Bolivia - Agricultural Technology Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-5372-B0 MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 15 MILLION TO THE REPUBLIC OF BOLIVIA FOR AN AGRICULTURAL TECHNOLOGY DEVELOPMENT PROJECT FEBRUARY 15, 1991 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 AND EOUIVALENCY UNITS Currency Unit - Boliviano (Be) Exchange Rate Effective July 31, 1990 us$1.00 = Bs 3.13 us$0.32 = Be 1.00 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS CIAT - Centro de Investigaci6n de Agricultura Tropical CIFP - Centro de Investigaci6n Fitogenetica Pairumani CIMMYT - Centro International de Mejoramiento de Maiz y Trigo CIP - Centro Internacional de la Papa cNIEA - Consejo Nacional de Investigaci6n y Extensi6n Agropecuaria COTESU - Swiss Fund for Technical Cooperation EMBRAPA - Empresa Brasileira de Pesquisa Agropecuaria GOB - Government of Bolivia 1BTA - Instituto Boliviano de Tecnologia Agropecuaria IBTN - Instituto Boliviano de Tecnologia Nuclear ICA - Colombian Agricultural Institute IDB - Inter-American Development Bank MACA - Ministry of Agriculture and Campesino Affairs GOVERNMENT OF BOLIVIA FISCAL YEAR January 1 - December 31  FOR OFFICIUL USE ONLY BOLIVIA AGRICULTURAL TECHNOLOGY DEVELOPMENT PROJECT Credit and Proiect Summary Borrower: Government of Bolivia Beneficiaries: The small- and medium-sized farmers and their families who live in the highland areas. This is a target population of approximately two million people Executina Aoencv: The Consejo Nacional de Investigaci6n y Extension Agropecuaria (CNIEA), an agency of the Borrower, and the Instituto Boliviano de Tecnologia Agropecuaria (IBTA) Amount: SOR 15.0 million (US$21.0 million equivalent) Terms: Standard, with 40 years maturity Financing Plan: IDA US$21.0 million Swiss Fund for Technical Cooperation USS 3.5 million Government of Bolivia USS S.3 million US$29.8 million Economic Rate of Returns Not Applicable Staff ApDraisal Report: Report No. 8979-BO Map: IBRD No. 22554 This document has a restricted distribution and may be used by recipients only in the .serformance of their official duties. Its contents may not otherwise be disclosed without Wornu "a.aK authorization.  MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF BOLIVIA FOR AN AGRICULTURAL TECHNOLOGY DEVELOPMENT PROJECT 1. The following memorandum and recommendation on a proposed credit to the Republic of Bolivia for SDR 15 million (US$21.0 million equivalent) is submitted for approval. The proposed credit, which would be repayable in 40 years, including 10 years of grace, at IDA's standard terms would help to finance an agricultural technology development project for the Republic of Bolivia. Parallel financing for research components of the project would be provided by the Swiss Fund for Technical Cooperation. The project is also expected to attract considerable cofinancing from other bilateral sources once the project gets underway and the institutional reforms of the implementiag agency (Instituto Boliviano de Tecnologia Agropecuaria, IBTA) are put into effect. 2. Backaround. The GDP of Bolivia suffered a continuous decline in the period 1980-1984 of 2.6% per year. The New Economic Policy instigated in 1985 has stabilized the economy, but GDP still lags behind the population growth rate. By contrast, agricultural GDP which comprised 23% of the value added in 1988, grew by 3.5% per year from 1980-1985 and then declined by 2% per year from 1986-1988. Nevertheless in the short term, agriculture, mining and transport are the sectors best positioned to contribute to accelerated growth in the Bolivian economy. Agricultural production and productivity per hectare have remained relatively constant since 1980, except for the drought year of 1983. The New Economic Policy provides producers of agricultural products with the framework they require to make rational decisions on cropping patterns and management, and offers good opportunities for growth of the sector by satisfying both local and export markets. IDA is supporting export growth potential through the Eastern Lowlands Natural Resource and Agricultural Production Project (Credit 2119-BO), and through a proposed Agro- export Development Project which would establish a Foundation to invest in and handle the marketing of non-traditional agricultural products of primarily, small-scale farmers. 3. In agricultural terms, the country can broadly be divided into two regions: the highlands, where small-scale peasant farming predominates under harsh climatic conditions, and the lowlands, where larger farms and modern technology are more in evidence. The agricultural sector provides about 50% of total employment. Some 80% of the population live in rural areas, but under conditions of extreme poverty. Most of the staple food is produced in the highlands on small- or medium-sized farms, with very low levels of productivity. There is little scope for increasing cropped area in the highlands, unless considerable investment is made in irrigation. On the other hand, the low levels of productivity of the presently cropped lands could be raised if improved technology were used. Due to the particular  expenses; (h) Government would assume an increasing share of incremental recurrent costs after Year 4 of the project, commencing at 10% in Year 4 and reaching 65% by Year 7; (i) by September 30, 1994, IBTA would recruit consultants satisfactory to the Bank to undertake a mid-term review of IBTA's programs, performance and means to ensure the stability of the institute and thereafter implement such recommendations as would be mutually agreed upon between IBTA and IDA; (j) IBTA would hire consultants satisfactory to IDA to undertake the study on Technology Transfer by December 31, 1991, and for Research Requirements in the Lowlands by September 30, 1992; (k) IBTA would develop and enter into contractual arrangements satisfactory to IDA which would bind employees receiving training under the program for MSc and PhD, to provide not less than two months of service to IZTA for each month of training received, before sending any employee for training; (1) Government would annually review the salary scales of IBTA and CNIEA staff so as to maintain competi.tive salaries satisfactory to IDA; (m) the first two contracts for goods and civil works, irrespective of their amounts, would be subject to review by the IDA before being awarded; and (n) the accounts of IBTA and CNIEA would be audited on an annual basis by an independent auditing agency acceptable to IDA and the audit reports would be submitted to IDA within six months of the close of each fiscal year. Conditions of Effectiveness: (a) IBTA would enter into a technical assistance arrangement, satisfactory to IDA, with another research agency, under terms acceptable to IDA; (b) IBTA would enter into a contractual agreement, satisfactory to IDA, and with CIFP to carry out research on corn and grain legumes; (c) IETA would have in position the program leaders for the agreed research program; (d) the Government of Bolivia would enter into subsidiary agreements with IBTA for the Technology Development component of the project; and (e) GOB would implement the new salary scales for IBTA and CNIEA, including the positions specified as "Cargos Criticos." 10. Proiect Benefits and Justification. The economic rates of return from agricultural research are particularly high when the initial level of technology is relatively low and there is widespread adoption by the intended beneficiaries. In the highlands of Bolivia the current level of technology is low. The design of the research program is such that the technology generated would be especially tailored for use by small-scale farmers. At present, delivery systems for technology are largely handled by NGOs and regional corporations. The project would help to coordinate these efforts through the CNIEA, and evaluate the need for additional mechanisms to support local or regional extension services. The project concentrates on the most important staples and sources of income for the smallholders in the highland areas (the highland crops covered provide 54% of the total food consumption of grain, 67% of tuber requirements, and close to 100% of grain legume consumption in Bolivia). An estimated 2-3 million rural inhabitants could benefit from the project. Net annual benefits to farmers and consumers from increased productivity are conservatively estimated to be of the order of US$4 million for potato, US$5 million for maize, US$0.5 million for quinoa, US$1 million for barley and US$1 million for Faba beans. Much of the production is for family consumption. In the case of technology to be developed to improve the raising of sheep and cameloids, women would be the main direct beneficiaries, as such livestock are almost exclusively tended by women. They also handle the processing of the wool and fibers; a major source of cash income for the family.  - s - 11. Environment. The project is considered environmentally benign in that good agricultural technology and husbandry indeed signifies the control and judicious use of resource!i. The emphasis of the project would be on such aspects as varietal resistance and biological control of diseases and pests that obviate the need for heavy use of noxious and expensive agrochemicals. Furthermore, improved management of pasture in the Altiplano could help prevent wind erosion, which is a major problem. 12. Proiect Risks. The basket of commodities to be researched in the project spreads risk. Furthermore, the project's planning and evaluation processes allow a flexible approach to resolving unexpected problems. A major risk is that either the technology is not suitable for farmers' conditions or that the transfer mechanisms are not effective. The project has been designed to include an essential component of technology testing and adaptation to minimize the risk of generating technology that does not meet producers' needs. The special study on extension and the coordinating role of the CNIEA should provide information on how to ensure that producers are aware of the new technology and give insights into deficiencies that need to be corrected. 13. A ma3or uncertainty in this project is the capacity of IBTA and the CNIEA to execute and manage a program of this magnitude. The design of the project includes considerable assistance by international advisers to obviate this problem. The project also involves a reduction in the scope of IBTA's activities and a reduction in its personnel to better focus its efforts. In view of the political difficulties such actions frequently encounter, the project design provides for such key actions to be taken at the outset of the project. Recommendation 14. I am satisfied that the proposed credit will comply with the Articles of Agreement of IDA and recommend that the Executive Directors approve the proposed credit. Barber B. Conable President Attachments February 15, 1991 Washington, D.C.  -6- SCHEDULE A BOLIVIA AGRICULTURAL TECHNOLOGY DEVELOPMENT PRJECT Proiect Costs Local Forelqn Total ------ - (US$ MillLons)------------ Training 0.34 2.20 2.54 Technical Assistance 0.43 2.96 3.39 Infrastructure 0.79 0.40 1.19 Equipment & Vehicles 0.42 2.43 2.84 Other Investment Costs 0.37 0.33 0.71 Personnel and Operations 10.10 3.60 13.70 Total Base Costs 12.45 11.92 24.37 Physical Contingencies 0.17 0.30 0.46 Price Contingencies 3.22 1.71 4.93 TOTAL 15.84 13.93 29.76 Financina Plan Swiss Technical Cooperation USS 3.5 million Government of Bolivia US$ 5.3 million IDA US$21.0 million Total US$29.8 million Estimated Disbursements I9 I= 19= IM9 199 1996 199 1998 Annual 0.8 '.3 2.7 3.4 3.4 3.4 3.6 1.4 Cumulative 0.8 J.1 5.8 9.2 12.6 16.0 19.6 21.0  PROCURE_ENT ARRANGEMENTS (US$ Millions) ICB Procurement LCB Procurement Other Procurement Total procurement Total IDA Other Total IDA Total IDA Other Total IDA Other INFRASTRUCTURE 1.0 (1.0) 0.5 (0.3) 0.2 1.5 (1.3) 0.2 TRAINING 2.9 (2.6) 0.3 2.9 (2.6) 0.3 TECHNICAL ASSISTANCE 3.8 (3.8) 3.8 (3.8) --- VEHICLE & EQUIPMENT 1.6 (1.6) 1.6 (1.6) 0.3 0.3 3.5 (3.2) 0.3 OTHMS 0.8 (0.6) 0.2 0.8 (0.6) 0.2 INCREHENTAL COSTS 17.3 (9.5) 7.8 17.3 (9.5) 7.8 TOTAL 1.6 (1.6) 2.6 (2.6) 25.6 (16.8) 8.8 29.8 (21.0) 8.8 (1) Swiss Technical Cooperation would finance US$0.2 million of civil works, US$0.3 million of vehicles and equipment. US$0.3 million of training and US$2.7 million of incremental operating costs. (2) Government would finance US$0.2 million of other Investments and US$5.1 of incremental operating costs. CA I- 0  SCHEDULE C BOLIVIA AGRICULTURA8 TECHNOLOGY DEVELOPMENT PROJEC Timetable for Key Protect Processing Events (a) Time taken to prepare: 9 Months (b) Prepared by: FAO/CP and IDA (c) First Bank missions March 1990 (d) Appraisal Mission Departure: June 18, 1990 (e) Date of Negotiations: January 22-25, 1991 (f) Planned Board Presentation: March 12, 1991  9- SCHEDULE D Page 1 of 2 STATEMENT OF BANK LOANS AND IDA CREDITS IN BOLIVIA (as of December 31, 1990) Amount (less cancellations) Ccadit Fiscal ------------------ Undis- Number Year Borrower Purpose Bank IDA bursed 16 Credits and 19 Credits fully disbursed 274.78 205.09 17030 tS) 1986 Bolivia Reconstr. Import Cr. 55.00 0.76 17190 1986 Bolivia V G Gas-Enclave 15.00 0.17 18090 1987 Bolivia Financial Mgt (PFMO) 11.50 1.68 18180 1987 Bolivia Power Sector Rehab 6.80 1.22 18280 (S) 1987 Bolivia Reconstr. Import Cr. II 47.10 12.69 18420 1988 Bolivia La Paz Municlpal Devt 15.00 4.60 18820 1988 Bolivia Emergency Soc. Fund II 27.00 0.19 19770 1989 Bolivia Econ Mgt Strength Opn 9.70 6.06 20120 1989 Bolivia Export Corridors 37.00 33.29 20130 1989 Bolivia Mining Sector 35.00 37.05 20920 1990 Bolivia Integrated Health Devt 20.00 20.98 21190 1990 Bolivia Eastern Lowlands 35.00 37.20 21270 1990 Bolivia Social Invest't Fund 20.00 21.20 21340 1990 Bolivia Private Enterprise Devt 16.10 17.55 19253 (S) 1991 Bolivia Financial Sector - C 14.50 14.60 21870 1991 Bolivia Water Supply & Sewerage 35.00 35.38 399.70 244.62 TOTAL 274.78 604.79 Of which repaid 141.96 10.56 Total held by Bank & IDA 13Z.82 594.23 Amount sold 0.05 Of which repaid 0.05 Total Undisbursed 244.62 -U-  - 10 - SCHEDULE D Page 2 of 2 axLTvtA Statenmem of IFC Investments as of oecemi,er 31. 1990 Totat Undisbursed Totat Including Investment Ffscal - COImitments -.Hetd Participants Number Year. ObLifor gusiness E= tv Loan Total AV Im Portion 237 SOL 1973 PIasmar Products PLastic 100 300 ;400 10O 344 8aL 1976/ Banco tnd. Devetopment 1988 S.A. Finance 5S0 10,000 10,550 10,000 3,250 389 SOL 1977 Notfno Wheat Andino HiLLing - 2,300 2,300 336 801l 1976 Banco Money - Capital Hipotecarfo Markets 337 337 S44 SOL 1981 C3N MaLt Food 5,700 5,700 929 901. 1987 Mlnera C9ncepcM on Mining 1,200 1,200 480 1178 SO 1990 Cia Minera Silver, Zinc del Sur S.A. Lead Mining 7,000 7,000 7,000 3,000 1990 Minera S.A. (parent of Cia Minera del Sur S.A.) 33000 -3000 3 Total -3,987 26,500 30,847 20,580 6,250 January 31, 1991  IBRD 2255,1 9 01o 10 2zSw0 B R A Z I L, GiUTRLTCNLG M