Morocco - Meknes Agriculture Development Project

Report No. 682-MOR r ILE COPY Appraisal of Meknes Agriculture Development Project Kingdom of Morocco May 9, 1975 Projects Department Europe, Middle East and North Africa Regional Office Not for Public Use M Document of the International Bank for Reconstruction and Development International Development Association This report was prepared for official use only by the Bank Croup. It may not be published, quoted or cited without Bank Croup authorization. The Bank Croup does not accept responsibility for the accuracy or completeness of the report.  CURRENCY EQUIVALENTS (AS OF FEBRUARY 1975) Currency Unit M Moroccan Dirham (DH) DH 1.00 US$0.242 US$1.00 DH 4.14 WEIGHTS AND MEASURES Metric Unit British/US Equivalent 1 millimeter (mm) = 0.039 inches 1 meter (m) 3.28 feet 1 kilometer(km) = 0.62 miles 1 hectare (ha) = 2.47 acres 1 litre (1) 0.264 gallons 1 cubic meter (m3) = 35.31 cubic feet 1 litre/second (1/sec) = 0.35 cusecs 1 kilogram (kg) = 2.26 pounds 1 retric ton (ton) = 2,205 pounds GLOSSARY OF ABBREVIATIONS MARA - Ministry of Agriculture and Agrarian Reforu (Ministere de lAgriculture et de le Reforme Agraire) DEVA Directorate of Agrieultural Development of of MARA (Direction de la Mise en Valeur Agricole) SP = Provincial Services Office of MARA (Services Provinciaux) CT = District Extension Office of MARA (Centre de Travaux) ORMVA * Regional Agrieultural Development Office of MARA (Office Regional de Mise en Valeur Agricole) SOGETA Agrieultural Land Management Corporation (Societe de Gestion des Terres Agricoles) S0DEA = Farm Development Corporation (Societe de Developpement des Exploit- ations Agricoles) ONICL = National Cereals and Pulses Office (Office National des Cereales et des Legumineuses) OCE Trade and Export Office (Office de Commercialisation et d'Export- ation) CNCA National Agrieultural Credit Bank (Caisse Nationale de Credit Agricole) DRE 5 Water Resources Division of Ministry of Publie Wbrks (Division des Resources en Eak) CLC,A Local Agrieultural Credit Bank (Caisse Locale de Credit Agricole) COMAGRI - Moroccan Agricultural Company (Compagnie Marocaine d'Agriculture) ASAP Associated Union of Agricultural Users (Association Syndicale Agricole Privil- egiee) GOVERNMENT 0F TEE xIfMDOK OF MCROCCO FISCAL YEAR January 1 to December 31  APPRAISAL OF MEKNES AGRICULTURE DEVELOPMENT PROJECT KINGDOM OF MOROCCO Table of Contents Page No. SUMMARY AND CONCLUSIONS..i-ii I. INTRODUCTION .............................. II. THE AGRICULTURAL SECTOR 1 A. Description l B. Previous Agriculture Projects. 2 III. THE PROJECT AREA AND NATIONAL INSTITUTIONS ..3 A. The Area ... A. TheLArato *--------------.--- ................................................- 3 Location...3 Topography 3 Population .3 Communications, Transport and Power 4 B. Natural Resources h Soils .... Glimate..... Water Resources 5 C. Land Tenure... D. Land Use, Agricultural Production and Yields. 7 E. Marketing and Cooperatives .....*..................8 F. Credit.9 G. Agricultural Support Services 9 IV. THE PROJECT.10 A. Objectives 10 B. Description il C. Status of Englneering .1 D. Cost Estimates.4 E. Financing 15 F. Implementation 16 G. Disbursements 17 H. Environment and Health ...17 V. PROJECT IMPLEMENTATION 18 A. Organization and Management. 18 B. Operation and Maintenance ....... 19 C. Services and Training ... . ..........19 This report was prepared by Messrs. J. C. Collins, H. van Wersch, D. von Samson, and Ms. S. Fukuda.  Table of Contents (Continued) Page No. D. Credit * * * * * ** *.................... 20 E. Land Reform ... ..... .... * -*- * * 20 F. Recovery of Costs . 22 G. Accounts and Audit...23 H. Monitoring ...23 VI. BENEFITS AND JUSTIFICATION ph....... A. Production.--- --- 24 B. Markets ......-.--.-@- ? C. Prices .............................. 25 D. Farm Income ..2 E. Main Benefits and Beneficiaries ...... ................... 28 F. Economic Evaluation ..29 VII. RECOMMENDATIONS.. . ....... . 29 ANNEXES 1. Land Tenure and Agrarian Reform 2. Agriculture and Livestock Production 3. Cooperatives and Credit 4. Project Works 5. Terms of Reference for Consultants 6. Cost Estimates 7. Estimated Schedule of Disbursements 8. Recovery of Project Costs 9. Prices and Farm Incomes 10. Economic Rate of Return and Sensitivity Analysis FIGURES World Bank 9652 Construction Schedule World Bank 9653 Organization Chart IERD 11201 Map - Meknes Agriculture Development Project  APPRAISAL OF MEKNES AGRICULTURE DEVELOPMENT PROJECT KINGDOM OF MOROCCO SUJMARY AND CONCLUSIONS i. Agriculture in Morocco accounts for about 27% of GDP at 1960 prices and employs about 55% of the labor force. An annual growth of about 6% in agricultural value added in recent years reflects use of modern technology and production of higher value crops. ii. Government in its Third Development Plan (1973-77) has allocated investments in rainfed agriculture to treble those in the previous Plan. This reflects a conscious move towards extending benefits of agriculture develop- ment more widely among the rural population. Previous plans had concentrated on construction of large storage works for irrigation water without a com- parable effort to develop downstream distribution systems so that in return for the high investment the incremental productivity had been disappointing. iii. Bank and IDA lending to Morocco in the agricultural sector has comprised loans of US$17.5 million for the Sidi Slimane Project (Loan 389-MOR) in 1965, of US$46 million and US$32 million for the Sebou I and Sebou II projects (Loans 643 and 1018-MOR) respectively in 1969 and 1974, loans of US$10 million in 1966 and US$24 million and a credit of US$10 million in 1972 for two Agricultural Credit Projects (Loans 733 and 861-MOR and Credit 338- MOR), and a loan of US$18.5 million in 1975 for the Souss Groundwater Project (Loan 720-MOR). The earlier projects suffered initial delays but once initial problems were overcome they and more recent projects have made satisfactory progress. iv. Under the first Sebou Project a program of land consolidation and redistribution is being undertaken. Provision for such land reform in irriga- tion schemes is provided for in the Land Consolidation Law of 1962, the Agrarian Reform Law of 1966, subsequently revised in 1972, and in the Agri- cultural Investment Code of 1969. Though certain provisions in the existing legislation apply to rainfed lands, other provisions, particularly affecting land under collective ownership, do not. v. The Meknes Agriculture Development Project extends over 170,000 ha. Redistribution of about 30,000 ha of land, mainly ex-foreign-owned farms expropriated by 1963 and 1973 laws, would benefit about 8,500 rural families who are now landless or farm non-viable holdings, 85% of which presently have an income of less than one-third of the average national income. Presently fragmented holdings would be consolidated. The farmers benefiting directly under the land redistribution program would be grouped in cooperatives for which essential infrastructure comprising earth access roads, potable water supplies and, in some cases, storage facilities would be provided. Member- ship of cooperatives would be encouraged among remaining rightholders on tribal collective lands. An existing irrigation network extending over  - ii - 3,500 ha in the project area and served by the Betit spring would be reha- bilitated and the resultant saving in losses of water would enable about a further 500 ha to be irrigated through an extension of the system. Small irrigation systems supplied from wells to be constructed initially for potable water supply to cooperatives would be constructed serving an estimated 600 ha. Offices and staff housing needed for the project administration and agricul- tural services would be built and equipment and vehicles provided. A program of in-service training for new staff would be undertaken and consultants would be provided to assist in surveys and planning of land reform and for a study of the constraints to development of collective lands on a national scale. vi. Project implementation would extend over 5-1/4 years, 1975-1980, at an estimated cost of US$32.4 million, of which the foreign exchange component would be US$14 million or 53% of project costs excluding local duties and taxes but including contingencies. vii. The foreign exchange would be financed from the IDA credit and would include the c.i.f. cost of vehicles and equipment (or 70% of the ex-factory cost where these are locally manufactured or assembled), the foreign costs or 80% of the total cost of employing consultants, and the foreign exchange com- ponent of project civil works estimated to be 47% of the total cost. Air photography and contract services for surveys, mapping and preparation of plans for land reform together with civil works contracts for rehabilitating and extending the Betit irrigation system, and contracts for the supply of equip- ment and vehicles would be procured by international competitive bidding. Other construction works, because of their small size and the scattered nature of the works, would be procured by local competitive bidding under normal Government procedures. Local currency expenditure would be financed by Government budget allocations reserved for exclusive use under the project. viii. The consultant study of tribal collective lands would be carried out in the Ministry of Interior. The Ministry of Agriculture and Agrarian Reform (MARA) would implement the balance of the project through its Meknes Provincial Services (SP) supported by the Directorates of Agricultural Development, Equip- ment and Livestock of the Ministry. SP would be reorganised to undertake the project, existing staff would be augmented, and the Deputy to the Chief of SP would be responsible for project implementation. ix. The project would increase agricultural production by an estimated US$6.8 million annually as a result of both improved yields and increased cropping intensity. The project is expected to generate net annual foreign exchange savings of about US$2.3 million. The economic rate of return, based on a 25-year project life, is estimated to be 24% and would be at least 12% on the basis of the most adverse assumptions of project costs and benefits. The economic rate of return of the improvement and expansion of the Betit irrigation system is also estimated to be 24%. x. Agreement having been reached on the principal issues and subject to the conditions of effectiveness, the project is suitable for an IDA credit of US$14 million to the Kingdom of Morocco, on the usual terms.  APPRAISAL OF MEKNES AGRICULTURE DEVELOPMENT PROJECT KINGDOM OF MOROCCO I. INTRODUCTION 1.01 The Government of the Kingdom of Morocco has expressed interest in an IDA Credit of US$14 million to help finance an Agriculture Development Project in the Meknes region. 1.02 The potential for development of the Meknes area was examined as part of the Sebou Project Studies undertaken jointly by the Moroccan Govern- ment and UNDP/FAO in 1963-1968. The Meknes Agriculture Development Project was identified by an FAO/IBRD Cooperative Program Mission in June 1972 and was prepared following a further Cooperative Program Mission in May/June 1973. 1.03 This report is based on information provided by the Moroccan Authorities and the findings of an Appraisal Mission in June 1974 consisting of Messrs. J.C. Collins, H. van Wersch, D. von Samson and Ms. S. Fukuda (IDA) and Mr. F. Mortier (FAO/IBRD Cooperative Program). Mr. J. Guillot-Lageat (IDA) attended one of the mission's final meetings with Moroccan Government officials. II. THE AGRICULTURAL SECTOR A. Description 2.01 The annual growth of agricultural value added averaged 5.9% during 1967-72, mainly due to a rapid growth of irrigation, increased use of ferti- lizer and other inputs and increased production of high value crops. The long-term growth trend of agriculture was estimated by the Bank's Economic Mission (1973) to be about 3% per annum, exceeding the population growth rate in rural areas. In 1972, agriculture accounted for about 27% of GDP (at 1960 prices), and employed about 55% of the labor force; about 30% of agricultural output was exported. The agricultural trade surplus has equalled about 20% of Morocco's merchandise imports. Morocco's agricultural exports are very much directed towards Europe, with France absorbing more than 50%. 2.02 Development of Moroccan agriculture has been the responsibility of the Ministry of Agriculture and Agrarian Reform (MARA) through its Agricultural Development Directorate (DMVA) and such public organizations as the National Cereals and Pulses Office (ONICL) and the Trade and Export Office (OCE). The main objectives under the Second Development Plan (1968-72) were the extension of large-scale irrigation, expansion of credit to large and medium farmers and export promotion. These policies together with favorable weather conditions, resulted in GDP growth of about 5.6% per annum, but income differences within rural areas as well as between rural and urban areas widened. The latest Bank Economic Mission estimated that "in real terms average consumption  declined slowly for about one-third of the rural population". Growth benefits, therefore, accrued mainly to medium and large farmers particularly in-the irrigation sector. 2.03 Under the Second Plan's investment program, D