Announcement of Two Hundred Sixty Million US Dollars for Agriculture and Rural Development in Mexico on May 9, 1975

. INTERNATIONAL BANK FC)R • RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank News Release.No.75/34 May 9, 1975 $260 MILLION FOR AGRICULTURE AND RURAL DEVELOPMENT IN MEXICO Mr. Roberts. McNamara, President of the World Bank, today announced the approval of two Bank loans totaling $260 million to assist Mexico's efforts to increase agricultural pr )duction and to raise the income and employment levels 1 of the rural poor. A loan of $110 million will support integrated rural development in 30 micro regions with a total rural population of 1.5 million. The other loan of $150 million will help to develop intensive agriculture and li vesto.ck operations • on 280,000 hectares in the irrigation districts of Bajo Rio Bravo and Bajo San Juan. i~:j;:iorta.nce of these p:i:-uj ei.; t-.:i," M.t.'. McNamara noted, "is that they demonstrate the Government's determination to attack the problem of rural poverty by practical measures d~signed specifically to help low-income fa.mi.lies become more economically productive. Throughout the developing world, the rural poor• have neither shared adequately in their country's progress, nor have themselves been able to contribute significantly to it. Their destitution has in effect ruled them out of the entire development process. The World Bank believes that it is integrated rural development projects such as these that can reverse that trend, and begin to transform absolute poverty into greater productivity." The projects are important steps in the development of Mexico's rural sector. • More than 20 million live in Mexico's rural areas and agricultt\re is by far their /more ••• Note: Money figures are expressed in US dollar ·equiva:i.ents. \.  , ... • i. - 2 - most important employment and income source. The average economic rate of return of the rural development project is estimated at 16%. The economic rate of return for the Bajo Rio Bravo/Bajo San Juan project.will be about $110 Million Loan for Integrated ~ural Development The loan will support integrated rural development in 30 micro regions of between 25,000 and 100,000 inhabi·'..;ants in different regions throughout the country, ranging from arid co humid tropical zones. About 750,000 persons will benefit directly from the project; 650,000 persons will, on average, be able to increase their family incomes from $400 to more than $800 per year; and 30,000 new permanent jobs will be generated. The project will help to increase the annual production of maize by 200 ,000 tons ; beans by 40 ,000 tons ; beef by 25,000 • tons; honey by 200 tons; and fruits and vegetables by 10,000 tons. The value of additional production will be about $85 million a year. The estimated total cost of the project is $295 million. It includes the construction of irrigation systems, 2,000 kilometers of feeder roads, small market stores and warehouses, water supply systems for 250,000 persons, construction or renovation of 220 health posts and 70 rural health .centers, and 1,150 classrooms to accommodate 60,000 students; the project also includes development of livestock, soil and water conservation, training of farmers, intensive technical assistance and provision of materials for self-help projects. This project was mentioned by Mr. McNamara in his address to the Board of Governors in September 1974, as "perhaps the most comprehensive project we are • working on ..• ", and fltJ1.~ most complex program ~.th ...which the Bank h:l~_-&avPr been /more ••• • - 3 - • ' t associated". The organizational framework of the project breaks new ground in Mexico, which has traditionally been strongly centralized. The· project would be implemented by some 14 federal and state agencies with effective coordination mechanism being established at the federal, state and local levels. The loan is the second from the Bank for rural development in Mexico. A loan of $50 million, made in October 1974, is assisting a similar project in the Papaloa- pan Basin. $150 Million Loan for Irrigation The second loan approved today, for $150 million, will assist in financing the Baja Rio Bravo/Bajo San Juan irrigation scheme, one of the most important pro- jects of the Mexican Government, to increase agricultural production. The $384 million project will benefit directly more than 100,000 persons • and develop intensive agriculture and livestock operations on 280,000 hectares • In addition to increased agricultural production, estimated at $152 million per annum at full development, the project will also help in reducing unemployment and contribute to the acceleration of the economic activity in the lower Rio Bravo Basin where 500,000 people live. The annual net income of the average ejidatario farmer will increase from about $1,600 to $4,000 at full development. The income of the average private farmer will increase from $2,400 to $6,000. The main components of this project·are: extension and rehabilitation of drainage systems, construction of an all-weather gravel surfaced road network; land preparation and leveling of about 200,000 hectares and intensive training assistance during the initial stages. Both loans are made to Nacional Financiera S.A. with the guarantee of the United Mexican States and both will have a term of 25 years, with inte~est at • 8-1/2% per annum. -0- • PROJECT: T E CHNI CAL DATA Bajo Rio Bravo/Bajo San Juan Irrigation Project COUNTRY: Mexico TOTAL COST: $384.4 million BANK FINANCING: $150 million, 25 years including 7 year, of arace at 8 1/2% per annum. OTHER FINANCING: Government Budgetary Allocations. IMPLEMENTING ORGANIZATION: The Ministry of Hydraulic Resources (SRH) is responsibl~ for the project's execution (plea1e complete mailing address). PROJECT DESCRIPTION: The project would complete rehabilitation of 280,000 ha in the lower Rio Bravo Basin to develop intensive agriculture. The project elements are: a) Irrigation system - concrete lining of most sections of main canals and laterals. Rehabilitation of structures • needed to control and measure water deliveries. b) Drainage system - enlarge- ment of some of the existing drains and construction of 1,300 km of new drains. c) Roads - provision of an improved all weather gravel-surfaced road network. d) Land preparation - levelling of about 200.000 he. ~) A~~;!ie~y ~~~~~ - construction or rehabilitation of houses for ditch riders and operating personnel, and installation of a radio network to link the operating units. f) Technical assistance - intensive technical assistance and demonstration during initial period of project to ensure efficient use of water. g) Equip- ment - purchase of additional equipment for operation and maintenance. PROCUREMENT: Contracts for major construction works on basis of international competitive bidding in accordance with Bank guidelines for procurement. Land levelling and smaller contracts, which cannot be included in major contracts, under negotiated contracts or local bids. ESTIMATED COMPLETION DATE: 1983 •  ~- • PROJECT: T E CHNI CAL DAT A Integrated Rural Development II • COUNTRY: Mexico TOTAL COST: $295 million IffRn TPTl\T /\ 1\T0TW0- • ..... ,$2,~Q.. ,.m-~J..J.3 ,....~" 2::: -:,ro~.:'~ -i_n,e.lmHng 5 years of grace, 8 l/2 percent per annum. OTHER FINANCING: Government $178 million. Beneficiaries $7 million~ IMPLEMENTING ORGANIZATION: The principal responsible for project execu- tions is the Ministry of the ~residency. Palacio Nacional, 4o piso, Mexico l, D.F. PROJECT DESCRIPTION: Construction of small irrigation systems including pump schemes, storage dams and dis- • tribution networks to irrigate about 30,000 ha; development of livestock; soil and wat_er conservation; provision of development credit to use the productive infrastructure most effectively~ construction of about 2,000 kilometers of feeder roads, construction of 60 small market stores and 5 warehouses; organization, se~sitization and training of farmer9 QY qpecialized multidisciplinary teams; provision of intensive technical assistan~e packages; installation of water supply systems to serve about 250,000 persons; instal- lation of electric power distribution systems to connect about 35,000 house- holds in 350 villages; construction or renovation and equipping of 220 healt}:1 posts and 70 rural health centers; 15) construction or renovatton and eqajp- ping of 1,150 classrooms to accommodate about 60,000 students; provision of materials for self-help activities in ejidos and villages. The loan is being made to Nacional Fine,nciera, S.Ao with the guarantee of the United Mexican States It has a term of 25 years, including 5 years of grace·, with i~terest Q at 1-1/2% per annum. PROCUREMENT: All contracts and purchases exceeding us$· 250,000 equivalent would be awarded under international competitive bidding in accordance with Bank Guidelines for Procurement A preference for domestic suppliers of 15 percent would be 0 permitted in the evaluation of bids for manufactured items. Contra~t~ of less than us$250,ooo equivalent would be let under local competitive bidding, negotiated contracts or executed by force account provided that not more than US$6o million of tne Bank loan would be used to finance such • contract and the force accotmt work di • ESTIMATED COMPLETION DNrE: 1978 ..