Announcement of Thirteen Million US Dollars Credit to India for the Himachal Pradesh Apple Processing and Marketing Project on January 10, 1974

• DSTERNATION~~L DEVELOPMENT ASSOCIATION 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 74/3 Subject: $13 million credit to India J.anuary 10, 19 74 for the Himachal Pradesh apple processing and marketing project The International Development Association (IDA), an affiliate of the World Bank, has extended a credit of $13 million to help finance a $21. 7 mi.Ilion prcject for pro- viding improvement• in apple-processing facilities and developing an integrated apple- marketing system in the State of Himacbal Pradesh. Himachal Pradesh is in the foothills of the Himalaya mountains between Tibet and the f~njab. It ia a predominantly agricultural and forest area where apples have be- • come the State's main cash crop. The apple industry has provided opportunities beyond the subsistence level and also contributed to reducing unemployment at least during the seasons of orchard operations, when additional labor is required for up to five months. At present, processing, transport and marketing facilities are inadequate. The project provides for development of infrastructure and establishment of a marketing organization the Horticultural Produce Processing and Marketing Corpora- tion (HPMC) -~ capable of competing in the apple industry and which will introduce advanced methods and technology. Specifically, HPMC will be provided with.a trans- shipment center linked to 12 packing houses, three collection stations and four cold storages; a juice concentrate plant; and a system of aerial cableways in selected production areas in terrain where roads are uneconomical. Also included in the project will be road construction and improvements providing all~weather road con- nections between orchard stations and packing houses, and road links to the existing • Note: Money figures are expressed in US dollar equivalents. /more  • IDA PoR. No. 74/3 -- India -- apple-processing project - 2 - highway system; training programs and technical assistance; and a project evalua- ~ion study. The project is expected to be completed in 1978. IDA funds for .processing and marketing facilities and cableways will be channeled through the Government of India on specified terms to the Agricultural Refinance Corpora~ion (ARC) for onlending to participating coonnercial banks which in turn re- lend the funds to HPMC. For roads, road maintenance equipment, technical assistance, training and a project evaluation, funds will go through the Government of India to the Government of Himachal Pradesh. In India, agriculture remains the dominant sector and the Government has become increasingly concerned about the plight of the lower strata which consists of over 200 million people w~th annual incomes of less than $60 per head. Therefore, the Government is giving, great emphasis to agricultural development. The present project in Himachal Pradesh is expected to contribute significantly to development of Indian agriculture where the primary focus and successes have been in food grains. The • Indian Government remains conscious of the need to achieve a better regional and commodity balance in the overall pattern of agricultural development. This op~ntion represents the first Bank Group project in India aimed at helping to achieve that balance by attempting to improve the processing and marketing of a perishable horticultural crop. It is expected that the project will help provid~ some 10,000 smallholder farmers with at least a 10% average income increase. The IDA credit of .$13 million will cover about 60 percent of the total project I co$ts. The remaining 40 percent will. be financed by the Himachal Pradesh Government (34 percent), ARC (3 percent) and participating commercial banks (3 percent). The credit is being made to the Government of lnd,ia for a term of 50 y~ars with 10 years of grace. It carries no interest but a service charge of 3/4 of 1% per annum.will ~ be made to cover IDA~s administrative expenses. - 0 -. • January 10, 1974 TECHNICAL DATA PROJECT: Himachal Pradesh apple processing and marketing project COUNTRY: India - State of Himachal Pradesh TOTAL COST: $21.7 million IDA FINANCING: $13.0 million credit, 50 years, 10 years of grace, no interest but a service charge of 3/4 of 17. per annum for IDA's administrative expenses. OTHER FINANCING: Himachal Pradesh Government,$7.3 million; ARC, $0.7 million; Commercial Banks, $0o7 million. • IMPLEMENTING ORGANIZATION: A marketing organization to be created under the project which will compete in the apple industry, Horticultural Produce Processing and Marketing Corporation (HPMC), w:Lll be primarily responsible for project imple- mentation. PROJECT DESCRIPTION: The purpose of the project is to finance improvements in the apple processing and marketing industry in Himachal Pradesh. The project will introduce technological innovations in processing, packing and grading of fruit, a coonnercially-oriented marketing organization, and infrastructure improvements to handle 55,000 tons of apples (or 25 per~ent of Himachal Pradesh's production at project completion). PROCUREMENT: 'Equipment and mateLial estimated to cost $3.2 million would be pro- cured on the basis of international competitive bidding with domestic bidders accorded the normal preference of 15 percent or customs duty whichever is the lower. Civil works (buildings) valued at $2.2 million are of diverse nature, unsuitable for international competitive bidding. The road works of $6.0 mil- lion would be done largely by force account, with the balance undertaken by local contractors. CONSULTANTS: Engineering consultants will be engaged to assist HPMC with the cold storage units and the juice concentrate plant. Also required are an apple quality control specialist. a marketing specialist, an apple packing expert, a food technologist, and a food processing microbiologist. • ESTIMATED COMPLETION DATE: 1978 - 0 - Not~: Money figures are expressed in US dollar equivalents.