Malaysia - Second Rubber Industry Smallholders Development Authority (RISDA) Project

 ICRR 10138 Report Number : ICRR10138 ICR Review Operations Evaluation Department 1. Project Data : OEDID : OEDID: L3699 Project ID : P004329 Project Name : Second Rubber Industry Smallholders Development Authority (RISDA) Project Country : Malaysia Sector : Agro-industry & Marketing L/C Number : L3699 Partners involved : Prepared by : Charles Derek Poate, OEDST Reviewed by : John C. English Group Manager : Roger H. Slade Date Posted : 08/05/1998 2. Project Objectives, Financing, Costs and Components : Building on the overall positive results of the RISDA I project (Loan 3139-MA), this project continued the objectives of increasing the productivity and efficiency of the rubber smallholder sub -sector, improving the institutional effectiveness of the Rubber Industry Smallholders' Development Authority (RISDA) and helping to develop human resources and the private sector in rural areas . Project components included:: (i) agricultural development, including replacing old rubber with new trees and other crops, improvement of nurseries, and maintenance of replanted areas; construction and maintenance of access roads; reorientation and strengthening of extension and training; improvement of mini -estates; and an applied rubber research program. (ii) institutional development of RISDA including development of computerised MIS, expanded staff training, support for M&E and strengthening of RISDA smallholder co -operatives. The total projects costs ultimately were US$ 343.8 million (US$ 253.2 at appraisal). The Bank loan of US$ 70.0 million was approved on January 25, 1994, closed one year late on December 31, 1997, and fully disbursed. 3. Achievement of Relevant Objectives : Agricultural development ans institutional strenghtening objectives were achieveds . The replanting program was 19% above appraisal estimates. The proportion of oil palm - at 25% - was double the appraisal estimate, reflecting the crop's increasing financial attractiveness . The institution building objectives were substantially achieved through the strengthening of RISDA's capacity for human resource development and management, the implementation of a training program for staff and co-operative members and the development of the MIS. Rubber smallholder co-operatives were strengthened through comprehensive rationalisation. 4. Significant Achievements : Extension activities achieved 160% of appraisal targets and increased the proportion of women trainees to 43% against the SAP target of 30%. The appraisal targets for institutional development were exceeded despite financial constraints. 5. Significant Shortcomings : The proportion of extension efforts towards mature rubber fell 30% short of target and the applied rubber research component generally proceeded slowly . 6. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev .: Substantial Substantial  Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf .: Satisfactory Satisfactory Quality of ICR : Satisfactory 7. Lessons of Broad Applicability : Individual projects are unlikely to halt macro -trends in an agricultural industry . Even with increases in labour productivity, growth in farm size may be needed to offset steep declines in commodity prices and rising opportunity costs of labour. Furthermore, the formation of production co-operatives on its own is unlikely to restore comparative advantage and the formation of marketing co -operatives does not guarantee profitability. 8. Audit Recommended? Yes No Why? A sector impact of the Bank supported treecrop program and its povery impact and privatization efforts would be of interest. 9. Comments on Quality of ICR : The ICR is entirely satisfactory and is well -supported with contributions from the Borrower.