Guinea - Gueckedou Agricultural Development Project

Document o. The World Bank FOR OFFICIAL USE ONLY Coy # 3;-- #C , Report No. 5581-GUI STAFF APPRAISAL REPORT REPUBLIC OF GUINEA GUECKEDOU AGRICULfURAL DEVELOPMENT PROJECT November 7, 1985 Western Africa Projects Department Agriculture A 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 Currency Unit = Syli (GS) US$1 Sylis 250 a/ Sylis 1.00 US$0.0526 WEIGETS AND MEASURES 1 meter = 3.28 feet 1 square meter (W2) = ln.76 square feet (sq.ft) I cubic meter Cm3) = 35.30 cubic feet fcu.ft) 1 kilogram = 2.205 pounds (lb) 1 metric ton 0 0.98 long tons 1 kilometer = 0.62 miles 1 hectare = 2.47 acres ABBREVIATIONS AND ACRONYMS AfDF - African Development Fund ALIMAG - Natfonal Enterprise for Distribution of Cereals BNCP - Bureau National des Commergants Prives (National Bureau for Private Traders) BNDA - Banque Nationale de Developpement Agricole (National Bank for Agricultural Development) CCCE - Caisse Centrale de Cooperation Economique (French Aid Agency) EEC - European Economic Community EPCOA - Entreprise PrEfectorale de la Commercialisation Agricole (Regional Agency for Produce Marketing) FAPA - Ferme Agro-Pastorale d'Arrondissement (District Collective Farm) FRUJITEX - National Enterprise for Fruit Exports DPDRG - Gueckedou Prefectoral Directorate of Rural Development (Direction Prefectorale de Diveloppement Rural de Gueckedou) IFAD - International Fund for Agricultural Development IITA - International Institute for Tropical Agriculture IRAT - Institut de Recherche Agricole Tropicale (Institute for Research on Tropical Agriculture) MDR - Ministry of Rural Development ONADER - Operation Nationale pour le Developpement de la Riziculture (Rice Development Agency) ORG - Operation Riz Gueckedou (Gueckedou Rice Operation) PPF - Project Preparation Facility PROSECO - National Enterprise for Export of Agricultural Products (except Fruits) SAC - Structural Adjustment Credit UPC - Union Prefectorale des Commercants WARDA - West Africa Rice Development Development Association GOVERNMENT FISCAL YEAR January 1 - December 31 a/ The official exchange rate at appraisal in April 1985 was US$1 = Sylis 24.4. From October 1985, the Guinean currency has been floating according to a market-determined rate, which on November 1, 1985, stood at US$1 = 265 Sylis.  FOR OMCIAL USE ONLY GUINEA GUECKEDCU AGRICULTURAL DEVELOPMENT PROJECT TABLE OF CONTENTS Page DOCUMENTS CONTAINED IN PROJECT FILE ........... .............. iii CREDIT AND PROJECT SUMMARY ........... ....................... v GUINEA BASIC DATA SHEET . .................................... viii I. INTRODUCTION .1 II. THE RURAL SECTOR .1 A. Country Background .I B. Sector Characteristics, Objectives and Strategy .. 2 C. Agricultural Services and Institutions. 4 D. The Rice Development Project. 6 E. Sector Lending Strategy and Rationale for Bank Involvement .10 III. THE PROJECT ........................................... 11 A. The Project Area .......... ....................... 11 B. Project Objectives ......... ...................... 13 C. Project Description ........ ...................... 14 D. Detailed Features ................................ 14 1. Management and Administration .... ......... - 14 2 Fxtension, Training and Research .15 3. Seed Production and Treatment .16 4. Land Development. Rural Roads and Garage 17 5. Input Supply and Agricultural Credit .17 6. Technical Assistance, Consultants and Fellowship Program .18 IV. PROJECT COSTS AND FINANCING .19 A. Ccst Estimates .19 B. Financing .21 This report is based on the findings of a Bank Appraisal Mission consisting of Messrs. J. Baah-Dwomoh, D. Drayton, A. Bab (IDA Staff - Western Africa Projects Department) and Mr. M. Neave (consultant). Ms. M. Nguyen (IDA) joined the mission in the field and assisted it. Secretaiial work was done by Mrs. C. Asare. Figures were checked by Mr. Sinodinos. This document has a restricted distribution and maay be used by recipienzs only in the performance of | their of!icial auties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - C. Financing Procedures and Revolving Funds ......... 23 D. Procurement and Disbursement ..... ................ 24 E. Accounts, Audit and Reporting Requirements ....... 26 V. PROJECT IMPLEMENTATION ............................... 27 A. Organisation and Management ..... ................. 27 B. Organisation of Extension and Training, and Staffing .................................... 28 C. Credit Organization and Administration ............. 29 D. Monitoring and Evaluation ........................ 31 E. Recurrent Cost Coverage after Project Implementation .................................. 31 VI. PRODUCTION, MARKETS, PRICES AND FARMER BENEFITS ....... 32 A. Technical Packages .................................. 32 B. Production and Yield Summary .. 35 C. Consumption, Markets and Prices ..... .............. 39 D. Impact on Farmers'Incomes ...... ................... 42 VII. PROJECT JUSTIFICATION AND RISKS . .45 A. Direct Benefits.... 45 B. Other Benefits ..... 45 C. Economic Analysis . . ...45 D. Economic Rate of Return and Sensitivity Analysis .. 48 E. Risks ....49 VIII. AGREEMENTS REACHED AND RECOMMENDATIONS . .50 ANNEXES 3-1 Training Plan 3-2 Agricultural Credit Program 3-3 Consultant Services 3-4 Study Trips and Short-Term Attachments 4-1 Siummary Costs (DPDRG) 4-2 Su-ary Costs (INCREMENTAL) 4-3 ORG1 Recurrent Cost Summary 4-4 Quarterly Disbursement Forecast 5 Organization Chart 6-1 Production Summary 6-2 Farm Enterprise Budget-Rice 6-3 Farm Enterprise Budget-Coffee Rehabilitation 6-4 Farm Enterprise Budget-Coffee Plantation 6-5 Farm Enterprise Budget-Groundnuts & Cassava 7-1 Key Assumptions and Parameters used in Economic Analysis 7-2 ERR - Sensitivity Analysis  - iii - GUINEA GUECKEDOU AGRICULTURAL DEVELOPMENTT PROJECT SUPPORTING DOCUMENTS A. Project Workinp Papers (Available from WAPA A) 1. TECHNICAL 1.1 Extension System 1.2 Training 1.3 Seed Production 1.4 Input Use 1.5 Area, Yield and Production Development 1.6 Rural Works Component 1.7 Rapport d'Evaluation, Genie Rural et Am6nagement 2. PROJECT COST TABLES 2.1 Summary Project Costs (DPDRG) 2.2 Summary Project Costs (INCREMENTAL) 2.3 Summary Recurrent Costs (ORG) 2.4 Investment (DPDRG) 2.5 Vehicle and Equipment Replacement Costs (ORG) 2.6 Fuel Costs (DPDRG) 2.7 Non-Fuel Operating Costs (DPDRG) 2.8 Recurrent Operating Costs (ORG) 2.9 Personnel Costs (DPDRG) 2.10 Personnel Costs (ORG) 2.11 Agricultural Credit 3. FARM BUDGET ANALYSES 3.1 Farm Enterprise Budget - Rice 3.2 Farm Enterprise Budget - Groundnuts and Cassava 3.3 Farm Enterprise Budget - Coffee Rehabilitation 3.4 Farm Enterprise Budget - New Coffee Plantation 4. ECONOMIC ANALYSES 4.1 Economic Analyis Table 4.2 Sensitivity Analysis 5. FINANCIAL ANALYSES 5.1 Financial and Accounting Arrangements 5.2 Agricultural Credit and Input Distribution - Procedures  - iv - 6. TERMS OF REFERENCE - EXPATRIATE STAFF B. Additional Supjporting Documents 1. Guinea Agricultural Marketing Survey 2. ONADER - Etude de la Factibilite de la Deuxieme Phase (1985 - 1989, 3. ONADER - Etude de la Factibilite de la Deuxieme Phase Dossier Complementaire 4. Supervision Reports - CR 952-GUI 5. Etude de la Rehabilitation de la Cafeiculture dans la Region de Gueckedou 6. Stage de Formation sur l'Introduction du Systame de Vulgarisation "Formation et Visites" dans l'Operation Riz Gueckedou (O.R.G.) 7. Operation Riz Gueckedou: Organisation du Monde Agricole.  -v- GUINEA GUECKEDOU AGRICULTURAL DEVELOPMENT PROJECT CREDIT AND PROJECT SUMMARY Borrower: Republic of Guinea. Beneficiary: - Ministry of Rural Development. Credit Amount: SDR 6.7 million equivalent (US$6.6 million equivalent). Terms: Standard Cofinanciers: African Development Fund (AfDF) and International Fund for Agricultural Development (IFAD). ProJect Description: The proposed project is a continuation of the pilot component of the IDA and AfDF financed Rice Development Project (Cr. 952-GUI). It aims at increasing the productivity of smallholders in food and cash crop production by expanding the scope and area of the first phase and introducing technical packages for coffee, groundnuts and cassava, and by strengthening the Gueckedou Prefectoral Directorate of Rural Development. These objectives would be achieved through; (a) providing extension services for 16,000 farm families involved in cultivation of swamp and upland rice as well as other rainfed and perennial crops; (b) providing training for Guinean staff and supporting agricultural research to test and introduce new technical packages, (c) strengthening the management and administration of the prefectoral service; (d) seed processing and distribution to farmers; (e) development of some 2,000 ha of swamp land through low cost irrigation works, and upgrading of 240km of rural roads together with their maintenance as well as maintenance of 260km of existing roads; (f) providing agricultural inputs to farmers through credit; and (g) technical assistance, consultant services and short and medium term fellowships for project staff.  - vi - Benefits and Risks: The main direct project benefits would be the increased production of rice, other food crops and coffee as well as the opening up of the rural areas through the road construction and maintenance component. The project would help test an institution building framework for strengthening the regional agricultural services, now being contemplated in the country as a whole. Additional benefits are expected from testing and establishing simple technical packages for coffee, groundnuts and cassava. Apart from the risk of drought which could lower production levels for the rainfed crops, the main risk, namely that the increased prices of fertilizer and farm inputs following the monetary adjustment might discourage farmer use of-modern inputs, would be met through the project's credit system. The new internal management system would aid the introduction and control of project credit and reduce the risk of credit abuse. Close project supervision and the credit study in the third year of the project would monitor its effectiveness and examine the transfer of credit tasks to the new banking institution which the Government will be creating during 1986. Estimated Costs 1- Local Foreign Total - S-ITS$ million--- 1. Kanagement and Administration 0.9 1.9 2.8 2. Extension Research and Training 0.9 1.1 2.0 3. Seed Production Unit 0.6 1.9 2.5 4. Land Development, Roads and Workshop 0.8 1.8 2.6 5. Agricultural Inputs 0.6 3.3 3.9 6. Technical Assistance, Consultants Fellowships, Studies and Audit - 4.1 4.1 Total Base Costs 3.8 14.1 17.9 Physical Contingencies 0.2 1.2 1.4 Price Contingencies 2.1 3.8 5.9 Total Project Costs 6.1 19.1 25.2 Project would be tax exempt  - 'vii - Proposed Financing Plan Local Foreign Total -- US$ million - IDA - 6.6 6.6 AfDF 0.7 5.8 6.5 IFAD - 5.0 5.0 Government/Farmers 5.4 1.7 7.1 Total 6.1 19.1 25.2 Estimated IDA Disbursements IDA Fiscal Year 1986 1987 1988 1989 1990 1991 1992 US$ million Annual 0.3 1.2 1.4 1.2 1.1 1.2 0.2 Cumulative 0.3 1.5 2.9 4.1 5.2 6.4 6.6 Economic Pate of Return: 232 Maps: IBRD 18935 IBRD 18936 WAPA A November 1985  - viii - GUINEA BASIC DATA SHEET FOR THE AGRICULTURAL SECTOR Unit 1974-76 Av. 1981 1. Population Total M 4.7 5.6 Rural as Z Total Z 84 80 Rural Families '000 611 720 2. Economic Overview GDP/Head of Total Population (constant 1981) $ 320 303 Agric. GDP/Head of Rural Population $ 164 155 Agricultural GDP as 2 of Total Z 43 41 3. Land Use Land Area sq. km. 246 246 Perennial Crops '000 ha 131 135 Annual Crops '000 ha 912 1267 4. Outputs 1/ 74-75 Av. - 100 1. Rice " 100 105 2. Fonio " 100 240 3. Cassava e 100 120 4. Coffee 100 45 5. Inputs Fertilizer '000 tons n.a. 0.5 6. Trade (Current Prices) Total Exports (F.O.B.) $m 186 496 of which: Agricultural Products X 5.4 1.0 of which: 1. Palm Kernels x 35 32 2. Coffee % 25 45 3. Pineapple X 31 6 Total Imports: Sm 257 423 of which: Agricultural Products Z 9 16 1. Rice x n.a. 43 2. Vegetable oil 2 n.a. 9 Agricultural Inputs X n.a. n.a. 7. Government Expenditures Total Recurrent Budget $tm 212 336 of which: Agriculture Z n.a. n.a. Total Capital Budget $m 174 274 of which: Agriculture 2 17 4 1/ Volume indices n.a. Not available  GUINEA GUECKEDOU AGRICULTURAL DEVELOPMENT PROJECT I. INTRODUCTION 1.01 The Government of the Republic of Guinea has requested IDA's assistance in financing the second phase of an agricultural development project in Gueckedou region of Guinea's forest zone. The project would follow up and expand on the pilot component of a Rice Development Project that became effective in April 1980 and for which disbursements are expected to be completed by the end of 1985. The pilot project covered a relatively small area of Gueckedou region but has demonstrated that a larger scale development based on the simple technical package introduced Is possible in the area. The follow-up project then, would seek to; (i) increase the area. number of farmers and productivity of suallholders in rice production as vell as production of coffee, and introduce pilot production activities in groundnuts and cassava in the whole of Gueckedou region and a small part of Kissidougou region through the provision of improved agricultural services; (ii) reactivate and strengthen the existing Gueckedou regional rural development service; and (iii) continue the applied research and training of Gulnean staff started in the first phase project. Project preparation began in April 1983 by consultants and was substantially completed by February 1984. On the basis of a review of the preparation report and following a change in Government In Guinea the consultants revised the report and submitted a final report to Government and IDA at the end of September 1984. Government then requested that the project be appraised. The appraisal was carried out by the Bank's Regional Mission in Abidjan in October 1984. II. THE RURAL SECTOR A. Country Background 2.01 Guinea has a land area of some 246,000 sq. km and an estimated population of 5.8 million growing at 2.8% per annum as of 1983. Despite excellent mineral and agricultural resources and a vast agricultural potential, the economic performance over the past several years has been poor with per capita GDP growth of 0.4Z per annum between 1973-1981 and a 1983 per capita GDP of US$300. 2.02 The main reasons for Guinea's poor economic performance started with the abrupt termination of relations with France at independence in 1958, followed by an isolationist policy along socialist lines without the benefit of a transition period and a back-up of technical assistance support and adequate macro and sectoral planning. Formerly productive sectors declined rapidly, the institutional base deteriorated and monetary pressure induced creation of its own currency, the syli, and subsequent rapid over-valuation. Government controls on trade and price levels  -2- resulted in major economic distortions; and lack of incentives particularly in the rural sector, as well as Government regulation that all agricultural products be marketed through state agencies caused stagnation of the economy and a reversion to subsistence farming in rural areas. Despite the emergence of bauxite and other mineral exploitation, revenues were used for inappropriate investments in inefficient public sector ventures, for promotion of various kinds of collective farms and mechanization and for financing a rapidly growing public sector payload. Guinea currently has serious balance of payments and debt servicing problems and the economy has been characterised by extreme dualism where there exists two parallel sectors, one in which transactions are carried out at an overvalued exchange rate and an unofficial sector where transactions take place at a parallell exchange rate ten to twelve times the official level. The official sector accounts for an estimated 28% of GDP and 45% of the monetized sector. Since the overthrow of the old regime in April 1984, the new Government is determined to reverse the poor economic showing. Additionally there is a dearth of trained technical and professional manpower and a general lack of institutional and managerial capacity and technical data with which to launch a rapid recovery. 2.03 To help resolve some of these problems, IDA has just extended a credit for a Technical Assistance Project for Economic Management (Cr. 1559-GUI) to assist the core economic management ministries. IDA has also appraised an Agricultural Services Project that would provide some technical assistance for planning and investment review in the agricultural sector. Another priority area being tackled by Government, the Bank and IMF is the correction of macroeconomic distortions through a major economic program, for which an IDA Structural Adjustment Credit and a Standby Agreement are about to be negotiated. B. Sector Characteristics, Objectives and Strategy. 2.04 Characteristics. Guinea's rural sector has a diverse ecological base with the potential for producing a large part of the country's needs in rice and other food crops as well as producing large quantities of coffee, cotton, copra, bananas, pineapples and other fresh fruits and livestock for local consumption, processing and export. At independence, agricultural commodities accounted for about 58% of export receipts with food imports making up just about 12.5% of agricultural export receipts. Between 1976-81 however agriculture contributed only about 3% to export receipts and the value of food imports exceeded that of agricultural exports by an average of US$ 35 million per annum or 2.3% of GDP 1/. Agriculture still provides a livelihood for about 80% of Guinea's 1/ For detai'ls on trends in agricultural export receipts and imports, see Agricultural Sector Review. Report No.GUI-4672 of April 15, 1984.  population but its contribution to GDP has fallen from 46Z in 1973 to 41% in 1982. At the same time food crop production has not kept pace with population increase and food imports now represent about 16% of total imports. 2.05 Rice is the dominant crop in Guinea in all regions except in the imf-verished soils of Guinea's upland plateau, the Fouta Djalon, where it takes second place in area terms to small millet, "fonio', (Digitaria sp.). Rice is Guinea's main food staple and national production is estimated at about 400,000 tons paddy per year. Until the recent change in Government (April 1984) and abolition of compulsory marketing through state agencies, most farmers preferred to produce for home consumption with only minor quantities going into either loc&l parallel markets or through Government's official marketing structures. 2.06 There are three main ecological zones for rice production: a) the forest region, which includes the area of the pilot component of the ongoing Rice Development Project, is suited for rice production both in the uplands, where rainfall is fairly reliable, and in the many small valley bottoms ("bas fonds") ideally suited for simple water-control techniques; b) the tree savamnah area of Upper Guinea with its many tributaries of the Niger-Tinkisso basin is a producer of both rainfed rice and of river-plain flooded rice; and c) the mangrove swamps along the Maritime Region where saline marsh rice is grown. However the lack of proven and reliable technical packages and inputs as well as the absence of an extension effort focused on the smallholders in the maritime and the savannah regions has meant that the potential for developing rice production in these areas is underdeveloped. In both the maritime and savannah regions the Rice Development Project financed research activities aimed at developing suitable technical packages for these zones (para 2.19). An Agricultural Services Project, recently negotiated, would supervise research activities and a first effort at extension for mangrove and sweet water rice in the Koba area of maritime Guinea to be financed by the European Economic Community (EEC), while the French Aid Agency, the "Caisse Centrale de Cooperation Economique" (CCCE) and the EEC are financing a cotton-food crop project including development of rice and other cereals in the savannah region. 2.07 Objectives and Strategy. The main objectives in the rural sector, as they are evolving under the new regime, are to promote cereal production for food self-sufficiency, to increase export production, and to raise the standard of living of the rural population. These objectives reflect the recommendations of the recent Agricultural Sector Review Report (No. GUI-4672) prepared by the Bank Group. Because of several years of neglect of agriculture, a number of issues remain to be resolved to permit an expansion of rural sector activities. The main issues affecting the sector include: (1) inappropriate pricing and marketing systems for agricultural products;  - 4 - (ii) the complete absence of effective and functional agricultural services for farmers (such as extension, research, input supply, credit); (iii) an overstaffed Mlnistry with poorly trained personnel and ill-adapted structures; and (iv) lack of resources to permit a properly functioniug rural development Ministry. 2.08 The strategy being adopted by Government to resolve these issues is still evolving but includes measures; (a) to improve smallholder agriculture, through services and incentives to farmers and free marketing of produce; (b) to reorganize and streamline agricultural services (extension, research, credit etc.) and concentrate such services on smallholders; (c) to improve rural infrastructure, develop the country's irrigation potential, and make agricultural inputs avalable to smaliholders; and (d) to develop the planning, investment review and supervision capability of the central Ministry and establish a properly functioning central Ministry. These measures arn being supported by IDA through the proposed project. an agricultural se.-rvices project, a recently apPraised SAC. and a study of services in the agricultural sector aised at identifying programs for extension and other services for the rural population (para 2.10). C. Agricultural Services and Institutions 2.09 Administrative Structure. Until the change in Government in April 1984. three Ministries were responsible for rural development in Guinea. These were the Ministry of Agriculture and Forestry, MKbistry of FAPAs (District Collective Farms or "Fermes Agro-Pastorales d'Arrondissement"), and Ministry of Livestock and Fisheries. In April 1984 the Mlnistry of FAPAs was merged with Agriculture, and In an administrative reorganization in December 1984 a single Ministry of Rural Development (MDR) was created merging the then Ministries of Agriculture and Livestock. The new Ministry has three State Secretariats under it responsible for Agriculture and Livestock, Water Resources and Forestry, and Fisheries. In addition to the State Secretariats, there is a Secretary General whose role is to coordinate all rural development activities and to advise the Minister on strategy. This single Ministry will be responsible for all aspects of rural development. The field level structure, described below, however has not been touched and in theory remains as before the merger of the three Ministries responsible for rural development. 2.10 Administratively the country is divided into 8 provinces, subdivided into 33 "prefectures" which in turn are divided Into "sous-prefectures" and finally districts that form the basic administrative unit in the country. A General Directorate for Production, with technical  -5- departments for Agriculture. Fisheries, Livestock, etc. is responsible for rural development at the provincial level. At the prefecture level there is a Secretary General for rural development reporting primarily to the "prefect" and responsible for coordinating the activities of technical directorates for Agriculture, Livestock, Research, Forestry, Conditioning, Rural Works etc. These technical directorates depend administratively on the prefecture but report on technical matters to the provincial directorates. At the sous-prefecture level, are units called sectors made up mainly of staff of the former Ministries of Agriculture and EAPA, but with responsifilities that are imprecise. At the district level, there is one agent of the Ministry of Agriculture plus agents of the former FAPAs. With the mezger of all the ministries responsible for rural development, all the agents have reverted to the Ministry of Rural Development but their duties ha'e not yet been redefined. The new Mlinistry is seeking to define better tbh field level structure and has asked IDA to finance, through a PPF advan:e, a study that would propose a work program for the rural sector for each of the seven provinces of the country over the next ten years and estimate the manpower and financial needs to carry out such a program. To ensure thlat the work program is efficiently carried out, the study, which began li October 1985, would propose an organizational structure for MDR to cover field level operations as well as to create a fully functional headquarters with competent services, skilled staff and coordinated services and the study would propose ways of privatizing as many agricultural services as possible. Another output from the study would be a recommendation on ways to integrate externally funded projects into the administrative and organizational structure of HDR as is being done in the proposed project. 2.11 Agricultural Research. Except for recent research efforts undertaken in externally financed projects such as the ongoing Rice Development Project, agricultural research has been completely neglected in Guinea since independence. Guinea's main research stations, except for those under the Rice Development Agency, ONADER, which was set up under the Rice Development Project (para 2.19), have been short of equipment and operating funds and all the stations have insufficient trained staff. Besides, agricultural research work in Guinea is not well coordinated since some of the stations are under the Ministry of National Education while others are under the MDR, without any mechanism for coordinating actions between the two Ministries. 2.12 The main research effort up to now has been devoted to rice and the principal stations that have been involved are the three stations created or taken over by ONADER, under the ongoing Rice Development project (Baro, Kamalo and Koba). In these stations, work is being done on irrigated. rainfed, floating and mangrove rice. Through the project, contacts have been established with international research centres such as WARDA, IITA and other centres, thus opening up the country to international agronomic research. Apart from the ONADFR stations, the main research centres include the Institut Valery Giscard d'Estaing at Farana, the Yatiya Rice Centre, the agronomic Institute at Bordo near Kankan, the Foulaya  -6- Institute, and the Sanfonia college near Conakry. However the lack of equipment, infrastructure, operating funds and more importantly trained staff, as well as a well-defined program have led to only piecemeal research work in these centres. A program to definve research and financial needs at the national level is clearly needed, and the Bank will help in this through the upcoming agricultural services project. 2.13 Agricultural Extension. Responsibility for extension activities before April 1984 was in theory shared by Ministry of Agriculture field level staff and the FAPAs. In practice however there was no effective extension provided to smallholders, except in the case of rural development projects such as the IDA-assisted Rice Development Project. The main reason was Government's emphasis on collective farms and neglect of smallholders, but other important reasons were the lack of resources for the Ministry of Agriculture, absence of research results that could be easily extended, and the inability of the FAPAs to perform even their primary role as production units and hence their neglect of the extension role assigned to them. With the creation of a single Ministry for Rural Development in December 1984, responsibility for extension rests with this Ministry. However, field level structures remain as before, agricultural agents have no training or experience in extension. and they have no operating means with which to do extension work. The upcoming study on national agricultural services (para 2.10) would help improve the situation. D. The Rice Development Project (Cr. 952-GUI) 2.14 Objectives and Design. The Rice Development Project was designed as a five year first phase project aimed at: (i) improving sectoral planning, studying agricultural prices and incentives, and restarting agricultural research at the national level; and (ii) preparing a pilot rice development project called Gueckedou Rice Operation, ORG, in a part of Gueckedou region in Guinea's high potential forest zone. 2.15 Project Description. The project had a National Component that consisted of; (a) the establishment of a specialized Rice Development Agency - Operation Nationale pour le Developpement de la Riziculture "(ONADER)" - within the Ministry of Agriculture for planning and. coordinating rice development and for acting as executing agency for the project; (b) a study of rural prices and incentives; and (c) applied rice research at three stations: Kamalo, near Gueckedou in the forest region, Baro in Upper Guinea, and Koba in Maritime Guinea, each representative of one of the three main rice growing ecological zones in Guinea; and a pilot rice development project, ORG in the Gueckedou Region for improvement of swampland and upland rice productivity on some 2,700 family farms. 2.16 The ORG, unlike the Bank's first venture in Guinea's rural sector, the enclave Daboya Pineapple Project (para 2.23), set out to make inroads on development of what was then and still is regarded by the Bank  - 7 - as Guinea's key resource in the rural sector, smallbolder agriculture. As such project design was a novelty for Guinea, whose main emphasis was on collective agriculture, and met some opposition during appraisal and early supervision. Collectives or state farms were substituted by a smallholder orientation; manual labor was favored over mechanization; and the technical package promoted low cost yield improvements using simple technology (improved seed, fertilizer, simple water control, and simple crop husbandry improvements) and was based on proven experience in similar ecological areas. The key concept was for development of technically and economically viable methods for improving productivity which could, if successful, be readily applied to a larger number of farmers. This approach also involved establishment of the usual range of support services in the pilot project area (management, research, extension, seed multiplication, feeder roads, extension, training, credit, monitoring and evaluation) many of which were themselves novelties in terms of practical implementation for Guinea. 2.17 Experience with the Rice Devel.2pn!ento tject. Project implementation started in 1980 and despite particularly difficult initial years the ORG component especially, has been able to achieve a reasonable part of the objectives set at appraisal. The economic rate of return (ERR) for the pilot phase has been reestimated at lIZ compared to i2.8Z at appraisal. The slightly lower ERR is due mainly to lower real prices for rice. The table and graph below give a summary of key project achievements. Key Project Indicators (ORG) Appraisal Estimated Estimated as Target (PY5) Actual (1984) Z of Target Participating Farmers Upland 2,700 3,011 112 Swamp 1,400 1,112 79 Areas Developed Upland 4,050 3,630a/ 90 Swampland 700 580- 83 Yields (tons/ha) Upland 1.25 1. 3-' 104 Swampland 2.6 2.2b/ 85 Rural Roads (Cumulative km) Roads rehabilitated 63 202.5 321 Roads maintained - 136.5 - a/ of which about 120 ha is double-cropped. b/ These are estimates made in the third year of project field level implementation (1983).  -8- FARMER PARTICIPATION ORG 3.2 ,000 FARM FAcAUES 3 2.06 2.65 2.4- 2.2- 2- i.2 - 0.8 ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~; 0.6 oft 1081 oft 1 63 1O 20 APPPAMSA TAR . ACTUAL 2.18 In reading the above table it should be noted that field level activities did not start until 1981. the second project year, and hence 1984 which should be PY5 would in reality refer to the fourth year of field level implementation. Targets for 1985 season, the fifth year of project implementation, exceed the appraisal estimates for PY5 in terms of areas developed. Particularly impressive in the ORG component has been the level of farmer acceptance and enthusiasm with the project's technical package and their willingness to construct, in their swamplands, simple water control systems with their own family or hired labor. At appraisal, only half of the swampland improvements had been envisaged this way, with project machinery being used for the other half but in practice almost all swamplands are developed using labor intensive methods. Further, double cropping of swamplands, not expected at appraisal, is already being done on at least 20Z of the bottom lands. 2.19 With respect to the other project components, the consultants' study on rural prices and incentives was completed on schedule and has served as a key element in subsequent agricultural policy discussions with Government and an important data base for the recent Agricultural Sector Review Report (Report No. GUI-4672 IBRD). Agricultural research in the project represents the only ongoing and active research activities in the country and has provided satisfactory results at Gueckedou even though results at the other two stations, Koba and Baro, have not yielded readily applicable  - 9 - technical packages. A combination of inappropriate objectives (inadequate orientation of most trials to farmer needs), logistical difficulties and eco-climatic setbacks (floods, droughts) have retarded progress towards the development of sure technical packages for these two regions. ONADER itself as an institution has only partially fulfilled its objectives. Management inexperience and inefficiencies, a dearth of trained national staff, and high technical assistance staff turnover have limited ONADER's capacity to do much more than keep the project's field components going. ONADER's role as a rice sector planning and coordinating unit has therefore been limited, tbough it has been instrumental in opening up contacts witb a variety of international agricultural research agencies and, following the government change, has started getting involved in Ministry activities especially in socio-economic studies, strategy development and investment review. 2.20 One of the key risks envisaged at appraisal concerned Government interference in produce marketing. In reality, this did not pose a problem and generally farmers were able to sell on the parallel market. Project Management on the other hand, still performs poorly in a number of areas, including forward planning, accounting, financial management and financial control despite the fact that they have acquired some experience through the project. 2.21 A detailed review of agricultural credit activities in ORG has also revealed a number of shortcomings in credit procedures and recording, with credit accounting being one of the problem areas of the project. Credit recording was particularly poor for the 1983/84 season and out of some 300 tons of fertilizer distributed, about 80 tons had not been recorded by the Credit Department at the time of appraisal in October 1984. An external audit proposed by the appraisal mission was completed in July 1985 and the audit report estimates that about half the inputs given out had been badly recorded and repayments for them may be difficult. These problems have been due, in large part to the shortage of well-trained and experienced staff, and the absence of financial and internal control procedures. The remoteness of the project area (700 km from Conakry) has also meant that the project has had to provide all its support services, with the consequent overburdening cf an inexperienced management and staff. There were continual difficulties for the Guinean administration in accepting and working with technical assistance staff, with resultant high technical assistance turnover and recruitment difficulties and hence the technical assistance staff have had little impact in improving management procedures. 2.22 These project difficulties have however been of the sort that can be expected for a start-up program in a country such as Guinea that had been closed to the outside world for so long. Despite these difficulties, the project has been instrumental in providing some much needed training and experience for local staff, though there is still much to be done in this area. The proposed project would build on this modest start and its  - 10 - design includes measures to improve management performance, especially in financial and credit administratior (para 4.12). This project would now concentrate on developing the Regional Agricultural Service as a whole to form a working model for other regions. The ONADER and research components are to be continued in the appraised Agricultural Services Project (para 2.03). 2.23 Agricultural Sector Lending. Apart from the Rice Development Project (FY80), that is described in paras 2.14 to 2.22 above the Bank Group has financed two other projects in Guinea's rural sector. The Daboya Pineapple Project (FY76). involving the development of an industrial estate with some outgrowers, was completed to satisfactory technical standards but since its completion has experienced foreign exchange financing, input supply and output marketing problems. Attempts to involve a foreign partner in the project have not been successful because of past Government macro economic policies, but with the reforms planned by the new Government it would be possible to privatize the project entity to increase production and exports from the project. A Livestock Development Project (FY81) focussed on cattle health through upgraded veterinary services. The project was cancelled in September 1983 because of Government failure to dismantle the state livestock marketing agency as had been agreed under the credit. The new Government has however dissolved the agency and asked IDA to prepare a new livestock project aimed at rehabilitating the sector as a whole. This new project was appraised in April 1985. The Bank Group has also appraised the above-mentioned Agricultural Services Project to upgrade planning, investment review and data collection in the Ministry of Agricultural Development and is undertaking a study on national agricultural services to improve extension and related services under a PPF (para 2.10). This could result in a second Agricultural Services Project. 2.24 Sector Strategy. Government policy under the Sekou Toure regime was generally to favor collective farming, and any departures from this were not easily accepted by the Government. Since 1980 the Bank has sought to change this approach by encouraging Government to concentrate on smallholders through the Rice Development Project (Cr. 952-GUI). The strategy worked well and even the old Government began to accept this approach as a viable alternative to collective agriculture. Through the same project the Bank was able to undertake a rural incentives study that laid the groundwork for a comprehensive agricultural sector review done in 1983 (para 2.19). With the new Government's determination and commitment to improve the performance of the Guinean economy, and its emphasis on smallholders, this approach would be applied to the whole sector. In addition to the focus on smallholders, the Bank's strategy now recognizes the opportunity to introduce wide ranging policy and organizational reforms  - 11 - and this is being done through the proposed project as well as the SAC. The main objectives of the Bank's rural sector strategy then would be to: (i) seek to increase productivity of smallholders in both food and export crop production, with an early focus on rice, coffee and other rainfed crops as well as fruit crops; (ii) push for satisfactory incentives for farmers, while seeking structural charnges in the long run; (iii) enhance the Government's capabilities for policy formulation, investment planning and project identification and preparation; (iv) improve overall organization of rural development services including manpower and structural planning of the Ministry of Rural Development and to help create effective and efficient field level support services (extension, research, data collection, monitoring and evaluation, credit, input supply etc.). 2.25 Rationale for Bank Involvement. The proposed project, the Gueckedou Agricultural Development Project started off as a pilot activity to see what could be done in developing smallholder agriculture. It demonstrated that this could be done. Both the Government and IDA see it as a regional organizational model for development in other regions, especially with the proposed merger of the pilot project unit, ORG (Operation Riz Gueckedou) and the existing regional Service of Rural Development in the project area (para 5.01). This integration of ORG and the regional service would reinforce the existing administrative service and avoid parallel structures in development, a key aspect of IDA's development strategy that it hopes to realize through the above-mentioned study on national services for the rural sector. In this second phase Gueckedou project, apart from continued emphasis on smallholders, the promotion of low-cost replicable techniques, emphasis on adaptive research and essential services such as extension, credit, and seed multiplication and treatment, are key ingredients of our strategy. The pioneering role that IDA has played in developing smallholder agriculture in Guinea as well as the increasingly productive dialogue on rural sector organization, have created a sound basis for IDA support for the project. III. THE PROJECT A. The Project Area 3.01 Location. The proposed project would be in the forest region of southeastern Guinea. The project would cover the entire administrative region (prefecture) of Gueckedou, including the zone covered by the pilot component of the rice development project, and a small part of southern Kissidougou region, with similar ecological conditions, both in Farana  - 12 - province. It is delimited to the west by the river Meli forming the border with Sierra Leone, to the south by the Makona river which forms the border with Liberia, to the East by meridian 9g55', and to the north by parallel 8