Mexico - Tropical Agricultural Development Project

Do_uunt of The World Bank FOR OMCIL USE ONLY Rapt Ne. 5997 PROJECT COMPLETION REPORT MEXICO: TROPICAL AGRICULTURAL DEVELOPMENT PROJECT (LOAN 1553-ME) December 27, 1985 Operations Evaluation Department |hE dwwme kw a rsu*eld db&Mkthu and ma be andi by rwdpemt ony in the perfomance of their .Ufd.I duk.. lb. emutnt ia ow a hedrwie be didoiod withou Worl Rank sntosIzathm..  ABBREVIATIONS ANAGSA - National Farm and Livestock Insurance Agency BANRURAL - National Rural Credit Bank CIFTROH - Center for Forestry Research in The Humid Tropics CPNH - Commission of National Water Resources Plan FIRA - Agricultural Trust FIRCO - Shared Risk Trust INIA - National Crop Research Institute INIF - National Forestry Research Institute INIP - National Livestock Research Institute NAFINSA - Nacional Financiera S.A. PRODERITH - Integrated Rural Development Program for the Humid Tropics PRONASE - National Seed Production Corporation SARH - Ministry of Agriculture and Water Resources SCS - Soil Conservation Service (US)  FOI OLmCIL USE ONLY PROJECT COMPLETION REPORT MEXICO: TROPICAL AGRICULTURE DEVELIPMENT PROJECT (LOAN 1553-ME) TABLE OF CONTENTS Preface ***** ********** ......... .................... i Basic Data Sbeet *e ............................................. ti Evaluation Summary *i................ * .......................... ii PROJECT COMPLETION REPORT: OVERVIEW I. Introduction ****.*..*.*****.*..******.*........*.*.*. * v II. Project Formulation .6 .............................. v III. Implementation ....* ......* .......................... vi IV. Economic and Agricultural Impact ........................ ix V. Institutional Performance **.*....* * ..*...*.***... ix VI. Bank Performance ..s ...... ......g.......g ......... x VII. Conclusions and Lessons Learned i......................... i Tables ........................................ xiii PROJECT COMPLETION REPORT ........................., 1 Introduction ........o................................. 2 I. General Background 1.1 The Agricultural Sector in Mexico ................. 6 1.2 The Humid Tropics .* .............................. 9 1.2.1 Characteristics of Agriculture and Stockraising ... 11 II. Integrated Rural Development Strategy in Mexico's Humid Tropics 2.1 Conceptual Framework ........... .................... 13 2.2 The Integrated Rural Development Program for the Humid Tropics .................................... 15 2.2.1 System of Operations *............................ 17 2.2.2 Organization and Functioning ... .................. 21 III. Implementation and Results 3.1 Planning .................................... 23 3.2 Research ..................................... 27 3.3 Infrastructure ..... 30 3.4 Organization ....................................... 31 3.5 Credit .......................... 0... *0.00.... 33 3.6 Rural Communication System ............................ 34 3.7 Training .................o37 Thdosumm ha aU- d I dibbfAo and mawy be ud by nxma oly in epe onrms of esi oJMi dut.. IlB comtu may mat ohwwa be d_lad wibout Woddank autboitism.  IV. Results by Project , 4 4.1 Acapetahua Project, Chiapas ........................ 39 4.2 Tantoan-Santa Clara Project, Tamaulipas ............ 42 4.3 Atoyac Valley Project, Veracruz .................... 44 4.4 Tizimin Project, Yucatan ........................... 47 4.5 Zapotal Project, Tabasco ........................... 50 4.6 Tesechoacan Project, Veracruz ..... ................. 53 V. Economic and Social Evaluation 5.1 Impact on Production * ..............****........ 54 5.1.1 Agriculture **.......... ...............*** ........ 54 5.2 Social Impact *..........................* 57 5.3 Institutional Impact * .............................. 60 5.4 Economic Analysis .... .............................. 61 Conclusion ................................................... 62 Map: IBRD No. 13209  - ~ ~ ~ ~ ~ ~ ~ ~ ~ - PROJECT COMPLETION REPORT MEXICO: TROPICAL AGRICULTURAL DEVELOPMENT PROJECT (WAN 1553-ME) PREFACE This is the project completion report (PCR) for the Mexico Tropical Agricultural Development Project, for which Loan 1553-ME was approved on April 25, 1978, for the sum of US$56.0 million. The project was completed and the loan fully disbursed in April 1985. This report was prepared by the Borrower. In addition, an over- view was prepared by the Latin America and the Caribbean Regional Office, based on the PCR, the Appraisal Report (No. 1864B-ME) of April 3, 1978, and the President's Report (No. P-2287-ME) of April 12, 1978. All correspondence with the Borrower, internal Bank memoranda and reports as contained In rele- vant Bank files have also been consulted. A field visit to the project area was undertaken in January 1985. The draft report was sent to the Borrower for comment on October 25, 1985; however, none were received. The valuable assistance provided to those who prepared this report by the Government of Mexico is gratefully acknowledged. The project has not been subjected to an audit by the Operations Evaluation Department.  - ii - PROJECT COWPLZTION REPORT MEXICO: TROPICAL ACRICUILTURE ZVEOWPMENT PROJECT (LOAN 1553-ME) BASIC DATA SHEET REY PROJECT DATA Initial Actual or Actual as Z of Estlm_te Estimated Actual Appralsl Eutimate Total Project Cost (USS mlllon) 149.0 134.9 91 Loan Amount (USS million) 56.0 55.8 Date of Board Approval - 4/25n8 Date of Effectiveness - 1/12/79 Dete Physical Componentu Completed - 6/30/81 Proportlon then completed (Z) - 80 Closing Date 12/31/83 6/30/84 Economlc Performance (ERR 2) 17Z 18Z Direct Benef1clarles (families) 3,000 8,800 290 Total Beneficiaries (farm famIlles) 40,000 32,000 80 CUILATIVE DISBDRSEMENTS Fn79 FY8o FY11 FY82 FY83 F84 FY85 Appraisal eStimaLe (USS million) 2.1 11.3 231 37. 2 49.5 56.0 56.0 Actual (USS =illion) - 6.0 12.0 23.0 31.0 54.5 56.0 Actual as 2 of Appralisl estlmte 0 53 52 62 63 97 100 MISSION DATA Month/ No. of Staffdays Specializations Performance Types of Misdion Year Persons ln Field Represented /a Rating /b Trend /c Problems /d Identification 6/75 4 40 a.b,c Preparatlon 12n/6(3) 1 4 a,b,c Appraisal 8/77 6 a,b SUBTOTAL 44 Supervision I 10/78 2 11 a,b I I NA Supervision II 6/79 1 5 c 1 1 0 Supervislon III 11/79 1 14 a 1 1 0 Supervlslon IV 10/80 2 18 *,b 2 1 F Supervision V 11/81 2 11 a,b 2 1 F Supervision VI 7/82 2 11 a,b 2 1 FP Supervision VII 5/83 1 11 a 2 1 FP Supervision VIII 3/84 1 18 a 2 1 FP SUBTOTAL 143 TOTAL 187 OTHER PROJECT DATA FOLIOW-ON PROJECT Borrower NAFINSA Name: PROIERITH II Executlng Agency SASH Loan No.: NA Fiscal Year January 1 - December 31 Loan Amount: NA Date Board Approval: est. 3/86 Name of Currency (abbreviation) Nexican Peso (NexS) Currency Exchange Rate Appraisal Year Average US$1.00 -Nex$23 Intervening Years Average USS1 .00 -NexS50 Completion Year Average USS1.00 -MlexS168 /a a - agriculturallst; b - agricultural economist; c - engineer. /b I - problem-free or minor problems; 2 - Moderate problem and 3 - Major problem. T7- 1 - Improvlng; 2 - Stationary; 3 - Deteriorating. 7T[ F - Financial; M - Managerial; T - Technical; P - Political. 0 - Other.  - iii - PROJECT COMPLETION REPORT NMEXICO TROPICAL AGRICULTURAL DEVELOPMENT PROJECT (LOAN 1553-ME) EVALUATION SUMMARY Introduction In the early 1970s, the Mexican Government began to shift its agricultural development priorities to rainfed areas which comprised 75% of the cropped land and 85Z of the farms. Part of this shift involved the development of its tropical lowlands which were estimated to contain about 3.5 million hectares of unused or underutilized land of high agricultural potential. The Tropical Agricultural Development Project (PRODERITH I) was an attempt to test development strategies for this area. Objectives About 3,000 families were to benefit directly from the project, with an additional 40,000 families to receive extension service support. The project was to be administered by a Technical Committee comprising all implementing agencies. Components included: (a) development of six pilot project areas through infrastructure and credit support; (b) agricultural research; (c) intensive agricultural extension services; (d) training and technical assistance; and (e) planning of future development programs for the tropics. The total project cost was estimated at US$149.0 million and the Bank loan of US$56.0 million became effective in January 1979. Implementation Experience Despite a slow start and serious budget constraints in 1982-84, project implementation was good and coordination excellent. The project successfully tested engineering techniques, agricultural production systems and farmer organization methods which can now be replicated in the areas surrounding the pilot projects. Drainage works and construction of roads and flood control dikes were completed on schedule. The research and agricultural extension services performed reasonably well. The credit program was disbLrsed quickly, but not according to the original objectives of the project. The revised project cost is estimated at US$134.9 million (90% of appraisal estimates). Results The project resulted in increased (340Z) crop area harvested, increased yields and improved access to markets. The overall incremental production is estimated at about 50X over pre-project levels. Although there is considerable variation between pilot projects, the overall economic rate of return has been estimated at 18% (17% at appraisal). Indirect benefits include improvement in health, educational and nutritional status of beneficiaries.  - iv- The project success was due in part to sound, continuous management supported by a highly motivated young cadre of field personnel who had grown and gained experience on the job, and in part to the Bank's creative role at appraisal and responsiveness and continuity during supervision. Sustainability Three main factors contribute to good prospect for project sustainability: (a) the institutional system built under the project has proven efficient and satisfactory, (b) a follow-on project is expected to consolidate the results of this first project and (c) the Government's support of the project has been and remains strong. Findings and Lessons (a) Contrary to other rural development projects in Mexico (PIDER I, and Papaloapan Rural Development, audited in 1983 and 1985 respectively), the project was designed as a pilot project and carefully prepared. The fact that a feasibility study was carried out for all pilot sub-projects (two of them had been completed before project appraisal) confirms OED findings that adequate and thorough preparation is essential for projects of this nature; (b) the project was realistic in scope and implemented by several agencies of the same Ministry, with a management and coordination system which proved excellent; tc) infrastructure, extension and social packages developed under the project proved replicable; Cd) the high level of extension coverage used in the pilot areas helped introducing quickly new agricultural technologies; Ce) Bank performance was particularly good: the experimental nature and the risks of the project were clearly recognized at appraisal; Bank supervision and continuity of staff on supervision were good; (f) on the basis of the project's success, plans have been prepared to develop an additional one million hectares in the tropical lowlands; the Bank appraised a second-phase project in mid-1985.  -v - MEXICO TROPICAL AGRICULTURAL DEVELOPMENT PROJECT (LOAN 1553-ME) PROJECT COMPLETION REPORT: OVERVIEW I. INTRODUCTION 1.01 This memorandum provides an overview of the Goveranent of Mexico's project completion report on the Tropical Agricultural Development Project (Loan 1553-ME). A fully revised completion report has not been prepared since OED and the LAC Region have agreed that the borrower's report is acceptable as the primary document for audit. However, a field review was carried out by LCPAC in January/February 1985 which largely confirmed the results of the borrower's completion report. The following overview, therefore, summarizes the report's conclusions and analyses project performance by: (i) describing the project background at appraisal; (ii) reviewing project formulation; (iii) reviewing implementation; (iv) discussing economic and agricultural impact; (v) discussing institutional performance; (vi) discussing Bank performance; and (vii) summarizing lessons learned and recommendations for future projects of this type. Project Background 1.02 In the early 1970s, the Mexican Government began to shift its agricultural development priorities from irrigated to rainfed areas which comprised 75Z of the cropped land and 85% of the farms. Part of this shift involved the development of its tropical lowlands which were estimated to contain about 3.5 million hectares of unused or underutilized land of high agricultural potential.l/ The Tropical Agricultural Development Project CPRODERETH I) was an attempt to test development strategies for this area. 1I. PROJECT FORMULATION 2.01 Project formulation was lengthy but effective. Identification to appraisal took two years (1975-77) and the preparation report was prepared by the National Water Planning Commission (CPNH) with Bank and UNDP assistance. Bank participation totalled 10 staff weeks. Despite this effort, considerable work was still required by the six man appraisal team which visited Mexico in August 1977, and processing to Board approval took an additional 106 staff weeks. There were, however, no major problems encountered in processing the appraisal report. Objectives and Description 2.02 The main project objective was to intensify and increase agricultural production in Mexico's tropical lowlands. About 3,000 families I/ This estimate has recently been raised to 7.0 million ha of medium to high potential land.  -vi - were to benefit directly with an additional 40,000 families to receive extension service support. The project was to be administered by a Technical Committee comprising all implementing agencies and was to be coordinated by a unit in CPNH called PRODERITH. Components included: (i) development of six pilot project areas to test administrative, technical and socioeconomic packages (two pilot areas had been studied by appraisal, Tesechoacan and Zapotal, and four others were approved by the Bank over the first two years of implementation; Acapetahua, Tantoan, Atoyac and Tizimin); (ii) agricultural research; (iii) intersive agricultural extension services; (iv) training and technical assistance; and (v) planning of future development programs for the tropics. The total project cost was estimated at US$149.0 million and the Bank loan of US$56.0 million financed 38% of total costs. III. IHPLEMENTATION 3.01 Despite a slow start, and serious budget constraints between 1982-84, project implementation was good and coordination excellent. The project successfully tested engineering techifiques, agricultural production systems and farmer organization systems which can now be replicated in the areas surrounding the pilot projects. The completion report details the physical accomplishments by component and the main results are summarized below. Pilot Projects 3.02 The pilot projects component was a success since physical progress in four of the six areas was good (Acapetahua, Tantoan, Tizimin and to a lesser extent Atoyac) and only two pilot areas failed to achieve their goals (Tesechoacan and Zapotal). However, one of these (Zapotal) began to show some improvement in 1984 and may yet be successful. The other (Tesechoacan) suffered serious local political and social problems and was cancelled in 1983. However, even in this project, conditions have begun to change and in 1985, PRODERITH re-established limited extension services to the area. 3.03 The infrastructure program in the pilot areas (27% of total costs) has made a major contribution to development of water management techniques in the tropical lowlands of Mexico. PRODERITH estimates that about 113,000 ha have benefitted and 8,500 new jobs have been generated. Drainage works and access road construction achieved 80-100% of targets, depending on the pilot area, and construction of flood control dykes exceeded targets. The drainage program started slowly due to a lack of experience and delayed the early impact of other on-farm activities such as credit and extension. However, despite these delays, after 1981 drainage construction progressed rapidly to meet its original five year goal in about three years. Unfortunately operation and maintenance of these small scale drainage works did not receive high priority until 1981/82 when a Bank mission recommended immediate action. As a result, a contract was signed in 1982 with the USDA Soil Conservation Service which proved very successful in establishing criteria for drainage infrastructure design, operation and maintenance. 3.04 The credit program (40% of total costs) disbursed quickly but not according to the original development objectives of the project. By early  - vii - 1982, the loan category for credit had been fully committed and Government had requested reallocation of funds to expand the component. However, before agreeing to this reallocation, the Bank requested an in-depth study of the project's credit activities which in mid-1983 revealed the following: (i) credit had been used for purposes other than on-farm development in support of the project's major infrastructure program which actually started in 1981; (ii) although the objective was to finance loans in the pilot areas, promoted by PRODERITH, only 18% of loans (10% of value) had been proposed this way by the end of 1981; and (iii) only about 42Z of the loans had been made even in the combined (pilot and expansion) areas since FIRA had been unable to disaggregate the project area from its larger administrative units which were based on municipalities. Despite these problems, the Bank eventually agreed in 1983 to officially permit additional financing of credit to borrowers in the expansion areas as well as the pilot areas. The reasons given for this agreement were: (i) FIRA had agreed to follow procedures which supported the objectives of the project; (ii) coordination between FIRA and PRODERITH had shown marked improvement since 1982; (iii) extension services had already begun to work in the expansion areas; (v) excellent progress had been made on reducing arrears in the pilot communities (from 95% to 5% of the communities); and (vi) the Bank wanted to increase disbursements under its loans to help Mexico through a difficult economic period and credit activities traditionally disbursed rapidly. Research 3.05 Given the inherent difficulties in establishing and strengthening research in a new agricultural zone, the project has made an important contribution. The basic infrastructure is now largely in place: three new centers have been constructed, three existing ones have been upgraded and three others are still under construction. Furthermore, although research continues to have a strong commodity orientation, the three research institutes for agriculture, livestock and forestry (INIA, INIP and INIF) have now agreed to work more closely together on a systems, or whole farm, approach to research to better serve the traditional mixed farming economy of the lowland tropics. An importantfirst step in this direction of improved coordination was the construction of a combined research center at Humanguillo in Tabasco for all three research institutes. More recently, the research institutes have also begun to work more closely with the extension services, however there is still considerable scope to improve the transfer of technology to the farm level. Extension Services 3.06 After a very slow start due to a lack of tropical experience, extension services have developed into an effective program. The basic approach used is that a PRODERITH team of extension staff, with technical, social and economic expertize, prepare a local development plan for a group of communities.2/ Farmers and community members participate in this process and productive and non-productive (social) investment requirements are included in the plan. Once priorities have been defined, PRODERITH helps coordinate the agencies providing support in infrastructure, credit, extension, health, water supply. By 1983, the extension program claimed that 32 local development plans had been prepared, 946 production groups established, 663 audio visual programs generated, and 185 communities and 28,300 families had participated. 2/ The program is an adaptation of the Plan Puebla- approach initiated in 1967.  - viii - 3.07 Production oriented extension support in the pilot areas is intensive (1 extensionist: about 100 families or 650 ha). However, experience indicates that this density is not required indefinitely and PRODERITH teams are able to move on to other areas and leave behind a density of co-erage more in line with normal Mexican levels (1:350 farmers) without causing a decline in production. Although this high density coverage is expensive, PRODERITH estimates that with support from the project's highly successful rural communications program of audio visual cassettes, the unit cost of expanding the extension program out of the pilot areas is reduced. 3.08 Although social programs were not considered important at appraisal, the PRODERITH concept of focusing on the entire needs of a conumunity, including social aspects, has been particularly successful. PRODERITH reports that about 38% of pilot area families have participated in the agricultural and social programs and in the more recently settled Tantoan area, participation has reached about 50%. The result has been an increase in direct support to entire family groups, including women and children. Training and Technical Assistance 3.09 Training of PRODERITH extension teams has been particularly successful, and many of the early professional trainees have remained with the project throughout implementation. Between 1979-83, about 500 professionals received formal, followed by in-service, training. 3.10 Technical assistance was also an effective part of the project's development effort. Consultancies were signed with: (i) FAO to provide mass media assistance which has been extremely successful and is now widely used by SARH in its general programs; and (ii) the USDA Soil Conservation Service which has made a major contribution to SARH's approach to soil conservation and drainage construction and maintenance in the tropical lowlands. Both groups have also effectively trained counterparts. Planning 3.11 Using experiences gained irn the pilot projects, CPNH's planning unit has carried out detailed feasibility studies on about 650,000 ha of the tropical lowlands which represent an area of influence of about 3.0 million ha. From these, a plan has been prepared to develop the entirE humid tropics by the year 2,000. From this, the Bank has already agreed to finance works under Chiapas .4gricultural Development Project and is about to appraise a PRODERITh II project. Disbursements and Project Cost 3.12 Despite considerable budgetary constraints between 1982-84 and a major devaluation of the Mexican currency, the US$56.0 million loan was completely disbursed by April 1986, in part due to the Bank's agreement in 1983 to finance works in the expansion area of Tantoan (after the Tesechoacan project was cancelled) and to reallocate funds to the credit component. 3.13 The revised project cost is estimated at US$134.9 million (90% of appraisal estimates). However, despite this apparent closeness in overall  - ix - estimates, appraisal values on the costs of individual components varied widely from appraisal estimates. These results are not unexpected given the pilot nature of the project and the fact that the appraisal was based on only two of six feasibility studies which eventually comprised the project. Procurement 3.14 SARH followed Its normal procedures for procurement under Bank projects which are currently the topic of critical review within the Bank. Although there was actually no ICB under rhe project due to the size and type of works carried out, SARH did split contracts into small sizes and in the initial years awarded many of these through negotiated purchase for which detailed information was not provided to the Bank. This procedure changed in 1981 after repeated Bank concerns that the aggregate limit for direct contracting (30% of total) would be quickly reached. Thereafter contracts were awarded through local competitive bidding procedures. Progress Reporting and Auditing 3.15 Progress reports were satisfactory and monitoring and evaluation procedures under the project worked well. Three audit reports were submitted for 1979-81, 1982 and 1983. Adherance to, and Changes in, Loan Conditions 3.16 Two covenants on operation and maintenance and procurement limits were not adequately adhered to, and there were five amendments to the loan agreement during implementation. Details are given in Table 5. IV. ECONOMIC AND AGRICULTURAL IMPACT 4.01 Although there was considerable variarton between pilot projects, the overall economic and agricultural impact has been substantial and the economic rate of return has been estimated at 182. Direct economic benefits to farmers include: (i) increased crop area harvested (from 20,000 ha to 68,400 ha); (ii) increased yields; and (iii) improvement in farmers' ability to cope with the vagaries of a tropical lowland environment through improved drainage and other technology provided by the extension services. Indirect benefits isclude: (i) the development of access roads; (ii) improvement in health, educational and nutritional status; (iii) improved farmer organization through the establishment of 946 production and marketing groups; and (iv) in Tizimin and Tantoan, there is evidence of reduced and/or slightly reversed rural to urban migration. Furthermore, since project beneficiaries were mainly ejidatarios and small private farmers, the project has supported Government's rural development objective of increasing real income and services to the poorer segment of the population. V. INSTITUTIONAL PERFORMANCE 5.01 CPNH and PRODERITH performed well as did the Project Technical Committee which met regularly during implementation. Even SARH infrastructure and extension departments, which in initial years were  - x - reluctant to participate, strongly supported the project after 1981. Two positive aspects also arose from the medium/long term credit component: (i) FIRA developed a more technical approach to its lending and began to work more with extension staff on loan formulation and supervision; and (ii) SARH accepted the need to include medium/lona term credit in its development programs. 5.02 Despite this overall good institutional performance, one organizational problem remains: the administrative role of PRODERITH at the SARH district level. During implementation the pilot projects either formed part of an SARH rainfed district or in some instances overlapped into two rainfr-: di3tricts. This caused occasional conflicts in lines of responsibility. Two possible solutions are now being considered for the PRODERITH II project:(i) to convert PRODERITH areas into PRODERITH districts with the same administrative responsibilities as normal SARH districts; or (ii) to make tie PRODERITH areas special units within the regulations governing districts. In the latter case, the PRODERITH resident engineer would manage special units within several districts and would report directly to the SARH state representative. V1. BANK PERFORMANCE Formulation 6.01 Given the experimental nature of the project and the inherent problems of predicting results from a pilot program, Bank performance is considered to have been good during formulation. In particular, the appraisal made a major contribution to project design and demonstrated sound judgment on the development needs of the tropical lowlands. Although the two initial pilot projects did not fully anticipate problems of land tenure, producer debt, farmer resistance to Government-sponsored programs, and the lack of institutional support to such programs in the region, these problems were largely overcome during review and implementation of the four pilot projects which were approved after appraisal. Supervi sia_ 6.02 Overall Bank supt'rvision performance was good. Continuity of stafr on supervision was goo%. with the eight supervision missions being split between two division staff members. During early implementation supervision missions pushed for strong coordination between agencies and aggressively pursued loan agreement conditions on limits for direct negotiations of contracts and eligibility of subloans rediscounted by FIRA. The Bank was also responsive to Government requests to explore possibilities to use undisbursed funds when it became apparent that the cost of the infrastructure program would be below estimates and that som- loan proceeds might have to be cancelled. 6.03 On the credit component, although the Bank's decision to permit lending to the expansior areas was appropriate, FIRA should have been requested to make good on amounts previously disbursed outside the expansion areas before continuing to receive additional loan proceeds. This was not Jane and reflects the Bank's desire to maintain high lewels of disbursements to Mexico during a difficult economic period.  - xi - 6.04 On cost recovery, although supervision missions did not enforce the need to prepare a socioeconomic study, this was not a critical problem since (a) no major irrigation works were eventually constructed under the project; (b) drainage works were mostly small scale; (c) farmers themselves appeared to be carrying out some maintenance on drains; and (d) the USDA Soil Conservation Service consultants were studying various options on how to implement an operation and maintenance program. VII. CONCLUSIONS AND LESSONS LEARNED 7.01 The project was a success. This was due in part to sound, continuous management supported by a highly motivated young cadre of field personnel who had grown and gained experience on the job, and in part to the Bank's creative role at appraisal and responsiveness and continuity duriug supervision. 7.02 The following lessons were learned which can be divided into two categories: (a) successful aspects; and (b) aspecrs in need of improvement or change: (a) Successful Aspects: (i) infrastructure, extension and social packages developed under the project were replicable; (ii) project management and coordination was excellent and this in turn greatly helped implementation; (iii) initial high levels of extension coverage used in the pilot areas (about 1 extension worker:100 farmers) helped gain experience and acceptance of new technology; (iv) the approach to extension is compatible with the on-going countrywide move towards strengthening extension services in Mexico; and (v) well-focused, properly selected consultant support directed at priority programs was sucessful (especially in soil conservation and rural communications). (b) Aspects in Need of Improvement or Change: (i) marketing constraints should have received greater importance in the long term planning of local development schemes; (ii) SARH procedures on design, contracting and supervision of infrastructure works in arid/semi-arid irrigated areas need adjustment in order to work effectively under lowland tropic conditions; (iii) the small credit component could not be effectively controlled to ensure that funds were provided for on-farm development activities  - xii - in support of the project's infrastructure program. Consequently, a free standing credit project would have been a more appropriate vehicle for such general credit supply; and (iv) research and extension in the Mexican tropics need to focus more on a systems, or whole farm approach, which integrates crop, livestock and forestry activities. Next Steps 7.03 The PRODERITH concept is now ready to move into an expansion phase around the pilot areas. This is appropriate given the good performance of the pilot projects and the fact that: (i) institutional coordination is working well; (ii) the responsibilities for operations have been decentralized to the state level; (iii) there is a nucleus of trained staff in place; (iv) the importance and method of establishing farmer organization has been accepted at the field level; (iv) research and extension have begun working more closely together; and (vi) plans have already been prepared to develop an additional one million hectares in the tropical lowlands. Consequently, the Bank has agreed to appraise a second phase project in mid-1985. This PRODERITI II project would also include a component to establish additional pilot projects to test the concept in new areas. This would carry on the process of studying new areas before entering into full scale development programs. May 31, 1985  MEXICO TROPICAL AGRICULTURE DEVELOPMENT PROJECT (LOAN 1553-ME) COMPLETION REPORT: OVERVIEW Project Cost Appraisal Estimate Actual Estimate Actual/Appraisal Local Foreign Total (Total) (2) ---------------