 1983. 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 December 1981 December 1982 Unit = Malagasy Franc (FMG) = Malagasy Franc (FMG) US$1.00 = FMG 278 = FMG 367.71 FMG 1,000 = US$3.59 US$2.72 FMG 1,000,000 - US$3,590 = US$2,720 (The cost estimates are based on US$1 = FMG 375) GLOSSARY OF ABREVIATIONS BTM Agricultural Credit Bank CCCE Caisse Centrale de Cooperation Economique (French development fund) CVA Circonscription de la Vulgarisation Agricole (Agricultural Extension Division) DDR Directorate for Rural Development DEP Directorate of Studies and Programming, MPARA EDF European Development Fund FAC Fonds d'Aide et de Cooperation (French technical assistance agency) FOFIFA Center for Agricultural and Rural Development Research MPARA Ministry of Agricultural Production and Agrarian Reform (Ministare de la Production Agricole et de la Reforme Agraire) SDR Rural Development Service SOMALAC Development Agency for the Lac Alaotra region GOVERNMENT OF MADAGASCAR FISCAL YEAR January 1 to December 31  FOR OFFICIAL USE ONLY MADAGASCAR LAC ALAOTRA RICE INTENSIFICATION PROJECT CREDIT AND PROJECT SUMMARY Borrowers: Democratic Republic of Madagascar Beneficiaries: Ministry of Agricultural Production and Agrarian Reform (MPARA) Development Agency for Lac Alaotra (SOMALAC) Center for Agricultural and Rural Development Research (FOFIFA) Amount: SDR 16.7 million (US$18.0 Million equivalent) Terms: Standard Project Description: (i) Objectives: The proposed 5-year project would aim at increasing rice production and the marketed surplus in the Lac Alaotra region, thereby saving foreign exchange expenditures on rice imports. This would be achieved mainly through the rehabilitation of existing irrigation infrastructure, the supply of farm inputs, and management and institutional technical assistance. (ii) Main Project Components: (a) The rehabilitation of existing "modern" irrigation networks on about 25,000 hectares; and the improvement of water availability on traditional schemes, on about 3,000 hectares; (b) The production of improved seeds and provision of agricultural equipment and inputs to the whole Lac Alaotra basin (about 68,000 hectares); (c) the reinforcement of SOMALAC, the regional develop- ment company responsible for agricultural development in the project area through material support, technical assistance and training; (d) assistance to the agriculture extension services (CVA) of the Ministry of Agricultural Production and Agrarian Reform (MPARA), including the provision of vehicles and equipment, training and construction of a central warehouse; (e) the establishment of a network of gauging stations; This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - (f) pilot activities aimed at increasing agricultural production; (g) the establishment of a monitoring and evaluation unit; and (h) studies related to the proposed project and for the preparation of agricultural projects in Madagascar. (iii) Benefits: Benefits resulting directly from Project investment would consist of increased production of rice. The value of annual incremental production of 51,100 tons of paddy is estimated at $15.8 million, at full development (year 11). These benefits would accrue to about 35,000 farm families in the Project areas. Additional quantified benefits would result from Project investments in seed production, gauging stations, and in pilot schemes and dissemination of new cultivation techniques, and from technical assistance for project preparation. (iv) Risks: The success of project implementation will depend greatly on the success of the organizational rehabilitation of SOMALAC, as well as on the efficiency of the extension and research services. The financial rehabilitation of SOMALAC which has been initiated will require a continued Government commitment throughout the project period and thereafter. The successful marketing of project output is dependent on prices fixed annually by the Government. Careful supervision and a thorough assessment of performance at a scheduled mid-term review will be essential. Project Costs: Foreign Local Total --------(US$ Million)------ Re-equipment of SOMALAC 5.5 1.2 6.7 Irrigation rehabilitation 7.0 3.4 10.4 Re-equipment of CVA MPARA 0.3 0.1 0.4 Agricultural equipment and inputs 3.5 1.0 4.5 Technical assistance and studies 4.6 0.8 5.4 Training 0.4 0.3 0.7 Pilot activities 0.3 0.2 0.5 Base Cost 21.6 7.0 28.6 Physical Contingencies 2.3 0.6 2.9 Price Contingencies 4.7 1.8 6.5 TOTAL PROJECT COST 28.6 9.4 38.0  - iii - Financing Plan: Foreign Local Total --------IJS$ Million-------- Government - 5.5 5.5 IDA 15.8 2.2 18.0 CCCE 8.8 1.2 10.0 FAC 4.0 0.5 4.5 TOTAL 28.6 9.4 38.0 Estimated Disbursements: IDA FY FY83 FY84 FY85 FY86 FY87 FY88 FY89 -------------------------(US$'million)