Thailand - Chao Phya Irrigation Improvement Project

FILE COPY DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Not For PubLic Use Report No. 24 A-TH APPRAISAL OF CHAO PHYA IRRIGATION IMPROVEMENT PROJECT THAILAND March 16, 1973 Agriculture Division Asia Projects Department This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the Iaccuracy Or completeness of the report.  CURRENCY EQUIVALENTS US$1.00 - Baht (B) 20.8 BI - US$0.048 US$1.00 million- B 20,800,000 B1 million - US$48,000 WEIGHTS AND MEASURES (METRIC SYSTEM) 1 hectare (ha) n 2.47 acres-6.25 rai 1 kilometer (kim) - 0.62 miles 1 meter (i) - 3.28 feet 1 million cubic meters (Mn3) - 810 acre feet 1 ton - 1,000 kg - 2,205 pounds ACRNYMS MAAC a Bank for Agriculture and Agricultural Cooperatives NEDECO - A Netherlands Consulting Group RD1 - A High-Yielding Rice Variety RID - Royal Irrigation Department USBR - United States Bureau of Reclamation FISCAL YEAR October 1 - September 30  THAILAND APPRAISAL OF THE CHAO PHYA IRRIGATION IMPROVEMENT PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ............................... i-iii 1. INTRODUCTION .......................................... 1 II. BACKGROUND ............................................ 1 Gene'ral ..................... ..................... The Agricultural Sector ..... ..................... 2 Development in the Chao Phya Plain ............... 2 III. THE PROJECT AREA ................................ 5 General .......................................... 5 Climate ........................ 5 Soils, Topography and Drainage ............. 5 Farm Size and Land Tenure ................ 6 Existing Irrigation Facilities . . 6 Agricultural Production ................... 6 Transportation and Marketing .............. 7 Pilot Projects ..................... 7 IV. THE PROJECT ..... 8 Description ...................................... 8 Project Works ....... ............................. 8 Second Stage Study ...... ................... 9 Water Supply, Demand and Quality ................. 9 Engineering Design ...... ......................... 10 Cost Estimates ................................... 10 Financing ........ ............................... 11 Procurement . . .................................... 11 Disbursements .................................... 12 Accotints and Audits ...................... . ........ 13 Project in Relation to Ecological Conditions 13 V. ORGANIZATION AND MANAGEMENT ........................... 13 Project Management and Coordination ............. . 13 Consultants' Services ...... ...................... 15 Implementation of Project Works ........ .......... 15 This report is based on the findings of an appraisal mission, composed of Messrs. A.A. Meimaris, A.J. Otten (IDA), D. Benor, and P. Judd (consultants). Mr. P. Whitford also made a material contribution to the preparation of the report.  -2- Page No- Supporting Agricultural Services ........ .. 16 Operation and Maintenance ........................ 17 Recovery of Costs .. ....................... 18 VI. PRODUCTION, MARKET PROSPECTS, PRICES AND FARMERS' INCOME .................. 20 Production ............... 20 Market Prospects ................ 21 Prices ........ 21 Farmers' Income . ................... . .... 22 VII. BENEFITS AND JUSTIFICATION ............................. 22 VIII. RECOMMENDATIONS .................................. 24 ANNEXES 1. Climatological Data 2. Project Works 3. Second Stage Study 4. Water Supply, Demand, and Quality 5., Cost Estimates 6. Equipment List 7. Schedules of Expenditures and Disbursements 8. Organization and Management 9. Consultants' Services 10. Supporting Agricultural Services 11. Operation and Maintenance 12. Present and Projected Cropping Patterns and Production 13. Marketing and Prices 14. Crop and Farm Budgets 15. Economic Analysis CHARTS AND MAPS Construction Schedule - Chart No. 7478 Proposed Project Organization - Chart No. 7479 Location Map - IBRD - 10202 Project Map - IBRD - 10203(R)  THAILAND CHAO PHYA IRRIGATION IMPROVEMENT PROJECT SUMMARY AND CONCLUSIONS i. This report appraises an irrigation project in the Northern Chao Phya Plain, for which IDA assistance of US$5.5 million is proposed. The project is part of a Government program to expand double cropping in the Plain with an additional 200,000 ha over the next ten years. It would enable an increase in wet-season rice yields as well as the cultivation of rice and some upland crops during the dry season, by utilizing water stored by the Bhumiphol Dam (Loan 175-TH) and the Sirikit Dam (Loan 514-TH). It would be the Bank Group's fifth :Lrrigation development project in the Plain and its seventh operation in the agricultural sector, all of them related to irrigation, totalling US$141 million. ii. The production of rice, the country's basic food crop and the largest export earner, grew by about 3% per annum during the last decade, barely in line with the growth in population. Furthermore, over half of this increase was achieved by an expansion of cultivation into new areas rather than by an increase in yields. As the opportunities for opening up new areas have become increasingly limited, most of the increase in rice production in the future, necessary mainly to satisfy domestic requirements, will have to be met by increased productivity. iii. The Chao Phya Plain is the country's most productive agricultural area, accounting for about 65% of the total irrigable land and 20% of total rice production. The area is eminently suited for rice cultivation as it has good soils, an established milling and marketing industry and easy access to the country's main urban centers. Large-scale investments, in- cluding four Bank loans, have been made over the past twenty years for the construction of the main irrigation and drainage system in the Northern Chao Phya Plain, and two storage dams to provide water for dry-season irrigation. These investments have extended the area under cultivation and increased wet-season rice yields in the Plain, but dry-season irrigation has not been extended at a pace commensurate with the building of water storage works. Several studies as well as two pilot projects carried out in the vicinity of the project area, have pointed out the need for additional investments in the main irrigation system as well as the necessity tc build a distribution network at farm level, in order to achieve a satisfactory increase in double cropping. iv. The proposed project would involve rehabilitation of the secondary irrigation and drainage systems as well as the construction of farm roads and on-farm works, including realignment of farm boundaries and land leveling, and would serve about 17,000 ha in two non-contiguous areas. It would also include supportiag services for extension, research, seed multiplication, credit and training. In addition, in view of the urgency to expand double cropping to meet the projected increase in demand, a feasibility study for a second stage project covering about 50,000 ha would be carried out under this project.  - ii - v. Taking into account recent currency realignments, the estimated project cost is US$10.6 million, with an estimated foreign exchange component of US$5.5 million, or 52% of the total. IDA financing would cover all foreign expenditures, the loca, costs being financed by the Government. The total cost of equipment to be put to international competitive bidding would be US$2.0 million. About 75% of the on-farm works, which total US$2.5 million, would be constructed by force account. The remaining works would be constructed by contract but cannot be grouped to be attractive to international contractors. Therefore, tenders would be advertised locally in accordance with normal Government contracting procedures. Rehabilitation works (US$1.4 million), involving repairs scattered throughout the project area, would not be suitable for contract work. They would therefore be executed by force account. Build- ings (US$0.3 million), to be tendered locally, management and consultants (US$1.9 million), second stage study (US$0.6 million), and contingencies (US$1.9 million) account for the balance of project costs. The construction period would be four years. vi. Unt:il recently the Royal Irrigation Department (RID) of the Ministry of National Development was responsible for the construction aspects of irrigation projects, while supporting sevices to farmers were provided by the Ministry of Agriculture. Most of the emphasis, however, was placed on constructing major works while little was invested in the farm distribution networks and few efforts were made to establish an efficient field organization for agricultural supporting services. Furthermore, coordination between the various Government Departments dealing with irri- gated agriculture was poor. The shortcomings of this situation have become increasingly apparent in recent years and, in an effort to accelerate irrigated development, the Government decided in 1972 to bring RID under the Ministry of Agriculture thus making one ministry responsible for all development stages of irrigation projects. In line with this approach, the Government has appointed the Deputy Under-Secretary of State for Agriculture as Project Director. Under him, a field project manager would be employed and competent staff assigned from various Departments of the Ministry of Agriculture to help ensure an integrated approach to development. A central policy committee would formulate policies and coordinate activities. A consulting firm would assist with project implementation and the preparation of the second stage study and would also provide in-service training. vii. The main direct impact of the project would be an increased produc- tion of rice and, to a lesser extent, of soybeans, mungbeans and peanuts. The net annual value of production is expected to reach B 80 million at full development, eight years after project commencement, compared with a current level of about B 33 million. At forecast world market prices, the economic rate of return on the project would be about 15%. A sensitivity analysis indicates that, under a number of adverse conditions, the return would not be less than 12%. Even if past investments in the irrigation system and storage works are taken into account, the rate of return still exceeds 11%. In a broader context, the project is expected to pioneer a more effective approach to water management, to demonstrate the benefits of more intensive cropping and to introduce a measure of agricultural diversification in the Chao Phya Plain.  - iii - viii. With 6,600 families in the project area and mostly small farm holdings, the available labor force is grossly under-utilized. The project would almost triple employment opportunities from a present level of about 5,000 man-years to 14,000 man-years, all of which would be met by the under-employed labor force of the region. Annual export earnings and import savings at the end of the construction period would amount to B 20 million (US$1.0 million) and reach B 34 million (US$1.6 million) at full development. Rice production in the project area is expected to rise from 36,000 tons to 100,000 tons per annum. Per capita income on a farm of average size would increase from about US$50 per annum to a figure between US$75 and US$170 per annum, depending on whether single or double cropping is practised. ix. The project is suitable for an IDA credit of US$5.5 million. The borrower would be the Kingdom of Thailand.   THAILAND CRAO PHYA IRRIGATION IMPROVEMENT PROJECT I. INTRODUCTION 1.01 The Government of Thailand has requested IDA assistance in financing the construction of the Chao Phya Irrigation Improvement Project. This would be the seventh Bank Group operation for promoting irrigated agriculture in Thailand, and the fifth project for improving irrigation facilities in the Chao Phya Plain. The four previous projects and their results are described in Chapter II. 1.02 Studies initiated under the Sirikit Dam Project (Loan 514-TH) included investigations which produced a development program for the rapid introduction of dry-season cropping in the Northern Chao Phya Plain. These investigations, carried out by NEDECO Consulting Engineers of the Netherlands, and the results over the past three years from two on-going pilot projects on about 2,500 ha, provided the basic data for project appraisal. 1.03 This report is based on the findings of a mission that visited Thailand in June-July 1972, comprising Messrs. A.A. Meimaris and A.J. Otten (IDA), and D. Benor and P. Judd (consultants). Mr. Whitford also made a material contribution to the preparation of the report. II. BACKGROUND General 2.01 Thailand's territory extends over 514,000 km ; almost one-fourth is cropland and one-half forest and grazing land. Its population, which current estimates put at more than 37 million, increased by 3.1% a year during the 1960's, but the official population policy should bring this growth rate down to 2.5% towards the end of the 1970's. Despite the high rate of population growth, the material progress of individuals was substan- tial during the 1960's since GDP growth averaged 8% a year in real terms, mainly because of large increases in exports and investment. More recently, however, GDP growth has slowed down markedly to around 6% a year. A large share of investment in the past went into industry and services, which were the leading growth sectors. Agriculture grew more slowly (5.4% a year between 1960-62 and 1970-72) and with wider fluctuations from year to year mainly due to changes in weather conditions; still, agriculture produced a large and increasing surplus for export. Per capita GNP was $186 in 1971 with large regional differences, a result of the concentration of past public and espe- cially private irvestments in the Bangkok area.  -2- The Agricultural Sector 2.02 While the agricultural sector's share in gross domestic product is only 28%, it employs close to 80% of the total labor force and accounts for 70% of total exports. Rice is the country's staple food crop with consumption averaging around 160 kg per year, among the highest in the world. Paddy production increased during the 1960's at an average rate of, 3% per year and presently stands at a level of 13.6 million tons. Although most rice is consumed locally, Thailand is a major rice exporter; in 1971, 1.6 million tons of rice, or about one-sixth of total production, was ex- ported. While rice is still the country's largest single export commodity, its share in total exports declined from 33% in 1965 to 17% in 1971 mainly because of a sharp fall in prices since 1969. Exports of other products such as maize, tapioca and tobacco, increased rapidly. 2.03 On the basis of the Bank's projections, Thailand can expect only a limited growth in rice exports during the next decade. Furthermore, export prices are not expected to recover appreciably from the low levels of 1970 and 1971. On the other hand, paddy production would still have to be raised by 4 million tons over the next decade, or an annual compounded growth rate of about 2.5%, in order to satisfy increased domestic require- ments. More importantly most of this would have to come from increased productivity, as only limited opportunities exist for the opening up of new lands under rice, a process which accounted for a significant amount of the total production inicrease in the 1960's. Moreover, new lands could be more economically devoted to nonrice crops for which a strong export potential exists. Increased productivity will also be necessary to maintain Thailand's competitive position in the world rice trade. Development in the Chao Phya Plain 2.04 One of Thailand's main river systems is formed by the Chao Phya and its tributaries. The Chao Phya River flows in a north-south direction through Central Thailand and branches off below Chainat into several deltaic distributaries before reaching the sea. The triangular shaped area of flat land with the apex at Chainat, and the base along the northern coast of the Gulf of Thailand, covers an area of approximately one million ha and is commonly known as the Chao Phya Plain 1/. Waters from the river system flood the Chao Phya Plain every year and farmers have traditionally used the flood- aters to grow wet-season rice; one-fifth of Thailand's rice crop is produced in this area. 2.05 The Chao Phya Plain has traditionally had a two-fold water problem. Firstly, the river floods were irregular both in timing and in height, account- ing for large fluctuations in crop yields from one year to another and, 1/ The Chao Phya Plain is divided into a Northern region where lands are generally over 4.5 meters above sea level (700,000 ha) and a lower Southern region (300,000 ha).  secondly, almost no cropping was possible during the dry season for lack of water. To cope with these problems, considerable investments have been made since 1950 and the Bank has extended four loans to assist in these phases of development. 2.06 The first of the recent phases in water control in the Plain was the construction of Chainat diversion dam, and a system of main canals and drains, completed in 1957 and partially financed by a Bank loan of US$18 million (36-TH). The system was designed to reduce damage from flooding by facilitating the drainage of excess waters, and to provide water for supple- mentary irrigation during dry spells in the wet season. This system was further extended with the construction of a water distribution network which started in 1963 with the assistance of a Bank loan of US$5.6 million (328-TH) and was completed in 1970. The system now covers the entire northern part of the Chao Phya Plain. 2.07 The second phase of development, the expansion of dry-season crop- ping, was initiated with the construction of the Bhumiphol dam oii the Ping River, the westernmost tributary of the Chao Phya. The dam, financed with a Bank loan of US$66 million, was completed in 1964. It provides hydroelec- tric power and permits the storage of monsoon flow, sufficiert for double- cropping of 220,000 ha in the Plain. Finally, the completion of the Sirikit dam on the Nan River, the easternmost tributary of the Chao Phya, would secure additional water supply for an extension of double cropping on 380,000 ha in the Plain or in the Nan River Valley (allocated at present to 180,000 ha in the Plain and 200,000 ha in the Nan Valley). The Sirikit dam, financed with a Bank loan of US$26 million (514-TH), came into operation during 1972. 2.08 The potential benefits of these water regulation works on agricul- tural development have not been fully achieved. Better drainage and flood control enabled a shift from broadcast to transplanted rice, especially on higher land in the Northern Chao Phya Plain, and reduced damage from flooding. The major result of the past investment has been an expansion of areas under rice and an overall increase of rice yields during the wet season. The ex- pansion of dry-season irrigation, however, has been slow; by 1972, the dry- season cultivated area totalled about 110,000 ha in the entire Plain, as against an available water supply sufficient to irrigate 220.000 ha (400,000 ha after completion of the Sirikit dam). The main causes for slow growth in double cropping have been analyzed in several studies carried out under Loan 514-TH and can be summarized as follows: (a) the main irrigation canals were designed to handle wet-season flows and are unable in most areas to deliver dry-season gravity irrigation, without the construction of additional check structures (Annex 2); (b) the absence of a distribution network to deliver irrigation water at farm level, which has limited dry-season cropping to areas adjacent to the main canals; and (c) the necessity for a realignment of farm boundaries in most areas to enable a rational layout of the distribution net- work. These deficiencies result from irrigation design concepts aiming at low-cost, wet season water control on areas which had previously relied on natural inundation. The time has now come for taking this water control a  -4- stage further. In fact, the need for additional investments to upgrade the existing irrigation network to permit dry season cultivation was recognized prior to construction of the Sirikit dam and the economic analysis of the dam included an allowance for such investments. 2.09 Realizing the need to extend double cropping in the command areas of the Bhumiphol and Sirikit Dams, in order to realize fully the potential benefits from those projects and to increase rice production for domestic needs, the Government has embarked upon a ten-year program to introduce double cropping on an additional 200,000 ha in the Plain. The first step in this program was the pilot projects described below (para 3.11). The success of these pilot projects, together with the studies financed by Loan 514-TH, form the basis for the present project on 17,000 ha. This is expected to be followed in about two years' time by a second stage project covering about 50,000 ha, for which a feasibility study is included in this project. The next immediate stage of development would be the Phitsanulok Irrigation Project, which is under consideration by the Bank. The first phase of this project, which is located in the Nan River Valley below Sirikit dam, would provide irrigation to about 38,000 ha during the dry season ard an assured water supply to about 72,000 ha during the wet season. Together these three projects would go a long way towards meeting the Government's objective of accelerating the introduction of double cropping. 2.10 Thailand must increase its rice production if it is to meet its increasing domestic requirements (para. 2.03). Investments in additional production capacity should logically be located in the command area of the Bhumiphol and Sirikit Dams. Intensification of land use through irrigation in the Chao Phya Plain is justified for the following reasons: (a) rice can be produced here more cheaply than in other regions of the country; (b) the Plain's heavy soils are well suited for rice cultivation; (c) the area is served by a well established and efficiently working rice milling industry and marketing system; (d) increased cropping intensities will increase the scope for expansion of other field crops, where soils are suitable, thus promoting long-run crop diversificatlon; and (e) past investments have already created an infrastructure enabling increases in double cropping with relatively low additional investments.  - 5 - III. THE PROJECT AREA General 3.01 The project area covers about 17,000 ha, located in the Northern Chao Phya Plain, about 200 km north of Bangkok and 30 km downstream of the Chainat diversion dam on the Chao Phya River (see Map IBRD 10202). The project covers two non-contiguous areas of 8,500 ha each in the districts of Sanburi and Bangrachan (see Map IBRD 10203) together with the headworks and main canals serving the two areas. These areas are broadly representative of conditions prevailing in the Northern Chao Phya Plain and can therefore serve as testing grounds for improved water management and agricultural practices. Other reasons for choosing these particular areas include their proximity to the successful pilot projects, the existence of a newly- rehabilitated primary canal system, and the fact that each area lies within a single administrative district. Climate 3.02 The climate is tropical with monthly average temperatures ranging from 25