Morocco - Rainfed Agriculture Development Project

Report No. PID9767 Project Name Morocco-Rainfed Agriculture ... @ Development Project Region Middle East and North Africa Region Sector Other Agriculture Project ID MAPE69124 Borrower(s) GOVERNMENT OF MOROCCO Implementing Agency Address MINISTRY OF AGRICULTURE, RURAL DEVELOPMENT, WATER AND FOREST Address: Direction des amenagements fonciers (DAF) Contact Person: Mr. Mohamed Milourhmane, Director Tel: 212-37-29 99 45 Fax: 212-37-69 84 34 Email:milourhm@agr.madrpm.gov.ma Environment Category B Date PID Prepared January 15, 2002 Projected Appraisal Date January 24, 2002 Projected Board Date June 11, 2002 1. Country and Sector Background Sector Background. With a GDP per capita of about US$1,250, Morocco is a middle-income country, but GDP growth fell from 4.4w in 1986-91 to 1.9w in 1991-98, causing Morocco to lag behind other countries in the MENA Region. With population increasing at 1.8w annually, this low growth rate has implied virtual stagnation of per capita income. The contribution of agriculture to overall growth turned negative in 1991-99: minus 0.3w p.a., representing a sharp drop from the positive contribution of 0.8w p.a. in 1986-91. This was a key reason for the increase in poverty. Beyond the effect of droughts, poor agricultural performance was also caused by a distorted incentive framework, mainly for "strategic commodities" which include soft wheat, sugar beet and cane, and oilseeds.In Morocco, 47T of the total population and most of the poor live in rural areas. Agriculture remains a major economic sector and the leading employer (about half of the work force). Hence, agricultural performance plays a crucial role in determining the living standards of rural households. Agriculture in Morocco accounts for about 179 of GDP but this varies, mainly due to climatic variations, primarily rainfall; for example, during the 1999 drought, agriculture only contributed 14.8w of GDP. About 90t of arable land is rainfed, and therefore variable rainfall has translated into wide fluctuations in yields and production. Agriculture in Morocco is characterized by a dichotomy between the irrigated and rainfed sectors, which represent respectively 14t (1.2 million ha) and 86t (7.5 million ha) of total arable lands. The rainfed sector consists of small traditional farms involved predominantly in cereal, legume and livestock production which, under normal rainfall conditions, contribute about 70t of  agricultural GDP. Cereal production is the most significant agricultural activity, accounting for about 70t of all agricultural land. It is therefore the major determinant of agricultural GDP, and its high variability under uncertain rainfall leads to high variations in agricultural GDP.Under normal rainfall, rainfed areas contribute substantially to the country's agricultural production, since they provide about 75t of total cereal, legume and pulse production, 70; of oil production, 25t of milk and cultivated fodder, 18t of horticulture products and 15t of sugar production. Moreover, rainfed or pastoral and agro-pastoral livestock production covers about 13 million ha of rangelands, which provide more than one-third of the total livestock feed needs and 709 of total meat production.Sector Issues. Despite recent Government efforts, the performance of the agricultural sector has been lagging and growth has stagnated. More broadly, the rural sector in Morocco is characterized today on the social front by a worrisome increase in poverty and on the ecological front by worsening natural resource degradation (water, soil, forest and rangeland). These factors contribute to increasing pressure on arable land, increasing natural resource vulnerability to drought and desertification.Rainfed areas in particular are facing new challenges and are confronted with major issues:Climatic Fluctuations. The uncertainty linked to the variations in climate and rainfall, including frequent droughts, is the principal feature of rainfed agriculture. However, the balance which has existed since the turn of the century between rainfall deficits and surpluses seems today to have been broken. Morocco lived through its longest and driest period of the century from 1973-95, during which only three truly rainy years occurred (1974, 1977 and 1978). Since 1975, the number of "dry years" has tended to exceed the number of "rainy years." Beyond their negative effects on the water-soil-plant system, drought periods have a strong impact on rural incomes and employment opportunities. Moreover, droughts increase the precariousness of rural populations' livelihoods, and contribute to accelerated land degradation by increasing the pressure on rangelands and forests.Troubling poverty. The latest Poverty Update findings show that while poverty had declined from 21t to 13w, it returned to 19t in 1998 affecting 5.3 million people. The vulnerable population also increased dramatically over the same period, from 9 to 12 million, or about 45 percent of the population. Poverty remains a predominantly rural phenomenon and the number of rural inhabitants living in extreme poverty has tripled from 1991 to 1998 period. The Update indicates that 7 out of 10 socially marginalized persons are living in rural areas, although poverty and exclusion are not felt with the same degree in the various regions of the country. Poverty is more acute in the Central North, East and Central South Regions where 25t of the population is affected. Poor performance of rainfed agriculture, due to the increasing rainfall deficit, the distorted pricing policy for cereals, and low public investment, have undermined progress in reducing absolute and relative rural poverty. Social indicators in rural areas are similar to those in countries with much lower per capita incomes, and the gap between urban and rural living conditions is considerable: for example, access to potable water and electricity is universal in urban areas, but only about 30t in rural areas; illiteracy stands at 37T in urban areas, but at 67T in rural areas where 54t of children do not attend school and 57T of villages are not server by usable road network. A large technological gap. The development of rainfed areas has been constrained by tradition which bears witness to a solid cultural identity, but which has also - 2 -  entailed a failure to enjoy the benefits of modern science, especially technological advances. This technological gap shows up clearly in the extent of intensification, notably concerning mechanization and the use of agricultural inputs. For instance, the number of tractors in rainfed areas is close to 43,000, while the needs are estimated at 77,000. Similarly, only 50t of farmers are using fertilizer, and this percentage drops to 33t for pesticides and 16t for certified seeds. This technological gap explains in part the limited achievement of productive potential in rainfed areas even though considerable opportunities exist for progress, particularly in cereals and livestock production.A low level of investments. Rural areas, especially rainfed areas, have been historically neglected in terms of access to productivity-enhancing basic rural infrastructure, broadly defined to include access roads, small and medium-scale irrigation, potable water, electrification and communications, as well as services such as health, education (especially for girls) and research and extension. More specifically, agricultural public investments represent on average about 12t of total public investment, but over 60t of the MADREF's investment budget goes to large-scale irrigation, and little goes directly to poor rainfed areas. Fragile ecosystems. Demographic growth and human pressure on agricultural lands in the rainfed areas have resulted in the destruction of vegetative cover and consequent erosion, the intensity of which depends on the topography and the nature of precipitation and wind. Moroccan soils are fragile, particularly in the arid and semi-arid areas which cover almost all of the country, and are susceptible to the various forms of erosion. It is estimated that more than 50t of lands are exposed to some form of erosion and that 25t of watershed surfaces face sizable risks of erosion. Erosion is also encouraged by inadequate land management and cultivation practices, as well as by low adoption of soil and water conservation techniques. Government Strategy. In response to growing rural poverty, the objectives of equity and inclusion, repeatedly stressed by King Mohamed VI, have become integral parts of the Government's program. In particular, the Government is intensifying its efforts towards the poorest areas through several measures: (a) the extension of the "BAJ" (basic priorities) program from 16 to 46 provinces; (b) the acceleration of rural infrastructure programs for potable water (PAGER), rural roads (PNRR) and electricity (PERG) with a view to reaching 60-70w of the rural population by 2004; and (c) a set of integrated and participatory rural development programs targeted at disadvantaged areas. To reduce the impact of the recent droughts, the Government has also implemented over a 15-month period (from April 2000 to June 2001) an ambitious Drought Emergency Program prepared by the Permanent Interministerial Rural Development Council (CIPDR) chaired by the Prime Minister and implemented at the provincial level under the authority of the governors.Besides these Government programs, MADREF recognizes that past efforts and approaches in rural areas have failed to reduce poverty, to boost agricultural production and to reverse natural resource degradation. The "2020 Rural Development Strategy", published in December 1999, emphasizes the need for local participatory development with three underlying guiding principles: (a) decentralization (Territorialisation and Deconcentration); (b) integration; and (c) participation. This vision is now being translated by MADREF into action plans. The process re-emphasizes the high priority given to the development of rainfed areas in the Five Year Plan. Key points are:A more coherent institutional setup for rural development is being implemented. In this context, MADREF will: -3 -  (a) focus on its core business of agricultural development, but also (b) facilitate and coordinate rural development programs as a whole by mobilizing other key players (including both public and private sectors, and non-governmental organizations (NGOs) and assisting local governments (Collectivites locales) and communities in designing and implementing their development programs;MADREF intends to adopt a "program approach" for rainfed area development, similar to the model adopted for the IBCD program. For this reason, MADREF wishes to include a strong institutional development component in the proposed Project to develop the capacity and tools to identify, prepare, implement and monitor new operations;MADREF wishes to develop regionally adapted approaches - basically poverty reduction approaches for poor, low-rainfall, remote areas (Bour defavorable) and agricultural growth approaches in higher rainfall areas (Bour favorable);The rainfed areas strategy implies decentralization and participation. MADREF is aware that this will require reform of its provincial departments (Direction provinciale de l'agriculture, DPA) and extension centers (Centres de travaux, CT, and Centres de mise en valeur, CMV). Hence, MADREF is working on developing a comprehensive restructuring plan; andMADREF wishes to develop further its partnerships with civil society, mainly NGOs, farmer organizations (Organisations professionnelles agricoles, OPA) and public foundations, such as the Agence de developpement social (ADS) and Fondation Mohamed V. 2. Objectives The Rainfed Agriculture Development Project (RADP) is the first phase of a wider program which aims to assist the Ministry of Agriculture, Rural Development, and Water and Forests (MADREF) implementing the "2020 Rural Development Strategy" in rainfed areas.The overriding goal of the RADP is to improve the livelihoods of smallholder farmers in rainfed areas by promoting local participatory development and fostering sustainable agricultural development. To this end, the proposed Project would have the following specific objectives:To build institutional capacity for project identification and implementation in rainfed areas in partnership with local organizations.In six priority areas: (a) to improve the livelihoods and incomes of the local population; and (b) to promote sustainable development of rainfed agriculture farming systems and reduce their vulnerability to drought.This project has been developed around three guiding principles: (a) to align programs for rainfed agriculture development with the objectives of MADREF as contained in the Rural Development Strategy; (b) to develop new approaches for rainfed agriculture development which take into account the impact of recurrent drought and regional differences; and (c) to focus on "priority action zones" (PAZs) selected on the basis of such criteria as level of poverty, shortage of basic infrastructure, access to social services and natural resource degradation. 3. Rationale for Bank's Involvement The Bank's participation provides for greater continuity in the implementation of a long term-rural development strategy. Since the establishment of its Country Office, the Bank has maintained a continuous dialogue on rural development with the Government and MADREF. In particular, the Bank was able to obtain a PHRD grant from the Government of Japan to support MADREF in preparing its "2020 Rural Development Strategy" which led to the identification of two lending operations: IBCD and the proposed RADP. Preparation work for these two projects was also - 4 -  supported by the PHRD grant.The Bank has acquired considerable experience in Morocco and worldwide on community dialogue and operations dealing with poverty alleviation issues, integrated rural development and sustainable natural resources management. The Bank can facilitate access to information in an advisory capacity on design and implementation issues and lessons learned with comparable projects.In Morocco, the Bank is also involved in several sectoral programs (e.g. BAJ, PAGER, PNRR, Promotion nationale and Agence de developpement social) which contribute to developing rural areas, and is therefore well placed to promote integration among these programs. 4. Description The proposed Project consists of two complementary components: (a) institutional strengthening aimed at developing the capacity and the tools, at both the central and local levels, to identify, prepare, monitor and implement new operations in rainfed areas; and (b) development activities in six "priority action zones" PAZs, i.e. the Atlas Mountains (Taroundant), High Eastern Plateaus (Boulemane), Pre-Saharan Oases (Tata), the Central Arid Zone (Khouribga), the Cereal Plains (Khemisset), and the Rif foothills (Sidi-Kacem). These PAZs are among the poorest areas in the country and are suffering from major handicaps in terms of rural infrastructure and access to basic social services. Implementation of the development activities component will be based on two guiding principles: first, project activities will be identified through a participatory approach to meet the real needs of beneficiaries; and second, activities will be adapted to local agro-climatic, demographic, economic and social contexts, by using specific models (Archetypes de developpement) which will be developed for each PAZ. The roles and responsibilities of each stakeholder in the implementation of the components will be specified during appraisal.Component A - Strengthening of Implementation Capacity for Rainfed Agricultural Development This component has been designed to help implement the principles and objectives of the "2020 Rural Development Strategy" in rainfed areas and to develop a structured approach to climatic risks by: strengthening MADREF's implementation capacity at the central level to develop and manage the rainfed agriculture development program, and to ensure adequate monitoring and evaluation of this program. In addition, the proposed Project will provide technical assistance to help MADREF in preparing and implementing a restructuring plan for its field offices; strengthening the local implementation capacity of MADREF's provincial (DPA) and local (CT/CMV) offices, and of local government and community institutions. The project will support training activities and technical assistance to help prepare local participatory "Communal Investment Plans"; and developing new instruments of sectoral policy, notably a drought management strategy, and demand-driven research funding mechanisms. In addition, the proposed Project will support: (a) the strengthening of the decentralized research network; (b) the preparation of technical reference manuals for each PAZ; and (c) the preparation of collective rangeland management studies.Component B - Rural Development Activities in Priority Areas.Under Law No. 33-94, which allows the State to intervene in legally designated rainfed development sites (called PMVB), the proposed Project will finance activities to promote sustainable agricultural development, to improve access to basic infrastructures and services, and to develop income generating activities, both off-farm and on-farm. Seven PMVB would be involved, over a period not exceeding three years per site, in the six - 5 -  PAZs which have been identified. Activities are organized in three sub-components: agricultural and pastoral development, to increase the productivity of agricultural systems, to improve natural resource management and to mitigate the effects of drought, notably through soil and water conservation works; rural infrastructure (including rural roads, small and medium-scale irrigation, and pastoral water points) and technical assistance to the Rural Communes (RC) in the preparation of comprehensive Communal Investment Plans (CIP); and support to local initiatives to promote partnership aimed at empowering local organizations, including NGOs and farmer associations. 5. Financing Total ( US$m) BORROWER 7 IBRD 27.27 Total Project Cost 34.27 6. Implementation Implementation Period: 6 yearsGiven the emphasis put on institutional strengthening and the delays inherent to local participatory programming, the mission considered that the project will require a six year implementation period, rather than the five years proposed in the preparation report. MADREF, in consultation with MOF, will confirm this choice prior to the appraisal missionArrangements for project coordination and implementation have been modelled on those recently agreed for the Bank-supported IBCD program. They are as follows:Project CoordinationAs for the IBCD program, project oversight and coordination would be carried out largely through existing institutions at the national and local levels.At the central level, overall project coordination will be assumed by the existing Permanent Interministerial Rural Development Council (Conseil interministeriel permanent du developpement rural, CIPDR) chaired by the Prime Minister and comprising all the ministers involved in the rural development agenda. The Council is assisted by a Rural Development Committee (Comite interministeriel permanent du developpement rural) made up of the General Secretaries of all the concerned ministries with MADREF as the Secretariat. A National Coordinating Committee (NCC), which will consist of the formalization of the existing Project Steering Committee, would constitute a permanent technical sub-committee of the CIPDR.At the provincial level, the existing Provincial Technical Committee will be responsible for coordination, working through its sub-committee, the Core Rural Development Committee (Comite restreint pour le developpement rural, CRDR). The Provincial Director of Agriculture would be the Secretary of the CRDR.At the communal level, a Local Development Commission (Commission locale de developpement, CLD) will be established. This is an innovation compared to the IBCD program, designed to decentralize project coordination and implementation to the lowest possible level to create maximum opportunity for community participation. The appraisal mission will review with MADREF the proposals made for the establishment of the CLD as the mechanism for consultation at the communal level. The operating policies and procedures and responsibilities of the CLD would be based on those of the existing Rainfed Agriculture Development Commissions (Commissions locale de mise en valeur agricole) established under Law No. 33-94 Law but would be expanded in term of mission and membership.Project ImplementationAs for project coordination, project implementation would - 6-  take place as much as possible through existing institutions. MADREF would be the executing agency through its central directorates and its provincial and local representations (DPA, CT and CMV). More specifically, project implementation arrangements will be as follows: Project Management. During pre-appraisal, it was agreed that the proposed project will be administratively attached to the Department of Land Development (Direction des amenagements fonciers, DAF) in MADREF and that the existing Project Management Unit (Cellule de gestion des projets PMVB, CGP) responsible for supervising the PMVB program will be strengthened to ensure adequate management of the Project according to Bank requirements. At the provincial level, the respective DPAs will be responsible for the management of the Project, with the exception of the agricultural advisory services and the support to local initiatives component which will be implemented by the local extension centers (CT/CMV). Central Supervision and Monitoring Commission. At the central level, the project will rely on this Commission (Commission centrale de supervision et de suivi, CCSS), established under the Law No. 33-94, to develop and implement operational procedures for the PMVB, review investment proposals, and supervise implementation. Its members include representatives of MADREF Departments involved in the rainfed program. It operates as a technical advisory committee to the CGP.Methodological Support Team. At the central level, this team (Equipe pour l'appui methodologique, EAM) will assist the CCSS, for a limited period of time estimated at three years, to provide support to the DPAs and CTs to identify, prepare and supervise local participatory development projects. The EAM will develop local programming instruments, prepare training material, design training programs, and contribute to the monitoring and evaluation system. The EAM will take the form of a network and include permanent staff from the various MADREF Departments involved in the project, as well as specific short-term technical assistance funded by the Project. Participatory Programming Team. At the provincial level, this team (Equipe de programmation participative, EPP) will work with beneficiaries, including rural communes and douars, to identify, prepare and monitor development activities in a participatory way. In particular, the EPP will assist the beneficiaries to formulate their request in the form of Communal Investment Plans (CIP) which will include two parts: (a) an infrastructure development program prepared at the communal level and presented to the CRDR; and (b) a local development program prepared at the community level.Role of the Rural Communes, Communities and Local Associations. The appraisal mission will specified: (a) the roles and responsibilities of each stakeholder in the design and implementation of the components; and (b) the mechanisms to effectively strengthen partnership with the Administration.ProcurementA draft Operation Manual was prepared during project preparation. This manual will be updated during appraisal when an Assessment of Agency Capacity to Implement Procurement will be carried out and the procurement plan finalized. During the assessment, the Overall Procurement Risk Assessment will be defined and prior review thresholds and procurement supervision plan specified. Draft procurement and disbursement arrangements are presented in Annex 6.Disbursement To be finalized during AppraisalThe borrower would establish a Special Account (SA) in MAD with the Treasury (TGR). The authorized allocation would be limited to MAD.... million, representing about 4 months of estimated disbursements from the IBRD Loan. Initially, the allocation would be limited to MAD.... million, while the full allocation will be claimed when disbursements reach US$ ........ million.Full documentation for expenditures under contracts - 7 -  requiring the Bank's prior review will be submitted with the corresponding application. Disbursements for goods contracts below US$300,000, works contracts below US$500,000 and services contracts and training below US$100,000 for consulting firms and US$50,000 for individuals consultants would be made on the basis of Statements of Expenditures (SOEs). Documentation to support these expenditures would be maintained by the DAF and made available for review by the Bank supervision missions and project auditors.Financial Mangement. The financial management arrangements are detailed in Annex 6 and summarized below.The Financial Management System (FMS) in place in the MADREF, is based on principles and procedures defined by the legal framework applicable to the public sector and more specifically to governmental institutions. MADREF, the implementing agency for the project, through its DAF, is maintaining an accounting system based on the cash basis and the outline of budget components (Morasse) according to the provisions of the Public Accounting Law. As technical Ministry the MADREF is accountable for budgeting, procurement and preparation of payments under the control of structures from the MOF which are accountable for clearing commitments (Contr