Burundi - Second Coffee Improvement Project

Report No. 908-BU FILE COPY Appraisal of the Second Coffee Improvement Project Burundi October 30, 1975 Eastern Africa Projects Department General Agriculture Projects Division Not for Public Use Document of the World Bank 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 EQUIVALENTS Curreney Unit = Franc Burundi (FBu) US$1 = FBu 78.35 FBu 100 = US$1.28 FBu 1 million = US$12,763 WEIGHTS AND MEASURES 1 kg = 1,000 gram = 2.205 lb 1 metrie ton = 1,000 kg = 2,205 lb lare 0.01 ha 1 ha 2.1471 acres 1 km = 0.621 mile i km2 = 0.386 square mile ABBREVIATIONS ISABU = Institut des Sciences Agronomiques du Burundi (Agricultural Research Institute) ITAB = Institut Technique Agricole du Burumdi (Agricultwral Training Institute) OCIBU =,Office des Cultures Industrielles du Burundi (Agency for Industrial Crops) Burumdi Government and OCIBU Fiscal Year January _ ta DecemUe 31  BURUNDI SECOND COFFEE IMPROVEMENT PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ...............................- I. INTRODUCTION .......................................... 1 II. BACKGROUND ........................................... 2 A. General ................................. 2 B. The Agricultural Sector ..................... 3 C. The Coffee Industry ..... ......... ............ 3 D. Agricultural Services ..... .................. 6 E. First Coffee Improvement Project ............ 7 III. THE PROJECT AREA ...................................... 8 IV. THE PROJECT ........ ......................... 9 A. General Description ................. 9 B. Detailed Features ...... ..................... 10 C. Project Costs ............................... 15 D. Financing ................................... 16 E. Procurement ................ ................. 17 F. Disbursement ......................... 18 G. Accounts and Audits ...... ................... 18 V. ORGANIZATION AND MANAGEMENT ...... .................... . 18 VI. PRODUCTION, MARKETING, FARbIERS' BENEFITS AND EFFECTS ON GOVERNMENT BUDGET ................ ... 20 A. Yields and Production ........... ............ 20 B. Markets and Prices ............ .............. 21 C. Farmers' Benefits ............. .............. 22 D. Effects on Government Budget . . 23 VII. ECONOMIC BENEFITS AND JUSTIFICATION ..... .............. 23 VIII. AGREEMENTS REACHED AND RECOMMENDATION .... ............ 24 This report is based on the findings of an appraisal mission consisting of Messrs. H. van Voorthuizen, R. Le Breton, and G.R. Henderson (IDA) and H. Vieilhescare (consultant), which visited Burundi in October 1974, and on the findings of a second mission to Burundi which Mr. van Voorthuizen under- took in April-May, 1975.  Annexes (Continuation) 10. Farm Budgets Table 1 - Net Production Values per ha for Coffee in Three Different Areas Table 2 - Net Production Values per ha for Food Crops Table 3 - Budgets for 0.85 ha Farms in Three Different Areas without and with Development of Coffee and Food Crops 11. Team of Advisers 12. Economic Cost - Benefit Analysis Table 1 - Economic Cost - Benefit Analysis - Rates of Return and Sensitivity Analysis Table 2 - Cost-Benefit Analysis - Whole Project Table 3 - Cost-Benefit Analysis - Agricultural Services Component Table 4 - Cost-Benefit Analysis - Coffee Processing Component Table 5 - Incremental Coffee Production Table 6 - Production of Fully-Washed Coffee Table 7 - Projected Coffee Values 13. Project Implementaion Schedule ORGANIZATION CHART MAP 1 - Burundi Coffee Growing MAP 2 - Project Area  ANNEXES 1. Coffee Growing and Research 2. Coffee Processing 3. Coffee Marketing and Prices Table 1 - Coffee Price Forecasts Table 2 - Export Values of Burundi and Kenya Coffee Table 3 - Coffee Exports per Calendar Year Table 4 - Coffee Price Sliding Scale - Campaign 1974/75 Table 5 - Distribution of Sales Proceeds of Arabica Coffee, 1969-1973 4. Food Production 5. Office des Cultures Industrielles du Burundi (OCIBU) Table 1 - Stabilization Fund - Comparative Balance Sheet, 1971-1973 Table 2 - Stabilization Fund - Profit and Loss Accounts, 1971-1973 Table 3 - Coffee Promot:ion Fund - Comparative Balance Sheet, 1971-1973 Table 4 - Coffee Promotion Fund - Profit and Loss Accounts, 1971-1973 Table 5 - OCIBU - Summarized Balance Sheet, 1971-1973 Table 6 - OCIBU - Operating Accounts, 1971-1973 Table 7 - Adjustment of' OCIBU's Annual Results 6. Project Cost Estimates Table 1 - Summary of Project Costs Table 2 - Agricultural Services Table 3 - Coffee Processing Table 4 - Coffee Research Table 5 - Construction Equipment, Bridges, Water Supply Table 6 - Project Management Table 7 - Technical Advice and Monitoring Table 8 - Administrative and Technical Services Appendix - Unit Costs for Coffee Washing Stations 7. Requirements and Financing of Fertilizers and Other Inputs Table 1 - Requirements and Financing of Fertilizers Table 2 - Farmers Payments for Inputs and Balances of OCIBU Fertilizer Fund 8. Government Cash Flow 9. Estimated Schedule of Disbursements   BURUNDI SECOND COFFEE IMPROVEMENT PROJECT SUMMARY AND CONCLUSIONS i. Burundi is a poor and very densely populated country and at least 90% of its population of 3.4 million people is dependent on smallholder agriculture which accounts for about 60% of GDP. Per capita GDP of the rural population is slightly less than the national average of US$94 mostly comprising of food production for subsistence. Coffee is the main cash crop and is grown by about 400,000, or more than half, of all farm families. Annual exports of green coffee at about 20,000 ton contribute more than 80% to the country's foreign exchange earnings. The Government's agricul- tural policy emphasizes quantity and quality improvement to existing export crops, diversification into other export crops, increased food production to meet nutritional needs and generally the conservation and improvement of Burundi's agricultural resources through water and soil conservation programs. A first Coffee Improvement Project, started in 1969 with IDA support, has assisted about 44,000 coffee growers in the northern province of Ngozi to increase the production and quality of smallholder coffee. A Second Coffee Improvement Project, now proposed, would expand the area of the first project to include all Ngozi's 110,000 coffee growers, who produce about one third of the country's coffee, and would also provide improved farm services to the remaining 35,000 farmers of the province who do not grow coffee. In addition to increasing the volume of coffee produc- tion, the Project would endeavour to improve the quality of coffee and in- crease the production of foocd crops. ii. This report appraises a Project which would over 5 years provide strengthened extension servic:es to improve coffee husbandry techniques espe- cially in the fields of insect control, pruning, mulching and the application of chemical fertilizers. It would provide technical assistance for the operation of the four existing coffee washing stations and construct four additional stations as an extended trial to identify economic methods to improve the quality of Burundi's coffee. Provision for the multiplication and distribution of improved seeds and distribution of fertilizers would increase the production of food crops, especially that of maize. Erosion control measures, mainly through planting of setaria grass, would be encouraged by the extension services. A small experimental rural development program would be included in the Project. The Project would further support the Insti- tut des Sciences Agronomiques du Burundi (ISABU), the agricultural research institute, for applied coffee research and would also assist in the rehabili- tation and maintenance of natural drinking water sources and bridges and culverts in Ngozi province. The resident Project management team would be backed up by an international advisory team which would visit Burundi at regular intervals. iii. The Office des Cultures Industrielles du Burundi (OCIBU), which is a parastatal agency for export crops, would be responsible for the major part of  - ji the Project. OCIBU would exercise its responsibility through the Project Department which was established to implement the first project. ISABU would be responsible for the coffee research component. iv. Total project costs are estimated at about US$7.5 million. The Kuwait Fund for Arab Economic Development is expected to finance 85Z of the costs of the construction of thie additional coffee washing stations, and the coffee research, ater supply and road components of the Project (US$1.2 mil- lion). IDA would f