Madagascar - Second Village Livestock and Rural Development Project

Document of The World Bank FOR OMCIAL USE ONIY Report No. 10128 PROJECT COMPLETION REPORT MADAGASCAR SECOND VILLAGE LIVESTOCK AND RURAL DEVELOPMENT PROJECT (CREDIT 1211-MAG) DECEMBER 5, 1991 Agriculture Operations Division South-Central and Indian Ocean Department Africa Regional Office 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.  EXCHANGE RATES Year Malagasy francs (FMGK Malaaasv francs (FMG) per SDR per USS 1982 405.6 349.7 1983 515.3 430.4 1984 645.0 576.6 1985 698.4 662.5 1986 941.6 676.3 1987 1,751.0 1,069.2 1988 2,054.1 1,407.1 1989 2,014.0 1,603.4 1990 2,012.0 1,494.0 WEIGHTS AND MEASURES 1 are (a) = 0.0247 acres 1 hectare (ha) = 2.47 acres 1 kilometer (km) = 0.62 miles 1 square kilometer (km2) = 0.39 square mile 1 kilogram (kg) = 2.20 pounds 1 liter (1) = 0.26 US gallon 0.22 Imperial gallon 1 ton (t) = 2,204 pounds ACRONYMS IDA International Development Association FAFIFAMA Livestock Development Agency for Western Madagascar FAO/CP FAO/World Bank Cooperation Programme FOFIFA National Institute for Agricultural Research and Rural Development IFAD International Fund for Agricultural Development MDRRA Ministry of Rural Development and Agrarian Reform MPAEF Ministry of Animal Production and Water and Forest Resources SPA Animal Production Service of the MDRRA SPEL Provincial Livestock Services Agency ADMINISTRATIVE NOMENCLATURE Faritany Administrative equivalent of a province Fivondronona Sub-prefecture Firaisana canton Fokontani Village level local government FISCAL YEAR January 1 - December 31  THE WORLD BANK FOR OMCL USE ONLY Washington, D.C. 20433 U.S.A. Office of Oifct(w-Genteral Opefatlm Ivatwutin December 5, 1991 MEO_RANDUM TO EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report - Madagascar Second Villaae Livestock and Rural Develonment Prolect (Credit 1211-MAG Attached, for your information, is a copy of a report entitled "Project Completion Report on Madagascar - Second Village Livestock and Rural Development Project (Credit 1211-MAG)", prepared by Africa Regional Office with Part It of the report contribut d by the Borrower. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment 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 authoriztion.  .b FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT MADAGASCAR SECOND VILLAGE LIVESTOCK AND RURAL DEVELOPMENT PROJECT TABLE OF CONTENTS Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .i Evaluation Summary . . . . . .................... . iii PART I: Proiect Review from Bank's Perspective 1. Project Identity . . . . . . . . . . . . . . . 1 . . . . . . . . . . 2. Project Background . . . . . . . . . . . . . . . . . . . . 1 3. Project Objectives and Description .. 2 4. Project Design and organization .. 2 S. Project Implementation.. 3 6. Project Results . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 7. Economic and Financial Results . . .9 S. Sustainability of Project Results ...... ... 9 9. Bank Perf,ormance . ......... . . . . . . . . . 10 10. Borrower Performance ... . ... . . . . ...... * v . . . 11 11. Consulting Services . . . . . . . ..... ....11 12. Project Documentation . . . . . . . . . . . . . . . . . . . . . . . . 11 PART II: Proiect Review from Borrower's Perspective . . . . . . . . . . . 12 PART III: Statistical Information 1. Related Bank Credits . . . . . . . . . . . . . .. .13 2. Project Timetable . . . . . . . . . . . . . . . . . . . . . . . . . 14 3. Credit Disbursements .. .15 4. Project Objectives . . . . . . . . . . . . . . . . . . 18 5. Projject cstg and Financing . . . ..... .........g 20 6. Project Results ... . . . . . 22 7. Status of Covenants . . . . . . . . . . . . . . . . . . . . . . . . 24 8. Use of Bank Resources . . . . . . . . . . . . . . . . . . . . . . . 26 9. Economic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . 28 Map: IBRD 15637 (PCR) 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.  - , - PROJECT COMPLETION PEPORT MADAGASCAR SECOND VILLAGE LIVESTOCK AND RURAL DEVELOPMENT PROJECT ICREDIT 1211-MAGI PREFACE This is the Project Completion Report for the Second Village Livestock Project for which Credit 1211-MAG, in the amount of US$15.0 million, was approved on February 23, 1982. The Credit was closed on December 31, 1988, one year behind schedule. The last disbursement was on August 29, 1989, at which time the non-disbursed amount of US$7.5 million (50% of the original credit) was cancelled. The report was prepared by the Agricultural Operations Division of the South-Central and Indian Ocean Department in collaboration with the FAO Investment Center (Preface, Evaluation Summary, Parts I and III). The Borrower's comments on the Project Completion Report are reflected in Part II. This repV_t is based, inter alia, on the findings of a mission to Madagascar in January, 1991, the Staff Appraisal Report, the Development Credit Agreement, supervision reports, correspondence, and the mid-term evaluation report.  - iii - PROECT COMPLETION REPORT MADAGASCAR SECOND VILLAGE LIVESTOCK AND RURL DEVELOPMENT PROJECT (CREDIT 1211-MAGl EVALUATION SUMMARY LBackaround 1. At the beginning of the 1980s, agriculture accounted for 40% of GNP and 80% of exports; it provided a livelihood for 80% of the population. The livestockl subsector played a special part, given the size of the country's herds and flocks (10 million head of cattle, 1.8 million sheep and goats, and 1.1 million pigs) and its high potential for production (420,000 km2 of rangeland and comparatively favorable animal health conditions, since Madagascar is free of many of the livestock diseases frequently seen in Africa). In addition, livestock breeding has an important function in village economies subsisting on small-scale farming: cattle, for instance, are widely used for field work and transportation; and consumption of beef, the cheapest meat on the market, is relatively high, although it has been declining in the last decade due to falling incomes. 2. The Second Village Livestock Project was the third livestock operation in Madagascar. The first livestock project, the Beef Cattl2 Development Project (Ln. 585-MAG), called for the introduction of new techniques through state owned ranching and importation of animals (Brahman cattle, which hal not been tested in the Malagasy environment), major investments in infrastzucture, and intensive technical assistance. The project failed primarily due to poor project design, which was never seriously reconsidered during implementation, and a neglect of land tenure issues. The design of the second livestock project, the First Village Livestock and Rural Development Project (Cr. 506-MAG), incorporated many of the lessons learned from the first project. Government and IDA opted for a model of village development based first and foremost on building up animal health and extension services targeted on traditional livestock breeders. In order to implement the project, a special development agency, FAFIFAMA was set up in 1974. In general, implementation of this project proceeded satisfactorily. Objectives and Design 3. The main purpose of the Second Village Livestock Project was to build upon and expand the achievements of the first project. It was to expand animal health coverage in Mahajanga Province, test different animal husbandry intensification methods and complete construction of rural infrastructure facilities, but also to strengthen the livestock subsector nationally by  - v - upgrading its organization, importing and distributing veterinary products, and supplying eluipment. FAPIPFAA would again be the implementing agency. Xm2lementation Experience and Results 4. The project achieved its goals as far as animal health coverage in Mahajanga Province was concerned. The animal husbandry pilot program had to be abandoned, however, and the rural infrastructure program gave mixed results. Strengthening of the national livestock subsector ran into numerous administrative difficulties which slowed it down and limited its achievements. The curtailment or abandonment of programs, and devaluations of the Malagasy franc (which greatly reduced doll.ar costs) were the main factors behind the sizeable reduction in total project cost (US$12.3 million instead of the anticipated US$25.8 million), which caused the cancellation of roughly 50% of the financing granted by IDA and the International Fund for Agricultural Development (IFAD). The main reasons why the project achieved its goals only partially were: insufficient preparation of certain project components, a very high turnover rate among project managerial staff, bureaucratic delays (particularly the slow pace of procurement) and cash flow problems. Nevertheless, the economic benefits accruing from vaccination campaigns are substantial enough to give the project a rate of return in excess of 50%, primarily because (i) benefits associated with vaccinations became apparent more rapidly than had been expected at appraisal and despite delays and partial achievements; and (ii) the investment program was much smaller than expected.' S. During the mid-term review of the project, in September 1987, it was decided that the credit would be extended by one year to carry out a number of studies focussing on necessary reforms in the livestock sub-sector. These studies laid the ground work for fundamental changes in the strategy of the Ministry of Livestock vis-&-vis the private sector and a shift in emphasis from beef towards dairy production. Sustainability 6. While the project has proven that in terms of expertise and organization, a satisfactory vaccination coverage to improve animal health can be achieved, the question how this effort can be sustained once project funding comes to an end, has yet to be addressed. 7. The creation of a specific project authority (FAFIFAMA) next to the Provincial Livestock Service (SPEL) is not sustainable both for financial reasons - termination of project funding - and management reasons - 1/ The PCR estimate of the economic rate of return is likely too high because it includes some of the achievements of the First Village Livestock Project; it was impossible to filter these out with the information available. All the sane, it is certain that the actual economic rate of return of the project exceeds appraisal estimates.  v overstaffing and confusion on respective roles. The decision to terminate FAFIFAMA's project role and transfer back its responsibilities to the Animal Production Service (SPA) of the Ministry of Animal Production and Water and Forest Resources was therefore taken in 1988, and FAFIFAMA was terminated in early 1991. 8. Since Government cannot ensure adequate recurrent cost funding for a national animal health and extension service, it has become necessary to move towards a system of increased cost recovery through fees collected from the beneficiaries and, in parallel, towards an increased privatisation of the animal health services. These actions are now part of the Livestock services reforms agreed to by the Government in the context of the Livestock Sector Project, which was presented to the Board on May 16, 1991. 9. The project's efforts to ensure the supply of veterinary products to the country by having them imported and distributed through a centralized Government agency (Pharmac!e Centrale) was clearly not sustainable; thLs has since been taken over by private suppliers in the context of the macro- economic reforms and liberalisation of imports which took place in 1987-1988, and is working satisfactorily. Findings and Tessons Learned 10. The project has, through both its successes and its failures, taught a number of important lessons, which either have been addressed in the context of the structural adjustment program, or are being addressed in the Livestock Sector Project: (a) the creation of a specific project authority (FAFIFAMA) next to the provincial livestock service (SPEL) is not sustainable both for financial reasons - termination of project funding - and management reasons - overstaffing and confusion on respective roles. The decision to terminate FAFIFAMA's project role and transfer back its responsibilities to SPA was already taken in 1 988, but only executed in 1991. (b) the design of an animal husbandry component needs to be done at preparation time and take into account not only supply side constraints, but demand constraints and the economic environment as well. In the event, the cessation of meat exports as well as the declining local beef market made a successful executicrn of this component totally impossible. (c) the imposition on a project authority to carry out activities that fall outside the project should be carefully reviewed and in general, only rarely be allowed. In the event FAFIFAMA's financial management was weak, it turned out impossible to separate project accounts from non-project funding.  - vi - (d) the question of sustainability of regular vaccination campaigns, an open issue during project implementation, is now being addressed in the Livestock Sector Project; a fee system has been introduced which will initially pay for the medicine, and progressively include payment of the vaccinators, as veterinary services are being privatized. (e) importation and distribution of drugs should be handled, where appropriate, by the private sector, or where severe market distortions exist by the private sector in competition with a public sector agency.  PROJECT COMPLETION REPORT MADAGASCAR SECOND VILLAGE LIVESTOCK AND RURAL DEVELOPMENT PROJECT (CREDIT 1211-MAG) PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE 1. Prjc Iett Project Names Second Village Livestock and Rural Development Project Credit No.: 1211-MAG RVP Unit: Africa Regional Office Department: South-Central and Indian Ocean Departiment Sector: Agriculture Subsector: Livestock 2. Project Background 2.1 At the beginning of the 1980s, agriculture accounted for 40% of GNP and 80% of exports; it provided a livelihood for 80% of the population. The livestock subsector played e special part, given the size of the country's herds and flocks (10 million head of cattle, 1.8 m.llion sheep and goats, and 1.1 million pigs) and its high potential for production (420,000 km2 of rangeland and comparatively favorable animal health conditions, since Madagascar is free of many of the livestock diseases frequently seen in Africa). In addition, livestock breeding has an important function in village economies subsisting on small-scale farming: cattle, for instance, are widely used for field work and transportation; and consumption of beef, the cheapest meat on the market, is relatively high, although it has been declining in the last decade due to falling incomes. 2.2 The Second Village Livestock Project was the third livestock operation in Madagascar. The first livestock project in Madagascar, the Beef Cattle Development Project (Ln. 585-MAG), called for the introduction of new techniques (ranching on state owned farms) and importation of animals (Brahman cattle, which had not been tested in the Malagasy environment), major investments in infrastructure, and intensive technical assistance. The project failed primarily due to poor project design, which was never seriously reconsidered during implementation, and a neglect of land tenure issues. The design of the second livestock project, the First Village Liveatock and Rural Development Project (Cr. 506-MAG), incorporated many of the lessons learned from the first project. Government and IDA abandoned the ranching concept and opted for a model of village development based on building up animal health and extension services for traditional livestock breeders. In order to implement the project, a special development agency, the Livestock Development Agency for West Madagascar (FAFIFAMA) was set up in 1974. In general,  -2- implementation of the project proceeded satisfactorily, despite initial delays related to the status of FAFIFAMA. The objectives of the animal health component were achieved, in particular with respect to veterinary infrastructure, staff training, and implementation of livestock vaccination campaigns. The pasture improvement component was not very successful, as was part of the rural infrastructure component (with the exception of the conatruction of schools). 3. Project Obietives and Descriptiop 3.1 The objectives of the Second Village Livestock Project were to increaae Madagascar's meat production, thereby raising incomes for poor livestock owners and increasing exports, to strengthen livestock institutions and to support policy changes for the sub-sector. The main emphasis in the project would be given to expanding output through maintenance and extension of animal health programs in the area covered by the first project and, thro':gh imports of essential veterinary products and equipment for the national veterinary service, throughout the country. This emphasis reflected the experience under the previous project that animal health programs have great potential for raising productivity cheaply and quickly under traditional husbandry systems. The project was to test several different systems oa whose success future livestoclk intensification efforts would depend. 3.2 The project included the following components: For Mahajanga province: (a) Continuation and extension of the basic animal health program; (b) A pilot animal production program; (c) Road construction and maintenance; (d) Water supply; and (e) Management and material support for FAFIFAMA, the project implementing agency. For the livestock sub-sector nationally: (a) Technical assistance to improve the organization of the sub-sector and its institutions; (b) Imports of veterinary products, equipment and materials for the national veterinary service; (c) Applied research; and (d) Studies, documentation and training. 4. P 4.1 The project was prepared by FAFIFAMA, based on a feasibility study conducted by SEDES, a French consulting firm. After an application for financing was addressed to IDA in October 1979, an appraisal mission visited Madagascar in June and July 1980. A post-appraisal mission was sent in November 1980 v take a more in-depth look at the subsectoral and  - 3 - inetitutional aspects of the proposed operation. During appraisal, significant changes in project design were made. First, the project was reviewed in the overall context of the sub-sector, in order to identify the relationship between the proposed components and the economics of livestock production throughout Madagascar and to clarify the implications of Government policy. As a result, components were added to the project to support Government initiatives in redefining policy for livestock and improving management of the sub-sector. Second, the proposed animal husbandry intensification and commercial steer fattening program was reduced to the scale of a pilot program, on the grounds that too little information and technical experience were available to justify a large-scale program; and the technical experience and managerial capability available to develop and manage the proposed fattening farms were too limited. Purther changes were agreed upon during post-appraisal, largely as a result of the rapid deterioration of the economic and financial situation of the country in the second half of 1980. The pilot component for animal husbandry intensification was further reduced and a program to import veterinary products for the national animal health pragram was introduced. Finally, project implementation arrangements were modified to take into account the recent reorganization of the Ministry of Rural Development and Agrarian Reform (MDDRA). 4.3 FAFIFAMA would be respon :ble for the components to be implemented in Mahajanga province; the Animal Production Service (SPA), which was part of MDDRA, would implement the sub-sector components. The choice of FAFIFAMA was virtually automatic, since the First Project PCR had indicated that its management capabilities had proven satisfactory. Little attention was therefore paid to the risks inherent in having FAFIFAMA simultaneously implement the project and be responsible for the commercial management of the abattoirs and cold store. The subsector component, supposed among other things to strengthen the organizational side of animal production services, had logically been assigned to SPA. However, no plans were made to set up a project management unit within the Department. 5. roiecst Imnlementation 5.1 Proiect Effectiveness. As a consequence of bureaucratic delays in meeting credit conditionality, the credit did not become effective until March 1983, more than one year after Board approval. The IFAD loan, which had been approved in March 1982, also did not become effective until March 1983, because of cross-conditionalities. 5.2 Xmnlementation Schedule. The project, to be implemented over five years, was closed December 31, 1988, a year later than planned. The extension of the closing date by one year was necessary to allow for the completion of a thorough review of sector issues that IDA and Government had agreed to do, in preparation of a new generation livestock project. 5.3 Proiect Costs and Financina. The total cost of the project had been estimated at US$25.83 million, to be financed as follows: US$15 million from IDA, US$8 million from IFAD, and US$2.33 million from the Government. On termination of the project, total actual cost was only US$12.3 million, with  -4- IDA and IFAD having contributed US$7.4 milion a%d US$4.4 million respectively. French, Swiss and German bilateral aid also contributed to the project costs, through donations of veterinary medicine. Project coats were significantly below appraisal estimates for a number of reasons. The animal production pilot program had to be abandoned because of shortcomings in the underlying studies and the economically discouraging results obtained on trials; management difficulties and problems in formulating a policy on pastoral watering facilities led to a considerable reduction in the scope of the rura). infrastructure program; and implementation of the livestock subsector component ran into numerous administrative difficulties which not only slowed down the execution process but also reduced its scope. In addition, devaluations of the Malagasy franc led to a significant reduction in the cost (denominated in U.S. dollars) of numerous inputs and local expenditures. Project costs and financing are shown in Table 5, Part III. 5,4 Disbursements. Due to implementation delays and the large reduction in project costs, disbursements lagged considerably behind appraisal estimates. The Credit was closed on December 31, 1988. The last disbursement was on August 29, 1989, at which time the undisbursed balance of USS 7.5 million (50% of the original credit) was cancelled. Estimated and actual disbursements for the IDA credit are shown in Table 3.A, Part III. 5.6 Proiect Risks. The Staff Appraisal Report identified several risks associated with the livestock sub-sector part of the project: (i) the organization of the veterinary service could affect the effectiveness of the importation of veterinary producte; and (ii) the successful implementation of the other components of the livestock sub-sector depended on new policy orientations from the Government and the implementation of a coherent production strategy. 5.2 Issues during Project Implementation. Three major sets of circumstances are at the root of the difficulties encountered during project implementation: (i) During the execution process, frequent changes were made in the institutional framework on which the project depended. The responsible Ministry was reorganized three times (1982, 1983, and 1985) the Animal Production Department, in charge of the national sub-sector component, was reorganized twice, and project responsibilities were split between two different services from 1985 onwards. These institutional changes were accompanied by appointments of new managers and a rapid turnover rate of personnel, which was prejudicial to sound project execution. (ii) Hurricane Kamisy, one of the most violent Madagascar has ever experienced, caused very serious damage in the project zone in May 1984. Infrastructure built during the First Project and the early part of the Second was damaged, particularly buildings constructed of local materials. It was therefore necessary to rehabilitate or reconstruct numerous buildings, and since the opportunity was logically taken to chan:ge to a permanent type of construction a major increase in Costs ensued.  (iii) Management of the Mahajanga export slaughterhouse had been entrusted to FAFIFAMA, despite strong objections of IDA and other donors. Due to inefficient managemnent and unsanitary conditions, the slaughterhouse lost its export license to the EEC, and its subsequent operation at undercapacity caused severe losses. Cashflow problems appeared very rapidly, since the government budget contained no provisions for reimbursing these losses. Despite repeated requests, Bank supervision missions never succeeded in obtaining the complete separation of commercial from project activities. This burdened the project with constant cashflow problems, over and above those created by delayed and inadequate releases of local counterpart funds. 6. Project Results (a) Regional comnonents 6.1 Basic animal health: At appraisal, it had been decided to increase the number of communes included in the target zone from 527 to 1,351 -- thus expanding coverage to the entire Province. This expansion was completed in three years instead of the four anticipated, despite the damage done by hurricane Kamisy in 1984. It was also during the third year that the maximum number of vaccinations against blackleg and anthrax was achieved (2.6 million animals vaccinated, or 95% of the goal set for the end of the project period). The number of vaccinated animals was maintained thereafter at 1.9-2.2 million head of cattle, or 70%-80% of the project objective. According to FAFIFAMA executives, the decline in the number of vaccinations was due to delays in deliveries of vaccines and, from 1988 onward, to the dismissal of a third of the village vaccinators, as a result of cuts in Government funding. These vaccination rates (covering 60-75% of the total number of head in the Province) were sufficient, however, to ensure effective coverage approaching the economic optimum. A SEDES survey in 1986 found that an increase in the vaccination rate from 60% to 75% reduces the number of deaths by half, but that beyond the 75% point there is no longer any perceptible gain. In addition, the number of calves treated for endo-parasites reached 157,000 head in 1985, then falling to 135,000 over the next two years, and finally to 100,000 in 1938. The project goal, which was to treat 22% of calves, was therefore achieved during a three-year period. FAFIFAMA executives regarded the decline as the consequence of less widespread acceptance by farmers of a new treatment offered them after 1985 and of the dismissal of vaccinators in 1988. As regards vaccination of pigs and poultry, the results achieved were equally satisfactory. After having reached maximum figures in 1985 (pigs: 53,000; poultry: 700,000) the number of animals vaccinated fell during the last years of the project. It is not possible to compare achievements here against project goals, since the latter were set at a level significantly below the pig and poultry vaccination rates achieved early in the course of the project. 6.2 To achieve these results, the project expected to recruit 115 supplementary staff, including 56 village vaccinators, 30 veterinary  -6- assistants and 6 veterinarians. In February 1987, however, 47 more vaccinators had been recruited than envisaged, bringing incremental vaccination staff to 137. By December 1987, incremental vaccination staff had dropped to 120, and by December 1988 to 80. Despite this reduction, the number of vaccinations per staff increased, which implies that FAFIFAMA effectiveness improved. The solution advocated from 1986 onward by supervision missions, namely that local authorities (at the commune level) assume the cost of vaccinators, seems to have had little success; no figures were available to the PCR mission except in the case of one district where responsibility for two out of three vaccinators had apparently been taken over by the local authority conicerned. Some degree of confusion was created after termination of the project, because a policy to privatize and liberalize the veterinary sector was announced. Government circles, professionals and local authorities are waiting for information on the practices and procedures that will be used to give effect to this policy, the main concern being how it will impact on operations in the field. 6.3 In order to provide agents with housing and work facilities, 80 veterinary centers and 20 vaccination crushes were built; hurricane Kamisy, which in May 1984 had destroyed numerous buildings constructed of local materials during the First Village Livestock Project, added to the building requirements. By September 1987, 86 veterinary centers had been either built or rebuilt and 16 crushes created. According to information assembled during the PCR mission, there were, on termination of the project: 9 primary veterinary centers (6 of them built during the First Project), 7 secondary centers, and 79 tertiary posts (34 of them rebuilt following the hurricane). No new vaccination crush was installed after 1987, although materials required for an additional 35 of them are available (crush building goals had been increased during project implementation). 6.4 Pilot livestock in nsification prooram: This program was abandoned in 1985. The survey that was to identify the 40 participating villages and determine the actions to be introduced proved disappointing. Moreover, cattle-fattening trials, at both industrial and smallholder levels, demonstrated that the profit potential of the operation was uncertain. The Credit proceeds were therefore reallocated to a dairy program, which was designed as part of a study carried out in the Mahajanga region. A milk- processing plant was built in 1988, which has been collecting an increasing proportion of the milk output of three livestock breeder associations, organized by the project, since the beginning of 1991. 6.5 Road construction And maintenance: This component was designed to be carried out in the pilot project zone. However, after the pilot project was abandoned, the equipment intended for it was used to build roads serving project facilities elsewhere and by the Public Works Department to rehabilitate major and secondary roads. On termination of the project, the equipment was leased to a private firm. In all 383 km of roads were built or had maintenance work done on thom (100 km estimated at appraisal). These roads have been operational and contribute significantly to tae economy of the region.  -7- 6.6 Water supolv schemes: Plans for watering points in grazing areas were affected as a result of the abandonment of the pilot livestock intensification program and by the controversy over whether tube wells or surface storage units (ponds, small dame) were to be used. In the end, only six watering points were developed, instead of the 36 planned; they consisted of one reservoir (where the dam wall was destroyed during the second year of operation) and five wells equipped with windmills and installed adjacent to FAFIFAMA's livestock purchasing posts. At the time of the PCR mission, no windmills were operating for lack of maintenance, although some of the wells were being used by the local population. The village water-supply program, which called for the sinking of 80 wells with beneficiary participation in the form of both labor and materials equivalent to 20% of installation costs, virtually achieved its target (with 75 wells sunk), despite considerable difficulties encountered by the project management unit in obtaining necessary information from the Hydrogeologic Service. Participation by villagers in the work of construction was not required until 1986 and 1987. Most of these wells are still in use. 6.7 SuPDort for FAFIFAMA: The measures making up this component had to do mainly with staff training and the establishment of a monitoring/ evaluation unit. At the time of the mid-term evaluation mission, it was noted that all FAFIFAMA employees, whatever their qualifications, had had the benefit of an on-the-job training program in the form of a period of advanced training spent at Antsiranana (CETEL), Antsirabe (CFC), the Tombotsoa school farm, or in the workshops of firms holding concessions for equipment used by FAFIFAMA. The head of the Animal Production Department made a study tour of several months' duration in Europe and the Pacific (New Caledonia). The head of the Water Supply Division visited installations in France, Togo and Kenya to broaden his experience and knowledge of pumping technology. The managing director of FAFIFAMA took part in a management training course in Mauritius. As to the monitoring and evaluation function, a Department with these responsibilities wB set up in the first quarter of 1983. Its first task was to collect and process data generated in the course of the pilot livestock intensification program. After the decision was taken to discontinue this program, it concentrated on administrative tasks. At that point, nothing had yet been done about establishing a management information system, supposed to include an improved cost accounting system. (b) Sub-sectoral Components 6.8 Technical assistance to imorove organization in the subsector: This component was to consist of: (i) two studies; (ii) design and implementation of a training program for SPA personnel; and (iii) procurement of equipment and motor vehicles for SPA. The subject of the first study, "Meat Supply to the Capital," was altered and became "Availability of Meat and Hides for Export." Terms of reference were drawn up in 1983 and a call for tenders issued in 1984. The contract was not awarded, however, until two years later, because of disagreements between the Ministry of Animal Production and Water and Forest Resources (MPAEF) and IDA. The second study, a thorough review of key institutions in the livestock sub-sector, was financed by USAID. In addition, MPAEF commissioned a study on restructuring of the central veterinary pharmacy. Institutional changes and high staff  turnover rates were major constraints affacting the design and implementation of the proposed training program for SPA personnel, while the subcomponent for procurement of vehicles and equipment was carried out in full. 6.9 Studies. documentation and scholarships: Since the goals of this component and the previous one were similar in many respects, the two should have been combined. The findings of the studies were useful in that they improved knowledge of the subsector. After the mid-term evaluation of the project, a proportion of the available Credit proceeds was reallocated for the preparation of a new livestock project. This decision has turned out to be beneficial. The studies have been instrumental in laying the basis for a dialogue between the Bank and the Government which has led to fundamental changes in the role of the 1ii:.stry vis-a-vis the private sector, and a shift in emphasis from beef towards Qairy production. 6.10 A consultant was commissioned to examine the status of SPA documentation services and to make recommendations for its improvement and rational management; this study indicated a need to rehabilitate the SPA library and train specialized personnel. No more than a few scholarships (short-term) were organized, as a consequence of the many institutional changes and high staff turnover rates. 6.11 Imports of veterinary products and materials: Government policy coupled with scarcity of foreign exchange made it necessary for the project to finance imports of veterinary products and materials to satisfy the needs of the country; this was done by the Central Pharmacy, a service run by MPAEF. The component has suffered from a series of mishaps: (i) ignorance of effective demand; orders were placed on the basis of administrative estimates that had little to do with actual demand or delivery capacity; (ii) faulty procurement; long delays in the procurement process caused a scarcity in supplies in the first years of the project and an oversupply in later years (e.g. at mid-term evaluation it was found that sufficient supplies of a certain drug were stored for four years of consumption whereas the effective life of the drug was 18 months); and (iii) mismanagement of stocks. In the end, imports totaling US$ 2.7 million were financed by IDA (68% of what was expected at appraisal) and US$ 0.9 million of imports was financed by other bilateral donors. These mishaps do not appear to have affected the adequacy of veterinary supplies at the project level. The experience nevertheless convinced both IDA and the Government in 1987 to stop official imports and leave the field to private importers; the import regime was subsequently liberalized. Also, IDA insisted on closing down the Central Pharmacy, an action which - after a good two years delay - was finally taken by Government in 1991. 6.12 Appjjled research: The funds allocated for this subcomponent were supposed to serve for preliminary cross-breeding experiments between the local Zebu and exotic breeds. The amount allocated was not sufficient to carry out a significant experiment, in addition the time available within the project period was found to be too short for experimentation. It was therefore agreed that the funds would be reallocated to other project activities.  -9 7. Economic and Financial Results 7.1 The PCR mission was unable to obtain the technical data that would have allowed "with project" and "without project" comparison of the farming model formulated in the Appraisal Report. The financial rate of return from this model has therefore not been calculated. It was possible, however, using data from the 1974 and 1986 censuses, to assess the benefits (at faritany level) of the vaccination campaigns (Part C, Table 6A)t this information provided the basis for estimating the economic rate of return, which, at over 50% (Part C, Table 6B), is much higher than the appraisal figure (36%).2 The rapidity and extent of the effects of vaccination campaigns on improving animal mortality rates is what explains the high rates of return. The difference in rates between the PCR and the Appraisal Report basically reflects the fact that surveys indicated that the benefits associated with vaccinations became apparent more rapidly than had been expected at appraisal. In addition, the investment program of the project was greatly reduced, which positively affected the rate of return. 8. Sustainability of Project Results 8.1 While the project has proven that in terms of expertise and organization, a satisfactory vaccination coverage to improve animal health can be achieved, the question how this effort can be sustained once project funding comes to an end, needs to be addressed. 8.2 The creation of a specific project authority (FAFIFAMA) next to the provincial livestock service (SPEL) is not sustainable both for financial reasons - termination of project funding - and management reasons - overstaffing and confusion on respective roles. The decision to terminate FAFIPAMA's project role and transfer back its responsibilities to SPA was therefore taken in 1988, and FAFIFAMA was terminated in early 1991. 8.3 Since Government cannot ensure adequate recurrent cost funding for a national animal health and extension service, it has become necessary to move towards a system of increased cost recovery through fees collected from the beneficiaries and, in parallel, towards an increased privatisation of the animal health services. These actions are now part of the Livestock Services reforms agreed to by the Government in the context of the Livestock Sector Project, which was presented to the Board on May 16, 1991. 8.4 The project's efforts to ensure the supply of veterinary products to the country by having them imported and distributed through a centralized Government agency (Pharmacie Centrale) were clearly not sustainable; this has since been taken over by private suppliers, in the context of the macro- 2/ The PCR estimate of the economic rate of return is likely too high because it includes some of the achievements of the First Village Livestock Project; it was impossible to filter these out with the information available. All the same, the actual economic rate of return of the project exceeds appraisal estimates.  10 - economic reforms and liberalisation of imports which took place in 1987-1988, and is working satisfactorily. Adequate supplies of veterinary products now are available through private importers, although problems persist in distributing them throughout the country. MPAEF and the importers themselves should study these distribution problems jointly. 8.5 Although left aside by the project, research and experimentation into methods of intensifying animal production have lost none of their importance. These actions should nevertheless be taken up again only when it becomes clear that effective demand is increasing. With the reopening of meat exports and the slow return to growth of the economy, the prospects for this to happen are becoming better. 8.6 The three associations of milk producers set up with project support have become convinced that the operation they are engaged in is worthwhile. Regular increases in their deliveries of milk to the processing plant confirm this. If the operation is to develop further, the plant must continue to ensure that milk is collected regularly from the whole group, and at a price acceptable to both parties. As FAFIFAMA has been dissolved, the producer associations will need to appoint a dairy processing plant manager officially and ensure that he respects producers' interests. 8.7 Results of the move to reinforce the Animal Production Department were disappointing. However, reinforcement is still essential if the Department is to have help in formulating a policy for development of the animal production subsector, as well as support in putting it into effect. Such assistance could be provided as part of a new project with World Bank financing. 9. Bank Performance 9.1 It has been pointed out earlier that the weaknesses that affected both preparation and appraisal of several components of this project made the work of the supervision missions more difficult. This difficulty was compounded by the fact that Bank staff responsible for the project changed several times over the course of the first year. Subsequently (Table 8, Part C), over a nearly three-year period, supervision missions were dispatched very regularly, to the undoubted advantage of the project -- although some of them would have been more useful if they had included an economist, who among other things could have provided better support for the Monitoring and Evaluation Department. During the last two years of the project, no supervision missions at all were organized. Although requested as early as the beginning of 1986, the mid-term evaluation mission was not sent out to Madagascar until September 1987, four months prior to the scheduled credit closing date. 9.2 During the course of the project, the Bank seconded a staff member who had previously worked on the project to MPAEF for two years. This arrangement was certainly of benefit to the project: for instance, very detailed technical and financial documents were prepared by project staff for use by the mid-point evaluation mission, while various studies in preparation for a third livestock project were begun in 1988.  - LI - 10. Borrower Performance 10.1 Government's support for the project was evident throughout, but the services of MPAEF proved very weak. Three factors reduced the effectiveness of this backing: (i) major delays in executing a number of components, as a result of the lengthy nature of bureaucratic procedures, particularly in the area of procurement - to which must also be added delays in taking decisions and then carrying them out; (ii) the effects of several reorganizations of the Animal Production Department and high rates of turnover among its top staff -- the key reasons for the lack of continuity in the project execution process and the difficulty of getting a training program into place; high staff turnover rates also had played a role in the slow pace at which decisions were taken; and (iii) Government's refusal to act on donors' recommendations regarding separation of accounts and activities in FAFIFAMA's "development" and "commercial" segments; the result was that counterpart funds, which were already insufficient, needed to be diverted in part to cover losses sustained on this agency's commercial operations. 10.2 FAFIFAMA executed the vaccination campaigns in the beginning ahead of schedule, however, when funding constraints became apparent the effectiveness of the parastatal began to decline. Financial management, accounting and procurement were weak, a situation which was compounded by the money losing commercial activities that had been entrusted to FAFIFAMA. 11. Consulting Services 11.1 At the time tne project was being prepared, it was decided there was no point in resorting to long-term consultants; only short-term consultants were to be retained. This technical assistance was used mainly to prepare the ground for studies, with few consultants taking any part in actual execution of the project. With hindsight, it now appears it would have been beneficial to strengthen national agencies with long-term consultants; this is particularly true as regards the livestock subsector component, the ambitious goal of which was to upgrade the organization of the Animal Production Department. 12 Protect Documentation 12.1 The PCR mission had access to detailed data on the first four years of the project, initially compiled for the mid-term review in September 1987. In contrast, only fragmentary data were available on the last year of the project. In addition, the mission could meet with only three former project professionals, the others having been assigned to other positions on completion of the project in December 1988 or on the dissolution of FAFIFAMA in April 1990. Moreover, once the mid-term review mission had announced its findings, project personnel lost their motivation, and as supervision missions were also suspended, data relating to the 1987-1988 phase of the project are virtually non-existent.  - 12 - PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE 3 1. Relative to the objectives and design of the project, one can say that project results have been satisfactory in terms of livestock coverage in the Mahajanga province. This despite problems encountered by the different participants in the project ever since project start-up, as well as the numerous administrative problems that delayed and limited project achievements. 2. Project implementation was delayed because of the following reasons: - insufficient preparation of certain project components; - rapid staff turnover - one year delay in credit effectiveness, as a result of which project funding did not become available until April 1983; - insufficient and delayed availability of counterpart funds; and - cumbersome procurement procedures, because procurement guidelines of both the World Bank and the Government of Madagascar had to be followed. When taking these factors into account, the technical and financial achievements of the project are acceptable. 3. At the date of credit closure in 1988, several issues were still unresolved, such as the link between FAFIFAMA and its former cattle slaughter ajtivities, and the transfer of livestock service responsibilities from FAFIFAMA to the Mahajanga province SPEL. These issues have now been resolved. 4. Lessons learned from the project: (i) the management of FAFIFAMA circumvented whenever possible the Department of Livestock within the Ministry. The only regular communication was on the annual work program of FAFIFAMA and on the use of the proceeds of the IDA Credit. As a result, when the decision was taken to close the FAFIFAMA parastatal, the Department of Livestock was completely unaware of FAFIFAMA assets, debts, activities, etc. The Department was therefore never able to follow-up on the project. In order to prevent such a situation from recurring, a special unit has been created within MPAEF to coordinate the activities of the Livestock Sector Project. (ii) Recruitment of special project personnel creates problems after project closure. To the extent possible, civil servants should therefore be used for all administrative activities planned under the Livestock Services Project. 3/ The following is the translation of the comments received from Government on June 19, 1991. The original letter is in project files.  PART IlI: STATISTICAL INFORMATION 1. Related Bank Credits Credit Number Year of Loan Title SIR million Status Approvat Cr. 1330-MAG 1983 Second Irrigation 16.7 in progress Project of Lake Ataotra Cr. 1433-MAG 1984 Cotton Development 16.9 CLosed Project June 30, 1990 Cr. 1589-MAG 1985 Irrigation Rehabilitation 12.6 in progress Project Cr. 1691-MAG 1986 Agricultural Sector 50.0 Closed Adjustment Credit June 30, 1990 Cr. 1709-MAG 1986 Agricultural Institutions Technical 8.7 Closed Assistance June 30, 1991 Cr. 1804-MAG 1987 Second Agricultural 8.0 in progress Credit Project Cr. 1878-MAG 1988 Forestry Management and 5.1 in progress Protection Project Cr. 2041-NAG 1989 National Agricultural 18.6 in progress Research Project Cr. 2125-MAG 1990 Environment Project 19.8 in progress Cr. 2150-MAG 1990 Agricultural Extension Pilot Project 2.8 in progress Not yet available 1991 Livestock Sector Project 13.2 Not yet effective  2. Project Timetable Item Original Schedule Mid-Term review Actual Date Preparation October 1979 Appraisal Mission -June and July 1980 Post-AEpraisal Mission November 1980 Staff Appraisal Report January 1982 Negotiations February 1982 IDA Board Approval - February 1982 IFAD Board Approval - March 1982 Credit Signature - -Aprit 1982 Credit Effectiveness - - _March 1983 Credit Ctosing December 31, 1987 December 31. 1988 December 31, 1988 LsDibrsement June 30, 1988 June 30, 1989 August 29, 1989  3. Disbursment of credit A. Estimated and Actual Disbursements of Credit 1211-MAG (US$ '000) _Appmisdl Esii:ate Actual Fiscal Year of 2 Quaster .urtd .uuw Qurel _ .ldv Actau Disbursement DisbursisbumeDisbrees % of Credit Fiscal Year of Appraisal Estimate Actual Cumu~~ C fmCraftiv .......... USS 1983 IX 1982 - - Xi] 1982 45 45 - - 111 1983 315 360 - - - VI 1983 340 700 - - 1984 IX 1983 600 1,300 615 615 4.1 XIl 1983 S00 1,800 - 615 4.1 III 1984 800 2,600 45 660 4.4 VI 1984 800 3,400 678 1,338 8.9 1985 IX 1984 900 4,300 178 1,516 10.1 Xil 1984 1,000 5,300 162 1,678 11.2 III 1985 600 5,900 286 1,964 13.1 Vi 1985 1,400 7,300 412 2,377 15.8 1986 IX 1985 900 8,200 302 2,679 17.9 XII 1985 1,000 9.200 152 2,831 18.9 III 1986 900 10,100 369 3,200 21.3 VI 1986 900 11,000 700 3,900 26.0 1987 IX 1986 600 11,600 786 4,686 31.2 XII 1986 700 12,300 450 5,136 34.2 III 1987 600 12,900 215 5,351 35.7 VI 1987 600 13,500 106 5,457 36.4 1988 IX 1987 400 13,900 245 5,702 38.0 Xll 1987 400 14,300 167 5,869 39.1 III 1988 400 14,700 365 6,234 41.6 VI 1988 300 15,000 277 6,511 43.4 1989 IX 1988 - - 219 6,730 44.9 Xii 1988 - - 144 6,874 45.8 III 1989 - - 164 7,038 46.9 VI 1989 - 54 7,092 47.3 1990 IX 1989 - - 282 7,374 49.2  3. Disbursement of credit B. Estimated and Actual Disbursements of IFAD loan (US$ '000) Calendar Year Estimated Actual Actual Disbursement Cumulative Disbursement Cumulative Cumulatve 1- . l ... . ffiDisbursements as .S..........U$. ..........'000 % of Loan 1983 900 900 51 51 0.6 1984 1,900 2,800 894 945 11.8 1985 2,100 4,900 653 1,598 20.0 1986 1,600 6,500 1,464 3,062 38.3 1987 1,100 7,600 448 3,510 43.9 1988 400 8,000 624 4,134 51.7 1989 - - 262 4,396 55.0  3. Disbursement of credit C. Disbursements of Credit 1211 -MAG by category (US$ '000) CategoRes5 1983 1984 1 1985 1986 I 1987 1988 1 1989 Total SAR Actual in % I EsImate of Etiffate Regional Sub-Project (FAFIFAMA) 1. Veterinary products and - 136 109 63 57 186 67 618 3,080 20 factors of agricultural production 2. Vehicles and material 45 339 59 338 144 232 11 1,168 2,330 50 3. Construction of veterinary 30 171 288 503 1?8 285 36 1,441 740 195 clinics and vaccination crushes 4. Consultant services and training - 65 122 71 70 12 91 431 790 55 5. Operating expenses - 740 810 554 469 593 48 3,214 9,690 33 Sub-total 75 1,451 1,388 1,529 868 1,308 253 6,872 16,630 41 Sub-sector Sub-Project 6. Veterinary products - 163 386 1,918 171 7 10 2,655 3,930 68 7. Equipment and materials for 61 24 - 146 1 - - 232 100 232 the central laboratory 8. Equipment for the SPA - - - - 40 433 1 474 190 249 9. Operating expenses of the SPA - - - - 2 - 2 160 1 10. Consuitant services and 3 38 37 177 111 410 498 1,274 1,990 64 training Sub-total 64 225 423 2,241 325 850 509 4,637 6,370 73 11. Special account 526 282 - - 538 - 270 - TOTAL 665 1,958 1,811 3,770 1,193 1,620 762 11,779 23,000 51  - 18 -. 4. Project Objectives indicators A aimal Achievewnt at Achie at Obsevtions objective aid-term Credit Closino CJauuary 1962) evaltution (December 1988) .___..__..____(Septemer 1987) Regional Activities a) Animal health . Area entire province entire province entire province Vaccination for . Vaccination of beef cattle 2,700,000 2,553,733 (1985) 2,135,065 anthrax and black leg . de-worming of calves tX) 22 27.6 (1985) 15 . Vaccination of swine 20,000 51,892 (1985) 32,454 . Vaccination of poultry 120,000 700,779 (1985) 459,388 . Construction of veterinary 80 86 86 centers . Construction of cruwhes 20 16 16 Materials for 35 additional crushes in stock. PersonneL recruitments veterinarians 6 4 n.s. n.a. veterinary assistants 30 53 n.a. village vaccinators 56 106 80 b) Pilot production program . Intensification in combined 40 Fokontany stopped stopped zone . fattening cattle commercial essais stopped stopped faru essais stopped stopped c) Construction and 100 km 383 km 383 km maintenance of rural roads d) Water supply . livestock 35 ponds 5 test drills and 5 test drills and ponds ponds .village 80 wells 75 welts 75 wells e) Support to FAFIFAMA .Training Cinternal) for all staff to large extent to large extent achieved achieved .Monitoring and Evaluation partially partially reallzed realized  - 19 - Sub-sector Activities f) Technical Assistance to improve the sub-sector Beef supply for 1982/1983 1987 1987 Antananarivo (coqpletion date) earLy on in partially partially . Studies of key project achieved achieved institutional issues continuous not started not started . Training procurement of comple.ed coqpleted . Material support vehicuLes and other equipment g) Importation of products and materials . veterinary products S 3 M S 2 M S 2 M Procurement . Laboratory equipment S 100,000 S 150,000 S 150,000 delays h) Applied reasearch S 200,000 cancelled cancelled i) Studies7 documentation, S 500,000 partially partially study grants realized realized  - 20 - 5. Project Costs and Financing A. Project Costs - aff Apwai Report Estimte Actual Expenses _ _ ~~~~~~~~~~~~~~Actual Costs Local Foreign Total Local Foreign I Total as a X of ____Costs CosCost osts Costs I Costs Costs Estilute ~~~~~~~~. .. _......... ... mitt;ions FF'--G ........ Regionat Progrm Animal Health 1,593 1,238 2,831 n.a. n.a. 2,750 97 Pilot Program 424 388 812 n.a. n.a. 430 53 Rural Roads Program 430 618 1,048 n.a. n.a. 340 32 Water Supply Program 309 218 527 n.a. n.a. 510 97 Intensification of FAFIFAMA 101 99 200 n.a. n.a. 2,270 11,350 Sub-total 2,857 2,561 5,418 n.a. n.a. 6,300 116 Livestock Sub-sector Progra Strengthening of SPA 183 367 550 n.a. n.s. 2,430 442 Veterinary Products - 1,029 1,029 n.a. n.a. 1,950 190 Laboratory Equipment - 33 33 n.a. n.a. 150 455 Applied Research 38 39 77 n.a. n.a. - - Sub-totat 221 1,468 1,689 n.a. n.a. 4,530 268 TOTAL 3,078 4,029 7,107 n.a. n.a. 10,830 152 n.o.: not available.  - 21 B. Project Financing original 1/ evised 2 Final 3I Actual as a X Souce I of Estimated I * ..m~~~illions ae S E.-U........... IDA 15.0 8.1 49 IFAD 8.0 4.3 4.4 55 Goverrinent i 2.8 2.8 0.5 18 TOTAL 25.8 15.2 12.3 48 1/ The exchange rate of USS 1.0 = 275 FMG, effective when the project was evaluated. 2/ After the mid-term review, SDR 5.85 million was cancelled of the IDA credit and SDR 3.15 million of the IFAD loan. 3/ In US$ terms only 48% of available financing was used; in FMG final costs exceeded predicted costs by 52%. 4/ The Government contribution is only an estimate.  - 22 6. Project Results A. Project Benefits Annual increase in production (In tons of live weight) Staf Appraisal Report PCR Estimates 11/ 1earsPost prjec7 years years Average 2/ X after 8 1 7UO 000years B-e-ef 1 2 13,000 1.,00 Pigs 5/ - - 300 160 130 Poultry fl - _ 70 30 25_ IJ In the Staff Appraisal Report, the increases in production are based on increases achieved since 1977, year 1 of the First Village Livestock project. In the Project Completion Report, these increases are based on the increase in production achieved since 1982. 21 The fourth project year (1986), is the year in which the SEDES survey took place and when the highest vaccination rates were achieved. ;J/ The year 1989 was the last year for which this mission was abl3 to collect data. 4/ PCR estimates are based on the SEDES survey in 1986, which indicated that the animal health activities of FAFIFAMA had reduced annual beef cattle mortality by 44,000 animals compared to 1978 and by 80,000 animals compared to 1974. The live weight of these animals is estimated at 300kg. After 1987, the vaccination coverage has started to decline and it is assumed that for budgetary reasons long-run coverage will decline by 20%. .a/ Vaccination protects, on average, 25% of the pigs. The average live weight is about 80kg. Long-run coverage will decline by 20%. Atu Vaccination protects, on average, 33% of all poultry. The average live weight for poultry is about 0.8kg. Long-run coverage is expected to decline by about 20%.  - 23 - 6. Project Results B. Economic Impact Economic Rate of Return taf AppraisaP Estimate Report Estimate ' ~~..'... ........ 10-year program (1st and 2nd projects) 34 6-year project - over 50 PCR Assumptions: 1. The coverage rate for all types of livestock will drop by 20% after project closing. 2. Incremental production has been valued at the economic price. 3. Incremental operating costs include the costs for SPEL to maintain a coverage of 80% of project coverage. These costs are estimated at 10, 50 and 20 percent of the value of the incremental production of beef cattle, swine and poultry.  - 24 - 7. Status of Covenants Covenants _ Coaents 4.01 (a) The borrower shalt carry out Parts F through J of the *Parts F to J were inplemented to varying degrees. Project through SPA with due diligence and efficiency and in It has been agreed, however, that part I should not conformity with appropriate practices, and shall provide, promptly be executed because it was recognized as not feasible as needed, the funds, facilities services and other iesources during the Project period. required for the purpose. 4.05. By December 31, 1982 or by such other date as the Association-To be implemented before December 31, 1982. Was may agree, the Borrower shall, in carrying out Part G (ii) of the only partially inplemented, with great delays Project, furnish the Association for its approval: (i) a resume of each candidate proposed to be sent overseas for training; and (ii) an outLine of the training program to be followed by each candidate. 4.06. The Borrower shaLl, in carrying out Part F of the Project: *(i) CompLied with but only few of the envisaged (i) by Deceffber 31, 1982 or by such other date as the Association surveys and studies were carried out. Delayed may agree, furnish the Association for its approval a program for project start up, institutional changes and numerous the studies to be carried out under Parts F (i) and F (ii) of the staff changes are responsible for this. Project; end (ii) exchange views with the Association on the findings and reconnedations reached in such studies, as such findings and recomanendations become available to the Borrower and the measures to be undertaken for the impiementation of such recommendations. 4.07. By Decefber 31, 1982 or by such other date as the Association- Section not applicable any more because of may agree, the Borrower shall, before carrying out Part I of the Agreement not to implement Part I of the Project. Project, furnish the Association for its approval: a detailed program for the carrying out of such Part of the Project. 5.01. (b) The Borrower shall through SPA: (i) have the accounts - Not adhered to for SPA, long delays in receiving referred to in paragraph (a) of this Section for each fiscal year audit reports for FAFIFAJIA. audited, in accordance with appropriate auditing principles consistently applied, by an auditor acceptable to the Association;- (ii) furnish to the Association as soon as avaitable, but in any case not later than six months after the end of each such year, (A) certified copies of its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and Ciii) furnish to the Association such other information concerning such accounts as the Association shalL froxn time to time reasonably request. 5.02. The Borrower shall undertake all measures necessary to ensure that the villages benefitting from the roads, surface water points - Not complied with until 1985. Complied with in and wells estabLished under Part E (i) and (ii) of the Project shal1i986 and 1987. contribute in cash or in kind not less than (20%) of the total investment and maintenance costs thereof. 5.03. The Borrower shall, starting July 1, 1987, cause Its services- Not complied with. and agencies charged with road maintenance and maintenance of public utitities to maintain all roads and water supply facilities related to the Project in Mahajanga Province, to make all necessary repairs and renewals thereof proptly, all in accordance with appropriate engineering and financial practices and make appropriate financial arrangements therefore. 5.04. Borrower shall, annually, exchange views with the Association- Never corrptied with. and IFAD: (i) on key issues of the Borrower's policy related to the livestock subsector and the Borrower's plan of action for the development of such subsectors; and (ii) on the pricing of meat, including the criteria for the pricing 5.05. By December 31, 1982 or by such other date as the Association- Never coeplied with. may agree, the Borrower shall prepare and submit to the Association a five-year plan for the Veterinary and Livestock Services within the MORRA; such plan shall contain: (i) quantified targets for the activities of the Veterinary and Livestock Services that are projected for such period, including any increase of coverage to be provided by the Veterinary Services; and (if) projection of the budieta allocations needed for the i nlementation of such plan.  - 25 - 5.06. By December 31, 1982 or by such other date as the Association- Arplied research program was abandoned. may agree, the Borrower shall prepare and transmit to the Association a policy paper which shall define the major aims of livestock research in Madagascar and specify the topics of research to be undertaken over the period 1982 through 1986. 5.07. The Borrower shall ensure that all veterinary products sold - Partial compLiance; prices were not adjusted to by the central pharmacy shall be sold at prices covering aLl costs reflect inflation. incurred by the Borrower for such veterinary products. 5.08. By December 31, 1982, or by such other date as the Association may agree, the Borrower shall make available to FAFIFAKA- Never complied with the services of all employees who were formerly employed by the Livestock Service in Mahajange Province. 5.09. By June 30, 1987, the Borrower shall: (i) review all arrangements made for the continuation of the Veterinary and - The decret dissolving FAFIFAMA was adopted in April Livestock Services in Mahajanga Province; and (ii) take all 1990. financial and organizational measures appropriate to ensure the continuation of such services. 5.10 The Borrower shall inform the Association of any measure planned to change FAFtFAHASs management or capital structure - Complied with. sufficiently in advance of effectiveness of such measure to enable the Association to commenm upon such measure. 5.11. (a) The Borrower shalt, annually while the Project is being - Partially complied with. executed, make sufficient budgetary and foreign exchange allocations for the purchase of veterinary products. 5.11. (b) By Decemiber 31. of each year while the Project is being - Partially complied with; list was once made for a executed but only as long as H (i) of the Oroject is partly financedthree-year period. out of the proceeds of the Credit and Fund Loan, the Borrower shall prepare a list of veterinary products to be imported by the Borrower during the following year and their prices and furnish a copy of such list to the Association for its approval. Such lists shall exclude veterinary products to be distributed to FAFiFAMA for the Mahajanga camponent. 5.11. (c) By March 31 of each year while the Project is being - Not complied with. executed but only as long as Part H ti) of the Project is partly financed out of the proceeds of the Credit and Fund Loan, the Borrower shall prepare a report on the distribution of the veterinary products imported by the Borrower during the previous year and furnish a copy of such report to the Association for its commonents. 5.12. Borrower shalL ensure that MODRA shall exercise, at all - Partially complied with as a result of times, the authority for technical and management supervision of institutional changes. SECIAM, SEVIMA and SOFIRAC. 5.13. During all times while the Project is being executed the - Production of vaccine has been uneven. Due to Borrower shall ensure that SPA assures the timely production of institutional changes, SPA was no longer able to adequate quantities and qualities of vaccinos produced by the guarantee produ-tion. Central Livestock Laboratory and the distribution thereof.  - 26 - 8. Use of Bank Resources A. Bank Personnel (man-weeks) StatffInputs IF8 I8 I I StaffII YJ3I FY84 FY85 I FY86I FY87 FY88 A F89 TOTAL Identification 16.3 16.3 Preparation 3.7 3-7 Appraisat 69.8 69.8 Negotiations 3.7 3.7 Supervision 2.8 3.8 13.8 8.8 14.5 11.0 23.4 3.9 82.0 Project Achinstration - 0.7 - 0.7 TOTAL 96.3 4.5 13.8 8.8 14.5 11.0 23.4 3.9 176.2  - 27 - 8. Use of Bank Resources B. Supervision Mission Information Stages in I Nnth/veor INuber of Days in Specializations Perfo ue Trenid e/ Types of Project cycle _pers Field rq.ented ./ .Rakng . problem Appraisal 6/1980 7 - - - - Post-appraisal 11/1980 2 - - - supervision 1 3/1983 1 10 F 2 2 F 2 10/1983 5 10 F,L,O,T 2 2 F,H 3 5/1984 2 20 F,L 2 2 F,H 4 11/1984 1 15 L 2 3 N,F,T 5 6/1985 1 15 L 2 1 M,T,F 6 2/1986 1 17 L 2 - 7 6/1986 1 20 L 2 8 12/1986 1 15 L 2 - p F: Financial Analyst; T: Training Specialist; L: Livestock Specialist; 0: other. h/ 1: Little or no problems; 2: Ninor problems; 3: Inportant problems. O/ 1: Improving; 2: Statioary; 3: Worsening. gl F: Financial; M: managerial; T: Technical.  - 28 - 9. Economic Anatysis A. Economic Prices of Beef I/ (constant price of 1990) Unit Price Projection in year 2000 of price at export for malagasy beef. FOB Mahajanga price for boneless and frozen beef 2/ Swiss franc per kg 2.43 FMG per kg 2.763 FO Mahajanga price for skins 3/ French franc per skin 20.91 FPG per skin 5,228 Local port costs, hardling and transport 4/ - boneless beef - skins FMG per kg 55 fHG per skin 5 Value of exported meat at staughterhouse FMG per kg 2,708 FMG per head 2/ 346,624 VaLue of skins at slaughterhouse FMG per head 5,223 Value of 5th quarter at staughterhouse FMG per head 36,000 TotaL value at slaughterhouse FMG per head 387,847 Slaughterhouse costs, boning and packaging I/ F140 per head 58,177 Costs for collection, transportation and transit of animals Z/ FMG per head 6,464 Farmgate price O/ - live weight FMG per head 323,206 FHG per kg 923 - carcass FMG per kg 1,901 1/ Madagascar is a net exporter of beef. ZI Actual prices of malagasy exports increased by 9%, adjusted according to the tendency of the world price increases between 1990 and 2000 (World Bank - December 1990). A/ In constant 1990 prices. 4/ 2% of FOB price for meats and 1 % for skins. A/ On the basis of cattle at 350 kg of live weight with a carcass yield of 49% and a deboned carcass yield of 75%. .Q/ Estimated at 15% of value at slaughterhouse, Including the value of the carcass (1 .5%). 2/ Estimated at 2% per live animal. I Price slightly Inferior to actual market prices which are about 1000 FMg/kg of live weight.  29 9. Economic Analysis B. Economic Price of Pork 1/ {constant price of 1990) unit I PriL FOB Europe price for carcass of $ US per kg 1.30 frozen pork gy Freight and insurance $ US per kg 0.10 CIF price, malagasy port S US per kg 1.40 FMG per kg 2.092 Local costs of inported carcasses FfG per kg 42 at slaughterhouse V/ Value of imrported carcasses at fMG per kg 2,134 slaughterhouse FMG per head 170,720 Slaughterhouse costs i)/ FG per head 11,950 Marketing costs I/ FM0 per bead 7,560 Import-substitution prices of FMG per head 151,210 pork at station-6 FMG per kg 1.890 1/ At present, Madagascar neither imports nor exports pork. Interior prices, presently superior by 50% to those of beef, indicate a certain tension on demand; on the International market, however, prices for beef are double the price of pork. The level of unsatisfied demand justifies the import-substitution option chosen to calculate the economic price of pork. 21 In constant 1990 prices. 2/ Estimated at 2% of CIF price. _4t Estimated at 7% of carcass value. A/ Estimated at 5% of live animal value. 13t Price noticeably superior to actual market prices (1500 FMg/kg of live weight).  ________________________________________________ _ 44- B R D 15637(P 44' 4'6' ~~~~~~~~~~~~~~~~418' FBVR MADAGASCAR F I RST VILLAGE LIVESTOCK ANTSERANANA AND RURAL DEVELOPMENT PROJECT PREM/ER PROJEr DTEEVAGE VI4LAGECIS ETr DE DEtZQPPEMENr RURAI K' MAHAJANGA FARITANY / fARITANY DE MAHAJANGA NOSS[-BE FIVONDRONANA RECEIVING INTENSIFIED VETERINARY SERVICE UNDER CREDIT bS MAG / 7 FIVONDRONANA AVANT ENEFICIE O'ENCADREMENT VETER/NA'RE FlAErS/F OAANS LEellV+Ile +Vohe-,- CADRE DU CREDIT 506 .-.AGL PllOT DEVELOPMENT PROGRAMS - MIDDLE WEST UNDER CREDIT 50 MAG I bo ? K + PROGRAMMES PILOTES OU MOYEN - OUEST DANS LE CADRE DU CREDIT 506 MAG * OMBY STATE RANCHES / RANCHES DE LA FERME D'ETAT OMfBY BITUMINOUS SURFACED ROADS / ROUTES A SURFACE dIUWMFE Sombov - ALL WEATHER ROADS / ROUTES PRATICABLES rOUTE L'ANNFE e oo RAILROADS /CHEMINS OF FER o FARITANY BOUNDARIES iLUMITESDESFARITANY A.oloI~vo0 FORMER PREFECTURE BOUNDARIES I LIMITES DES ANCIENNES SOUS PREFECTURES FIVONDRONANA BOUNDARIES (SHOWN IN MAHAJANGA FARITANY ONLYI) AntIDhIhy\ Anlcho LIMITESEDES FIVoNDRoNANA fMON TREESJNIGUEMENTrOARS LE FA A/TANYDG MAHAJANGAI + r ALL WEATHER AIRPORTS I AEROPORTS OUVERTS rOUTE L'ANNEE e flordno7 CAPITAL / CAPITALE FARTAN CAPITALS I CAPI TALES DES FARITANY orE 0 CHIEF TOWN IN FIVONDRONANA / Al Mor?nr e l r PRINCIPALE VIE DES FIVONDRONANA O CHIEF TOWNS IN fORMER PREFECTURES/ J' , '* ' Moo ",o,o PRI41PALE VILLE DESANCIENNES SOUS. PREFECTURES, i> ' '- .. -16' ~~ o,sr f'/0 .1, Ferive Mainfira\ ~bhdZ AinoonrZco 18 Ger 6 Mtointirono o MjAncooe1roe prndono IS' , ~~~~~~~~~~~~~~~~~~~~~Ak-e .z.e _jn~o~ TOAMASiNA /~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Channel c Belo Su M.ond .az O Folol Xmbpt o ePy VIrnd -20'J s I o ~ vro < O c e a n 20 Morondavq Mohobo Mol .mbondP Mono o Y "v'4"n fonodsonO Monanjiry Mo'I2o' Re,b,oho 22 Ankoooe,eno -~~~~~~~~~~~~~~~~~~~~.0O 0I 5 1?0 0 I20 20K o Mok-kwob0 50 100 150 MILES Morombe . Av<Soi ro1\.- 0/aoP, ; j Vohnpeno P , X / Fo~~~rafangano -24' 24'- in,, Ap h.$ 00- l voop 6 oOd byvB rhe W01 Be'S. 61eS ocO,hl '