Colombia - Atlantico - Number Three - Irrigation Project

Document of The World Bank -7 FOR OFFICIAL USE ONLY Report No.1841 FLE COPY PROJECT PERFORMANCE AUDIT REPORT COLOMBIA ATLANTICO IRRIGATION PROJECT (Loan 502-CO) December 28, 1977 Operations Evaluation Department 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 Average Annual Currency Equivalents During Course of Project US$1.00 - Col$ 13.50 (1967) US$1.00 M Col$ 21.90 (1972) US$1.00 - Col$ 23.70 (1973) US$1.00 - Col$ 27.08 (1974) US$1.00 = Col$ 30.90 (1975) US$1.00 = Col$ 34.82 (1976) Measures MM millimeter (1 mm = 0.039 inch) m meter (1 m - 3.28 feet) km kilometer (1 km - 0.62 miles) ha 2 hectare (1 ha - 10,000 2 - 2.47 acres) km2 square kilometer( km2 - 247.1 acres - 100 ha) -3 cubic meter (1 mn3 - 1.31 cubic yard - 264.2 US gall ns) M3 million m (1 Mm3 - 811 acre feet) kg kilogram (1 kg - 2.2 1b) m ton or ton 1,000 kg - 2,205 lb kva kilovolt - ampere Abbreviations INCORA M Instituto Colombiano de la Reforma Agraria ICA Instituto Colombiano Agropecuario CECORA M Central de Cooperativas de Ia Reforma Agraria SENA Servicio Nacional de Aprendizaje Caja Agraria Caja de Credito Agrario, Industrial y Minero FFA M Fondo Financiero Agropecuario Fiscal Year -- January 1 - December 31 FOR OFFICIAL USE ONLY Project Performance Audit Report COLOMBIA ATLANTICO IRRIGATION PROJECT (Loan 502-CO) Table of Contents Page Preface Basic Data Sheet Highlights PROJECT PERFORMANCE AUDIT MEMORANDUM I. Summary of the Project Completion Report i II. OED Comments Vii PROJECT COMPLETION REPORT I. Background 1 II. Preparation and Appraisal 3 III. Implementation 7 IV., Procurement and Construction 16 V. Costs and Disbursements 17 VI. Institutional Development and Performance .19 VII. Agricultural and Social Impact 31 VIII. Rates of Return 39 IX. Special Issues 40 X. Bank Performance 42 XI. Conclusions 43 Map LThis document has a restricted distribution and may be used by recipienqs only in the performance or their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Project Performance Audit Report COLOMBIA ATLANTICO IRRIGATION PROJECT (Loan 502-CO) Preface This report presents a performance audit of the project supported by Loan 502-CO, signed in June 1967, and closed almost fully disbursed in December 1975. A project completion report (PCR) was issued by the Latin America and the Caribbean Regional Office in Nov- ember 1976. The audit is based on a review of the Bank files, on consul- tation with Bank staff in both Washington and Colombia, and on a visit to Colombia. During the visit, discussions were held with INCORA officials, both in Bogota and at the project site. Officials of TAHAL, the consultant firm retained by the Government, were also interviewed. The audit established that the PCR offers a satisfactory analysis of project history and performance as well as of the factors that brought about the main problems associated with the project. The audit fully supports the PCR's conclusions. Therefore, this report consists of the PCR, with a covering memorandum that includes the summary prepared for the PCR and additional comments by OED that elaborate on the events which led the Bank to finance this project. The kind and valuable assistance provided by the Government of Colombia in the preparation of this report is gratefully acknowledged.  COLOMBIA ATLANTICO IRRIGATION PROJECT (Loan 502-CO) Basic Data Sheet A. Amounts (US$ m1n) (as of 31 AUG 77) Original Disbursed Cancelled Repaid Outstanding Loan 502-CO 9.0 8.7 0.3 1.1 7.6 B. Project Data Original Plan Revisions Actual First Mention in Bank Files 20 JUL 64 Government Application 13 DEC 65 Negotiations 26 MAY-9 JUN 67 Board Approval 1 MAR 67 27 JUN 67 Loan Agreement 29 JUN 67 /a Loan Effectiveness 30 SEP 67 15 NOV 67 2 NOV 67 Physical Completion /b Percentage of Original Proj- ect actually completed /b Last Disbursement 16 JUL 76 Loan Closing 31 DEC 72 31 DEC 73; 31 DEC 74 31 DEC 75 Total Project Cost (US$ m1n) 15.7 17.2 Economic Rate of Return (%) - Part I (Irrigation) 11 )Below 5% - Part II (Flood Protection) 25 C. Mission Data Month, No. of No. of Date of Year Persons Weeks Manweeks Report Identification Ic JUN 64 2 2 2 20 JUL 64 Appraisal (1st visit) JUN 66 7 3 21 ) Appraisal (2nd visit) SEP 66 3 2 567 Subtotal 28 Supervision I MAR 68 1 1 1 19 MAR 68 Supervision II JUN 68 1 1.5 1.5 20 AUG 68 Supervision III DEC 68 1 1 1 2 JAN 69 Supervision IV OCT 69 3 1 3 14 NOV 69 Supervision V JUL 70 3 1 3 12 AUG 70 Supervision VI AUG 71 2 1.5 3 1 SEP 71 Supervision VII /d FEB 72 4 1.5 2 24 MAR 72 Supervision VIII MAR 72 1 1 1 31 MAR 72 BTO Supervision IX Ie AUG 72 1 1 0.5 31 AUG 72 Supervision X If MAR 73 3 2 1 22 MAR 73 Supervision XI 7g SEP 73 3 2 2 7 NOV 73 Supervision XII /h JUN 74 1 1 0.5 22 JUL 74 Supervision XIII lh MAR 75 1 1 0.5 20 MAY 75 20 Completion I Ii NOV 75 1 1.5 1 Completion Ii Ii MAR 76 1 1.5 0.5 ) 30 NOV 76 /J 1.5 D. Follow-on Project: Loan 849-CO, Second Atlantico Development. for US$27 million, approved 29 JUN 72 and effective 14 NOV 72. /a Revised 30 JUN 72 (to make it fully compatible with the Loan Agreement of Loan 849-CO) and 6 JUL 72 (to expand training activities inside Colombia). lb Some project components have not yet been fully completed (see PCR., paras. 1.02, 2.05. 3.03. 7.01, and 7.02); some other components will be finalized under Loan 849-CO (see PCR. paras. 3.09 and 7.03). 4a It identified other projects as well. Id It also updated the appraisal report of Loan 849-CO (Second Atlantico Development Project), taking into account developments since the project had been appraised in October 1970, and reviewed the status of the Cesar Studies financed under Loan 624-CO (Agricultural Credit Project). /e It also supervised Loans 624-(Cesar) and 849-CO. If It also supervised Loans 849- and 793-CO (Caqueta Land Settlement Project). and reviewed the preparation of Caqueta Stage II (eventually, Loan 1118-CO). /g It also supervised Loan 849-CO and discussed the future appraisal of Cordova 2 Agricultural Development Project (eventually, Loan 1163-CO). lh It also supervised Loan 849-CO. /i It also supervised Loans 849- and 1163-CO. /i Revised 19 SEP 74.  Project Performance Audit Report COLOMBIA ATLANTICO IRRIGATION PROJECT (Loan 502-CO) Highlights Loan 502-CO (US$9 million) financed the construction of irrigation and drainage systems on 3,300 ha of previously undeveloped land (Part I); flood protection and drainage on 6,000 ha of rainfed land (Part II); roads for both parts; and some minor associated investments and the feasibility study for a Stage II project. It took eight years to disburse the loan. Technical problems were the main factor slowing down project implementation: most of the soils to be irrigated proved to be saline and/or alkaline; the site of one pumping station had to be changed; the completion of the other pumping station was delayed for technical reasons and because of problems with the contractors. The project envisaged developing intensive export-bound fruit and vegetable production under a sophisticated fixed sprinkler irrigation system. The sprinkler system was eventually established, but the intensive cropping pattern could not be implemented; thus, the sprinkler system is presently ir- rigating traditional crops, bound for the internal market. As a result of both the delay in implementing the project and the impossibility of imple- menting the intensive cropping pattern envisaged, the project's economic rate of return is presently estimated to be below 5%. The following points may be of particular interest: - Improper choice of irrigation as the main tool for developing the Atlantico area (PPAM, paras. 15 and 18; PCR, para. 11.02) - Formalistic calculation of the project's rate of return at ap- praisal (PPAM, paras. 18(i) and 22) - Unsatisfactory pace of project implementation (PPAM., para. 4; PCR, paras. 1.02 and 3.03-3.09) - Improper review of soil studies at preparation and at appraisal (PPAM. paras. 4 and 10; PCR, paras. 2.02. 3.05, 3.06 and 10.02) - Inadequate supporting services to farmers (PCR, para. 6.05) - Satisfactory performance of the consultants (PCR, paras. 4.04 and 6.10) - Satisfactory institution-building spin-off (PPAM, paras. 8 and 9; PCR. para. 6.02) - Positive project impact on family incomes and living standards, but unsatisfactory overall economic results (PPAM, paras. 11-14 and 16; PCR, paras. 7.02, 7.04-7.06, 7.11, 8.02 and 8.03).  Project Performance Audit Memorandum COLOMBIA ATLANTICO IRRIGATION PROJECT (Loan 502-CO) I. SUMMARY OF THE PROJECT COMPLETION REPORT Background 1. The Atlantico No. 3 Irrigation Project is located in the Atlantic coastal region of Colombia in the Department of Atlantico, about 80 km south of the city of Barranquilla and in the delta zone of the Rio Magdalena. As considered by Government, the overall project area comprises three sectors in which rural and agricultural development are proceeding concurrently. These are: the Molinero Sector (11,700 ha) being developed by private inter- ests, mainly owners of large holdingsin the area; the Repelon Sector (4,700 ha) being developed by Government through the Instituto Colombiano de la Reforma Agraria (INCORA) with their own resources; and the South Sector (35,000 ha) being developed with the assistance of Bank Loan 502-CO for irrigation and drainage of 3,300 ha and flood protectio and drainage of 6,000 ha to be farmed under rainfed conditions (Stage I-f);and Loan 849-CO for drainage and land preparation on 17,000 ha for rainfed farming (Stage II). In the early 1960s the area was considered one of the most economically depressed in the country due to the decreasing productivity of the fishing industry, which for several decades had been the primary source of income to the local inhabitants. A limited amount of subsistence farming, including livestock production, was practised in the area but crops were subject to damage by annual flooding from the Rio Magdalena and local runoff and the usually unfavorable distribution of rainfall. 2. With passage of the basic agrarian reform law in 1961, Law 135, .providing for the creation of INCORA and to carry out agrarian reform to- gether with agricultural and rural development, with the objective of improving the livelihood of the poor rural population throughout the country, Government initiated an agricultural development and agrarian reform program in the area in 1963, to replace the fishing industry as an economic base. Following about four years of project preparation and negotiation, Loan 502-CO was signed on June 29, 1967 for US$9.0 million, which, together with Govern- ment's contribution of the equivalent of US$8.5 million, has financed the construction of flood protection works, irrigation and drainage systems, roads, pumping plants, experimental farms, a project headquarters, and agri- cultural supporting services for extension, research, credit for farming operations and inputs, purchase of livestock and purchase or rental of machinery. The loan was for a term of 25 years at 6% interest with a six- year grace period. Subsequently, Loan 849-CO was signed in June 1972 in the amount of US$5.0 million, which, with an estimated Government contribution of US$4.7 million, will finance completion of the drainage systems and land clearing and preparation for all lands in the dry farm area (17,000 ha) and part of the irrigated area. The two projects are interdependent and operated by INCORA as one project. . 1/ The 3,300 ha to be developed through irrigation and drainage are called Part I; the 6,000 ha to be developed through flood protection and drainage are called Part II. - 11 - Targets and Goals 3. Prior to the project (Stage I) it was estimated that the net income per hectare in the area from agriculture was in the range of US$50 to US$70 (dollars 1975). In view of the favorable climate and what were considered to be good soils at that time, the project was designed to achieve a dramatic in- crease in production value with double-cropping under irrigation and the intro- duction of modern technology. The plan included the production of high value crops for export, such as oranges, pineapples, tomatoes, guavas, papaya and tobacco as well as traditional crops such as maize, cotton, sorghum and beans. It was also planned to expand and improve the production of livestock. It was considered that this conversion to modern intensive agriculture, with inexpe- riencedsettlers/farmers under the strong centralized management of INCORA, would increase the net value of production from US$605,000 in 1966 to about US$5.7 million in 1982, which was the date estimated for full development. The basic objective was to provide a family income for new settlers at least equivalent to about US$2,800 to US$4,000 for Part I and US$1,250 for Part II. Within the concept of the new law, the project as planned met all the criteria for integrating land reform with land development to improve agricultural production and family incomes and living standards in the rural sector. In this sense it conformed to national and sector policies, and, since it was the first project of this type to be undertaken by INCORA, it served as a model to develop and implement these policies. Implementation 4. Implementation of the project encountered serious problems which delayed completion of the principal objectives by almost four years beyond the date originally scheduled, which was December 31, 1972. As will be noted further on, these problems will also prevent the project from fully achieving the objectives initially envisaged. The most serious problem came to light in 1969 upon completion of additional soil surveys by the consultant firm that had been retained by INCORA to prepare final designs and supervise construc- tion. These surveys revealed that nearly all lands in the South Sector, both Stage I and II, were affected to some degree by salinity and alkalinity, including the groundwater, and that a part of the area selected for irrigation development was unsuitable for cultivation. This required a change in the plan for the irrigated area to exclude some lands and select others, and to restudy the proposed cropping patterns for the entire project, as it now became evident that the high value export crops could not be grown. Research and trial plantings had confirmed that the soils were suitable for only tra- ditional crops such as maize, cotton, and sorghum or pasture for livestock and this led to significant changes in the potential for production, farm types and settlement objectives, credit and extension needs, marketing arrangements, need for processing plans, machinery requirements and other factors affecting management and operation of the project. The other serious delays had to do with technical difficulties encountered in constructing the San Pedrito pumping plant, which is the main source of water supply for the irrigated area. The first contract for this plant was awarded in 1969, but due to non-compliance by the contractor, the contract was cancelled in 1972 and a new contractor selected. By late 1974 all infrastructure works had been - iii - completed on the project (502-CO) but full irrigation service could not be provided until the San Pedrito plant was completed. This was finally achieved in April 1977 but a large part of the area to be irrigated (2,100 ha) still remains to be cleared, leveled and prepared for cultivation. It is not expected that a stage of full development on production will be reached before 1980. Land Acquisition and Settlement 5. It was initially estimated that about 14,000 ha out of the 22,000 ha of cultivable land in both Stages I and II could be acquired by INCORA for the settlement of some 2,000 landless families. The program has fallen short of this goal, as by the end of 1975 about 8,000 ha had been acquired and about 840 families settled. The program is going ahead with titles issued for 1,100 ha in 1976, mostly new settlers, and with a total of over 3,000 ha in Stage II under negotiation for acquisition. Thus, overall land acquisition could eventually reach a goal of 12,000 ha; however, INCORA claims that more than 90% of the farms in Stage I are in compliance with agrarian reform laws and that the pro- gram is completed in this area. Procurement and Construction 6. The construction of project works and purchase of major items of equipment were procured in accordance with the Bank's procedures for inter- national competitive bidding; however, all construction contracts were awarded to local contractors since no foreign firms responded to the tenders, probably because of the low value of each contract. Equipment was normally supplied through the local agents of foreign manufacturers. The total value of the 95 contracts awarded was about US$13.0 million. Costs and Disbursements 7. Total expenditures on the project as of June 30, 1976, were equivalent to US$17.2 million, which represents an increase of 9% over the original esti- mate. This relatively low increase was largely due to the fact that most of the major works and equipment purchases were completed or under contract before the high inflationary period began in late 1973. Another factor was the change in the project plan which eliminated some items, such as the processing facilities for oranges and other export crops, which offset about 64% of cost overruns in other items. Due to the delay in implementing the project, the disbursement period for the loan extended over a period of eight years, 1969-76; however, this had no effect on total disbursement, which amounted to US$8.7 million as of August 31, 1976, as Government financed the total cost overrun of US$1.47 million. A comparison of actual expenditures and disbursements with original schedules would be meaningless due to the time lapse between the original com- pletion date of December 31, 1972 and August 1976, when the final works were completed and disbursements terminated. Institutional Development and Performance 8. The planning and implementation of the Atlantico No. 3 Project had a strong influence on the organizational development of INCORA during the early - iv - years. This was the first integrated development project to be undertaken by INCORA and many of the procedures and methodology developed and used on the project became standard for other projects. The project provided a strong motivation to achieve competence and capability in every department of INCORA to effectively deal with the problems generated by this new direction to agrar- ian reform and rural development. It is generally conceded that INCORA achieved this capability but that over the years other political and economic forces in the country prevented the institution from fully carrying out the obligations imposed by Law 135. 9. The opportunities for training presented by the project were valuable and effective in developing management and support staff for INCORA. This included in-service training working with the consultants, fellowships overseas for specific technical training, and local courses in all aspects of INCORA's work for support staff. The training accomplished during the early years of the project had a significant impact on INCORA's eventual development into the only organization in the country competent to undertake large land development and settlement projects and to carry out programs to benefit small farmers. 10. It was common practice over the years to put the blame on INCORA's poor management for the excessive delay in completing the project. However, an objective study of the records indicates that INCORA's performance was better than it was given credit for. The soil problem, for example, which caused a delay in replanning the project, was not the fault of poor management, but rather the fault of poor judgment on the part of the consulting firm which did not recognize this condition in the original feasibility report. The delay in completing San Pedrito pumping plant was due to lack of experience by local contractors and not entirely to INCORA's management. As a young organization with inexperienced staff, INCORA naturally had problems in maintaining satis- factory progress but both management and staff made a very strong effort, at least during the period up to 1973, to carry out the project as planned and to achieve the immediate goals. The physical infrastructure, with the exception of the San Pedrito plant, and other project activities were largely completed by the end of 1973, to the extent possible with the constraints on soil quality and before irrigation service became available to all lands in the area desig- nated for irrigation. Supporting services and training were made available to small farmers, especially new settlers; however, the coordination between other Governuent agencies who participated in the project for specific purposes was never satisfactory. There were and continue to be deficiencies in the quality and amount of extension assistance, the amount of production credit available, the level of research and its link with technical assistance for the farmers, the provision of machinery services in sufficient quantity and on schedule, the availability of certified seed, and inadequate farmer training programs. The realization that the project could not achieve the original goals because of the soils conditions had led to decreased interest in the project on the part of Government. Further, the reorganization of INCORA, initiated by the new Government which took office in August 1974, has adversely affected the institution in recent years and the strong sense of purpose which character- ized the early years does not prevail at present. INCORA will complete the project works for both Stages I and II but it is not certain that the support to bring all the land into full production will be forthcoming. - v - Agricultural and Social Impact 11. An analysis of the value of production generated by the project since 1972 through 1975, together with a revised projection for full develop- ment in 1980, indicates that the total net value of production will reach about US$1.4 million as compared to the US$5.7 million originally estimated (expressed in 1975 dollars), or 25%. As noted previously, this reduction is primarily due to the inferior soils which will not sustain high value crops. However, even with this reduced production value the project has had and will have a positive impact on the incomes and living standards of families living in the area. By the end of 1975 the actual net value of production for Part I, without full development of the irrigated area, was about US$435,000, which was 2.4 times greater than the estimated value before the project. This in- crease, which was achieved through more intensive cropping under both rainfed and irrigated conditions (increased prices for farm products, although not contemplated in the computation, brought about additional incentives) has provided a more dependable average family income of about US$967 annually, which is above the subsistence level, and the improvement in living standards is evident. In Part II of the project, however, because of a prolonged drought during the first semester, net value of production in 1975 was only 50% of the estimated value before the project. The increase that will be achieved with full development should bring about another substantial in- crease such that both per capita and family incomes will approach the minimum goals established in the original project plan. About one-half of the land owners on the project are INCORA settlers with farms from 8 ha to 16 ha and among the private owners about 90% have farms of less than 50 ha. This tenancy pattern is conducive to a more equitable distribution of income and increased employment, as many former part-time farm workers are now operating their own farms. 12. It is estimated that the project is likely to yield a rate of return of about 2% for Parts I and II together, as compared with the apprai-sal esti- mate of 11% for Part I and 25% for Part II. 1/ The main reasons for the lower than expected rate of return are: (i) the overoptimistic assumptions regard- ing production, given the unfavorable soil conditions and the high risk of double-cropping under rainfed conditions - indeed, the new analysis indicates that the gross and net value of production at full development will reach about 50% of the original projections; and (ii) the fact that a greater proportion of the area than originally estimated is used for extensive livestock farming, which gives a lower return per hectare than field crops. 13. The impact of the project must be evaluated in conjunction with the Stage II project where increases in production value are also taking place, due primarily to flood protection and drainage, and contributing to an im- proving economy in the region. Further, Repelon Sector, which has better soils, has developed rapidly, especially in production of tomatoes and cot- ton, which are export crops, and has had a correlative impact along with the development in the South Sector. Thus, the original intention of the Govern- ment to improve living conditions in this depressed region is beginning to show positive results as may be observed among the inhabitants throughout the area. In addition to agriculture, social services have been improved including new schools, health centers and hospitals, rural electrification, communication 1/ No distinction was made between the two parts in the new analysis because some of the investments in drainage, roads and flood protection benefitted both areas. - vi - facilities and new highways and roads. The benefits of all three projects have accrued, either directly or indirectly, to all 50,000 inhabitants of the region. Conclusions 14. During implementation the project encountered serious problems which delayed completion of the infrastructure about four years beyond the original date. Considerable work remains on land development and it is not expected that full development will be reached before 1980. The poor quality soils, seriously affected by salinity and alkalinity, will constrain full production to about 25% of that projected at appraisal but the increase in production value under these conditions will still provide family incomes well above the sub- sistence level and make it possible to improve living standards for the area's inhabitants. Agricultural development in the area, both in the Repelon Sector and the South Sector, has already transformed and improved the economy, over the former dependence on the fishing industry, and will provide more secure and adequate incomes for the local inhabitants in the future. The project will fulfill the Government's original objectives of improving social and economic conditions for the poor families in the area and to provide a reliable base for future growth and improvement. 15. Although the Government's decision to transform the economy of the area was right, there is a question as to whether irrigation should have been included in the first-phase - before the overall area of 35,000 ha was fully developed under rainfed conditions and the farmers had gained some experience with agriculture. Investment per ha and family is higher for irrigation and was to benefit a limited number of families. This was aggravated by the selec- tion of a sophisticated fixed sprinkler system. The main benefit to be gained from this area may be the opportunity to test and demonstrate the feasibility of extending irrigation to other suitable lands in the South Sector. - vii - II. OED COMMENTS 16. Many problems plagued the long-lived implementation history of the Atlantico project; some parts of the project were never implemented; those that were, were implemented in sites different from those originally selected and with major cost overruns. Gone are the hopes for a garden producing large amounts of citrus and other fruit and vegetables bound for the international markets; meager results are likely to be reaped instead. The present estimate of the economic rate of return the project is likely to yield is below 5%. The PCR provides a balanced description of the project and a thorough, critical analysis of its main problems and achieve- ments. It is almost completely silent, however, on the events at identifi- cation, preparation and appraisal that led the Bank to finance this project. The following comments focus on these points, including the inappropriate use of the rate of return computation at appraisal. Also, the question is raised whether the project, a failure in many respects, may have some important redeeming qualities. 17. In 1961, the Government established INCORA to carry out agrarian reform together with agricultural and rural development. At the time, irrigation was seen as a major tool to solve social problems in areas with high population density and undeveloped land resources. Several areas were selected for irrigation, and project preparation activities were started; the availability of previous studies, maps, etc.,was one of the factors favoring that selection. In 1965, Atlantico happened to be the site on which preparation works were most advanced. In addition, Atlantico was a depressed area, and strong social and political pressures were being exerted on the Government to do something to improve the lot of its inha- bitants. The Government asked the Bank for financing to carry out this activity. 18. The project had been poorly identified, however. It is true that Atlantico was an economically depressed area and measures to develop it were badly needed. The Government had built two flood control works (dikes along the Magdalena River - 1954, and along the Canal del Dique - 1959) and was working on the Guajaro Dam (1964/67), thus stopping flooding of the South Sector of Atlantico (eventually the project site). Technically, irrigation could be performed in the dry area. However, (i) if this area was to be developed, irrigation was not the most cost effective way for developing it; improved dry farming, together with some flood protection and drainage works, could have produced adequate results at a fraction of the cost. The rates of return estimated at appraisal for the two kinds of development clearly showed this: 11% for irrigation-cum-drainage (Part I) and 25% for dry farming-cum-flood protection (Part II) (ii) ff investments on irrigation were to be made in Colombia, Atlantico was not one of the more suitable sites. Higher returns could have been realized if the irri- gation works had been located elsewhere. 19. Moreover, the project had been improperly prepared; project design was overly optimistic and complex, and it did not properly take into account some of the regional constraints, such as the limited availability - viii - of people with any experience in farming. Some of its features were based on poor or erroneous information. The PCR makes those points, mentioning the incompleteness of the soil studies, the overoptimistic cropping patterns, the overoptimistic assessment of the entrepreneurial capabilities of the prospective beneficiaries, and the absence of any provision for on-farm development. The selection of sprinkler irrigation as the method to carry it out was also strongly criticized in the Bank. 20. Nevertheless, the Bank approved the project.l/ This was not an easy decision, however. On the one hand, the members of the appraisal mission found the project physically and agriculturally feasible, / but they could not give it their "endorsement on the basis of normal appraisal criteria". Their main areas of concern were the very intensive cropping pattern needed to justify the cost of the project, the use of sprinkler irrigation, and the lack of management and farmer experience.3/ On the other hand, the project's emphasis on high-value export crops would help diver- sification away from coffee and would improve the balance of payments. Eventually, this argument prevailed, and the project went ahead. 21. The Bank was right in thinking that the expansion of nontraditional exports was a step in the right direction. It was wrong, however, in assuming that this particular project would result in such an expansion. The appraisal staff's judgment against the irrigation part of the project - a judgment that proved to be sound - should have been given greater weight by the Bank. A different decision - developing the whole area under an improved dry farming scheme, as was decided later in the Second Atlantico follow-on project - would have been preferable. 22. The Bank endorsed the irrigation project although it had at hand rate of return estimates for each of the two alternatives that showed that dry-farming development was much more profitable and cost-effective than the sophisticated sprinkler irrigation system. It must be concluded that the rate of return computation was not given enough attention, and the analysis of economic benefits became only a non-negative test: an effort to demonstrate that it was not under 10%. 23. As an investment project, Atlantico proved to be disappointing: actual implementation diverged significantly from the original blueprint, and bigger returns to the monies invested there could have been reached elsewhere. In strict economic terms, the project must be deemed a failure. But, was it really a failure! The Government disagrees, and points to the 1/ After the appraisal mission had properly reduced its size from 35,000 ha to 3,900 ha, mainly because it estimated that INCORA did not have suffi- cient managerial capacity to undertake the full project. 2/ Assuming, on the basis of the information then available, that the project would be restricted to an area with "very good soils." 3/ Although they had already reduced the project size for that very reason. See footnote 1/ above. - ix - completed project works; the benefits that are stemming from the project (though smaller than envisaged and slower in showing up), which are likely to continue increasing; the increased and increasing standard of living of the area inhabitants; and the institution building by-product. The con- sultants have emphasized the latter point and have even suggested that in retrospect the main "objective" of the Atlantico project might prove to have been the building-up of economic and technical capacity in INCORA to handle all kinds of development projects, including irrigation, and the increase of knowledge available in the country both on the relative merits of irrigation vis-a-vis rainfed farming, and on the complex network of activities (specially in the "software" area) needed to carry out success- fully projects that attempt area development in aa integral way. As expli- citly spelled out in the PCR, Atlantico was a fertile breeding ground in which a very considerable number of professionals were trained, including many that were to become INCORA executives. Many observers have suggested that the irrigation projects that are presently being carried out in Colombia, as well as other projects carried out by INCORA (including those financed by the Bank), have benefited from the improved organization and management, and the better administrative and technical procedures that resulted from the Atlantico experience. Future audits on these projects might try to find out whether the design and implementation of these projects improved significantly - or whether some delays or cost overruns were avoided - as a result of the institution building resulting from Atlantico. 24. It must be concluded that the Atlantico project generated some important benefits in institution building and training that cannot be properly assessed - let alone, measured - with the methodologies presently available. To say that in a broader context the direct economic return of the project mattered less than its impact on the technical ability, thinking and decision-making capabilities of INCORA's leaders and technical staff, as some observers have suggested, might be an overstatement, but these benefits cannot be ignored.l/ 1/ The training opportunities were valuable and effective in developing INCORA's management and staff. It must be noted that INCORA could not fully profit from them, however, for several factors resulted in a high rate of rotation and exit of INCORA's top and mid level management.  COLOMBIA ATLANTICO NO. 3 IRRIGATION PROJECT LOAN 502-CO Completion Report TABLE OF CONTENTS Page No. I. BACKGROUND ...*........... ....... . . . . . .......... 1 II. PREPARATION AND APPRAISAL ............ ......... .e.*-. 3 Origin and Project Formulation .................... 3 Targets and Goals o .............. ............. 5 Other Donor Agency Roles . 6 Sector Setting ...... .. ................ . ...... 6 III. IMPLEMENTATION ........... .............. .. ...... 7 Effectiveness and Start up .............................. 7 Physical Progress .................... ........... 8 Land Acquisition and Settlement 12 IV. PROCUREMENT AND CONSTRUCTION ....................... 16 V. COSTS AND DISBURSEMENTS oo................... 17 Total Project Costs ..................................... 17 Disbursements . .... .......... .. 18 Allocation of the Proceeds of the Loan .................. 19 Covenants . 19 VI. INSTITUTIONAL DEVELOPMENT AND PERFORMANCE ............... 19 Institutional Development and Performance ............... 19 Supporting Services ......... .......o ... 25 Agricultural Credit ..0.0.................* ......... 26 Staff and Training Issues ............................ 27 Consultant Services ......... . . . ...... 29 Accounting and Reporting o............ - ..... 29 Institution Building ......... oo ...... ...... ... ... .. 30 TABLE OF CONTENTS (Cont'd) Page No. VII. AGRICULTURAL AND SOCIAL IMPACT ......................... 31 Stage of Present Development .......................... 31 Incremental Output and Impact of the Project ............ 32 Technological Change .... . ..... .................... 37 Project Charges ..... ... ...... ... .... ....... .. . .. 37 Overall Assessment .... .... ... ...................... 38 VIII. RATES OF RETURN ................. . ..... . .............. ... 39 Financial and Economic Rates ........................... 39 IX. SPECIAL ISSUES .................. ........................ 40 Weather and Risk ............ .......... . ..... ............. 40 Research and Technical Availabilities ................... 40 Sector Influences .............................................. 41 Integrated Development ..... ... ... ....... ................ 41 Settlement .....to.......t...........o...................... 41 X. BANK PERFORMANCE .................. . . ........ .. ........ . 42 XI. CONCLUSIONS ..... ................................................ 43 MAP - IBRD 3245 RI COLOMBIA ATLANTIC NO. 3 IRRIGATION PROJECT Loan 502-CO Project Completion Report I. BACKGROUND 1.01 The Atlantico No. 3 Irrigation Project is located in the Atlantic coastal region of Colombia in the Department of Atlantico, about 80 km south of the city of Barranquilla and in the delta zone of the Rio Magdalena. The Bank loan No. 502-CO for US$9.0 million to the Instituto Colombiano de la Reforma Agraria (INCORA) was used to finance construction of irrigation and drainage systems and roads on 3,300 ha of previously undeveloped land and to provide flood protection, drainage, and roads for 6,000 ha which are farmed under rainfed conditions. Loan funds were also used to construct a project headquarters, to recruit foreign consultants to assist with planning and execution of the project, to purchase farm machinery and equipment for operation and maintenance, to establish two experimental farms, and to prepare a feasibility study for a Stage II project. The total cost of the project was US$17.2 million. 1.02 The loan was signed on June 29, 1967 and became effective on November 2, 1967. The original completion date was set as December 31, 1972. However, due to serious problems and delays encountered during execution the final completion date became December 31, 1975. A Closing Date of June 30, 1976 was agreed with INCORA, however, as of that date, two small construction contracts signed prior to the completion date remained to be finished, and equipment ordered in 1975 was still being delivered to the project. It is expected that disburse- ments will continue until September 1976 or later. The loan was for a term of 25 years at 6% interest with a six year grace period. 1.03 Some clarification is required early in this report on the use of the title "Atlantico No. 3 Irrigation Project," and the role of the project financed by the Bank in the overall development of the southern part of the Department of Atlantico. As initially conceived in 1963, and as still con- sidered today by the Colombians, the Atlantico No. 3 project envisaged agri- cultural and rural development in an area covering about 66,000 ha which was bounded on the south by the Canal del Dique, on the east by the Rio Magdalena, on the west by the limits of the arable area west of the two large cienagas (swamps) of Guajaro and La Limpia extending to a range of low hills, and on the north by a range of low hills known locally as the northern or Manati hills. In this area three sectors were identified to be developed separately but as parts of the overall project; these were the Repelon Sector (4,700 ha) to the west of the two large cienagas, which occupied about 15,000 ha in a north-south direction in the west-central part of the overall area, the Molinero Sector (11,700 ha) to the north and west of the cienagas and the South Sector (35,000 ha) extending from the cienagas east to the - 2 - Rio Magdalena (Map IBRD 3245 RI). The Repelon Sector has been developed for irrigation by INCORA with its own resources and the Molinero Sector was eliminated from the project by INCORA and is now being developed by private interests, mainly the owners of large holdings in the area. The South Sector is being developed with the assistance of two Bank loans; Loan 502-CO for irrigation of 3,300 ha in the south part of the South Sector along the Canal del Dique extending from the Rio Magdalena westward to the vicinity of the Santa Lucia Experimental Farm, and Loan 849-CO for drainage and land develop- ment under rainfed conditions on 17,000 ha in the northern two-thirds of the South Sector. The project under Loan 502-CO was designated as Stage I of the South Sector and Loan 849-CO as Stage II. Stage I is further divided into Part I covering the irrigated area and Part II the 6,000 ha provided with flood control, drainage and access roads. This 6,000 ha was not definitely located at the time of appraisal but during final planning of the project the northwestern section of the South Sector adjacent to Guajaro Reservoir and generally south and west of the village of Manati, was selected and the drain- age system completed with funds from project 502-CO. This area was also in- cluded in the Stage II project area when Loan 849-CO was approved. In addition, the flood protection works on the north boundary of the South Sector and also the Stage II area, part of the main drainage canal, the main Boquitas drainage pumping plant and the main highways throughout both the Stage I and Stage II areas were financed from Loan 502-CO funds and have benefitted landowners in both areas. Hence, the two projects are interdependent and the terminology, Stage I and Stage II of the South Sector of the Atlantico No. 3 project, which is consistent with INCORA's official designation, will be used in this report. 1.04 INCORA was created by Law 135 of December 31, 1961. The Atlantico project was the first large-scale project in which agrarian reform was com- bined with land and water development to be undertaken by the new agency, with surveys and planning for the project starting in 1963. The overall project area was considered one of the most depressed areas in Colombia where some 7,000 families obtained their livelihood from subsistence farming, including some livestock, and fishing in the cienagas and lagoons which covered more than 60% of the area as a result of annual flooding from the Rio Magdalena, runoff from the nothern hills and heavy storms within the area. In the beginning the two principal objectives of overall development were (a) to improve incomes and the livelihood of the extremely poor families, basically by substituting an economy based more on agriculture for the fishing industry which was becoming less and less productive, and (b) to promote production of high value crops under irrigation and double-cropping for the export market. The main crops proposed were oranges, pineapples, tomatoes, guavas, papaya, tobacco, peanuts, dried beans and grain sorghum. Achievement of the first objective could obviously have a significant im- pact on increasing and stabilizing the incomes of people living in the area and this objective, as will be noted later in the report, has been or will be achieved to a certain degree. The second objective will only be achieved on a limited scale due to serious deficiencies in the soils in the project area and their unsuitability because of salinity and alkalinity for growing export crops. Some vegetables, mainly tomatoes, and beef for export are - 3 - are being produced and will increase when all the 3,300 ha are fully developed but soil conditions will limit use of the land to traditional crops such as sorghum and maize and pasture for livestock. The true condi- tion of the soils were unknown at the time the original project plans were made but now, nine years later, it is clear that the production potential of the area, with the exception of the Repelon Sector, which is giving high yields of cotton and tomatoes, is only a little more than 50% of that originally projected and most of the farm development and production plans have had to be discarded and INCORA's efforts at present are aimed basically at trying to make the best of a bad situation. II. PREPARATION AND APPRAISAL Original and Project Formulation 2.01 In the early 1960s, the Government was faced with serious social and economic problems in the depressed area in the southern part of the Department of Atlantico. It was estimated at that time that the average annual per capita income in the area was in the range of US$28 to US$55 (expressed in 1975 dollars). Most of the families were dependent on fishing for a livelihood and this was becoming less and less productive. Farming was on a subsistence basis and unstable because of the annual inundations from the Rio Magdalena and the Canal del Dique. It is evident from aerial photos taken at that time that at least 60% of the South Sector was temporarily or perman- ently flooded each year. With the creation of INCORA in 1961, Government took the decision to carry out a comprehensive agrarian reform and agricultural de- velopment program in the area, including flood control, which would replace fishing as the main occupation of the local inhabitants. It was also expected that irrigation development which would permit double-cropping would make it possible to produce high value crops for export, which would both increase the farmers incomes and foreign exchange earnings. 2.02 Operations for surveys and planning began in March 1963 under con- tracts between INCORA and local firms; Alfonso Olarte and Associates, for topographical surveys and with Samper, Madero and Uribe for soil surveys. The Ministry of Public Works had constructed a temporary dike along the Rio Magdalena in 1954 and along the Canal del Dique in 1959 which reduced flooding from those sources. INCORA started construction of Guajaro Dam in 1964, which was completed in 1967, and the flooding problems in the South Sector began to be controlled. The initial flooding from the cienaga Guajaro came about through construction of a gate structure several years earlier at San Cristobal on the Canal del Dique for the purpose of replenish- ing storage in the cienaga and to improve conditions for fishing. This was a valid objective, however, during high water in the Rio Magdalena and thereby the Canal del Dique, flows into the cienaga were excessive and not too well controlled which caused flooding to the east in the South Sector. Guajaro dam stopped this flooding and at the same time created a source to supply the Repelon Sector and the Manati area of the South Sector with water for irrigation. It also created a permanent lake for fishing. As some of the lakes and swamps dried up, INCORA initiated the first planned agricultural development. In 1964, INCORA entered into a contract with Development and Resource Corporation, New York for a feasibility study on agricultural development in the South Sector, including irrigation, drainage and flood control. This report, completed in 1966, was fairly detailed covering all aspects of integrated development for 35,000 ha however, as it was eventually revealed, the report was based on complex and idealistic planning which did not take into account the actual conditions in the South Sector; the ability of INCORA to carry out a full scale project of this size, both from the standpoint of managerial competence and financial re- sources; and the capacity of the future settlers/farmers to effectively adapt to intensive irrigated farming with very limited previous experience. Following some preappraisal discussions with INCORA officials who came to Washington, the first appraisal mission visited the project in June, 1966. It should be noted at this point that all project planning and evaluation was based on the soil surveys performed by the local firm and these surveys did not include a technical analysis of the saline and alkaline conditions which existed throughout the area and in the sub-soil and groundwater. Hence the real problem that was to have such a damaging effect on the future of the project had not yet come to light and was not fully revealed until three years later when a new soil survey was completed in May, 1969. There were many clues that these conditions existed but these were overlooked during the phase of project planning and formulation. 2.03 The main preoccupations of the first appraisal mission were the managerial capacity of INCORA to undertake a project of this size and the suitability of the heavier soils in the northern part of the South Sector for irrigation. The mission proposed to reduce the risk by limiting the size of 'the project, as this was the first project of this type, both for the Bank and INCORA, where intensive cultivation of high value crops for export would be undertaken in conjunction with agrarian reform, which implied new settlers with a minimum of experience on agriculture and irrigation. For these reasons the project was considered as a pilot stage and during the appraisal mission and later negotiations with INCORA, Bank Staff basically reformulated the project to fit what they considered to be within the capacity of INCORA and the farmers to effectively carry out. The first pro- posal was to reduce the area to be irrigated to 11,000 ha, which would in- clude the Repelon Sector, but the final proposal was for 4,000 ha with elimination of Repelon because of the high pump lift and the judgement that the soils were not suitable for irrigation. Flood protection and drainage for 6,000 to be farmed under rainfed conditions was retained in the project. The 4,000 ha to be developed under sprinkler irrigation was located on the recent alluvial soils, which were lighter in texture and more permeable, in the area immediately adjacent to the Canal del Dique, extending westward from the Rio Magdalena to the El Limon hills. On the basis of soils data available at that time, the selection of this area undoubtedly appeared feasible however, later events revealed this area to be the most seriously - 5 - affected by salinity and alkalinity in the South Sector, which brought on serious delays in implementing the project and certainly made it impossible for the project to achieve its original objectives. The proposed loan was approved on June 27, 1967 and the Loan Agreement signed on June 27, 1967. The loan became effective on November 2, 1967. Targets and Goals 2.04 Prior to the project the better soils in Parts I (1,500 ha) and II (3,200 ha) were cultivated under rainfed conditions for subsistence crops and extensive livestock operations. Normally two crops were grown each year during the wet season from April through November however, crops suffered from short drought periods of 2 to 3 weeks or from flood damage which was particularly severe in Part II, the Manati area. It was estimated at the time of appraisal that net income per hectare in the two areas ranged from US$50 to US$70 (1975 dollars). The project inputs which were planned to con- sist of flood protection, drainage, and irrigation in Part I; assistance to farmers to adapt to modern intensified farming; improved supporting services for credit, storage, processing and marketing of high value export crops; and improved availability of seeds and rootatock, fertilizers, insecticides and herbicides and machinery services; were all designed to achieve a dramatic in- crease in the value of production. It was assumed that irrigation in Part I would remove the risk of double-cropping and make it possible to grow crops such as oranges, pineapples, tomatoes, guavas, papaya, tobacco and peanuts in addition to the traditional crops of maize, sorghum and beans. The project plan also included storage, sorting and packing sheds and machinery to process most of these products for both the local and export markets. It was esti- mated that the net value of production would increase from US$605,000 annually in Parts I and II before the project to more than US$5.7 million with the project. It was considered that this conversion to modern intensive 'agriculture, with inexperienced settlers/farmers of whom many were ex- fishermen, could be accomplished under the strong centralized management of INCORA who would provide guidance and technical assistance. It was assumed that climate and soils were very favorable for obtaining high yields and ex- port quality products and that only supplemental irrigation and modern tech- nology were required to achive this. The constraints of salinity and alkalinity were not taken seriously. 2.05 The physical goals of the project have been achieved, i.e., the infrastructure for flood protection, irrigation, drainage, roads, pumping plants, experimental farms and a project headquarters have been completed. Except for about 1,000 ha in the eastern part of Part I, land improvement and development on the balance of the project area has not been started. About 3,300 ha in Part I have irrigation and drainage systems and facilities for sprinkler irrigation, but INCORA does not appear to be actively support- ing a program to rapidly bring these land into full production. The land acquisition and settlement program has been carried out to a reasonable degree in both Parts I and II and settlers are on the land. With this situation it is not possible at this time to fully evaluate the impact of - 6 - the project and to what degree the targets and goals will be met. Timewise the project is about 5 years behind schedule for completion of construction and several more years will certainly be required to even partially achieve the goals for agricultural development and increased production value. At the moment it is clear that the plan for production of high value export crops has been discarded and the processing facilities will never be built. Test plantings of oranges and pineapples have failed and it is generally accepted that most of the suitable land will be used for traditional crops or pasture for livestock. Due to the saline and alkaline conditions in the soils the trend appears to be to use the land more and more for pasture and less for field crops. For example in Part II the original cropped area in 1966 was estimated as 3,200 ha, while in 1975 the maximum areas under sorghum and maize was 1,200 ha with pasture making up the balance. This could be due to the fact that livestock gives a fair annual income per hectare, with a minimum investment and labor cost but, it is also because so much land is only suitable for pasture and farmers do not want to take the risk of planting field crops on inferior land and the vagaries of rainfall. In summary it must be accepted that the production goals originally established will never be met and INCORA has projected a new cropping pattern which indicates that net production value at full development in Part I could reach slightly more than 21% of the original estimate, and this may be optimistic. Other Donor Agency Roles 2.06 Other than a small research project on reclamation of saline soils carried out by Utah State University, no other outside agencies participated in the project. Sector Setting 2.07 Within the context of the country's overall agricultural production, area under cultivation and number of farmers, the proportion represented in the project was not important. The project was more important in the setting of the Atlantic Region where development in the rural sector had never re- ceived sufficient attention from Government and where there was fairly wide- spread marginal poverty. There was also an imbalance in land ownership and in the benefits derived from the land, highly in favor of the owners of the large farms and ranches. This situation had generated social unrest and political problems, in addition to the economic deprivation, and Government was faced with an urgent need to take action to alleviate these conditions. The enactment of Law 135 in 1961 was an expression by the Government at that time that land reform would become a reality throughout the country and that programs to improve living conditions for the rural poor would be implemented. For several years after the law came into force, until about 1970, successive Governments provided adequate institutional and financial support to INCORA for programs and projects designed to achieve the rather comprehensive objectives set out in the law, and during this period INCORA achieved a rather impressive record for agrarian reform and in initiating land develop- ment projects. The Atlantico No. 3 project was the first project to be - 7 - initiated by INCORA within the concept of the new law and it met all the criteria for imposing land reform and improving land use, agricultural pro- duction, family incomes and living standards in the rural sector. Therefore, the project not only conformed to national and sector policies but also served as a model to develop and implement these policies. During the period from 1971 up to the present time there has been a gradual downgrading of Government's support for land reform and improvement of rural conditions by means of land development projects. At present the emphasis has shifted to the all inclusive rural development type projects which may have some of the same goals outlined in Law 135 but which represent a different approach to reaching these goals. III. IMPLEMENTATION Effectiveness and Start Up 3.01 The only condition of effectiveness was recruitment of a consulting firm to assist with design, implementation and management of the project, since the Bank had serious doubts as to INCORA's ability to execute a project of this type with which they had no previous experience. The original date of effectiveness was September 30, 1967 but the contract with TAHAL Consulting Engineers, Ltd., Israel was not signed until October 18, 1967 and the loan was declared effective on November 2, 1967. It took some time to fulfill the conditions imposed in 13 Side Letters which were an adjunct to the Loan Agree- ment. These actually were assurances or conditions which could have been in- cluded directly in the Loan Agreement. A list of these Side Letters is presented below: Number Subject Status of Compliance 1 Allocation of Resource as Only partially complied with as between Repelon and project Repelon received equal priority with project 2 Recruitment of Consultants Not fully met as consultants terminated in 1975 rather than 1977 3 Procurement and 15% prefer- Generally non-compliance as ence for local suppliers bidding documents not submitted to Bank for prior approval. No foreign bids received for civil works, as contracts too low in value 4 Allocation of Loan Proceeds No problem 5 Private Landholdings and Reasonably good Land Settlement -8- Number Subject Status of Compliance 6 Import Licenses No problem 7 Provision of Agricultural Credit and Extension Services Reasonably good 8 Insurance on Imported No Problem Equipment 9 Recovery of Investment Due to delay in completing project, the conditions in this letter have not been met 10 Maintenance of Roads Fair not complete 11 Maintenance of Highways Reasonably good 12 Amendments to Land Reform Law No Problem 13 Purchase of Foreign Funds No Problem for Payments in Foreign Currency 3.02 INCORA gave a high priority to establishing the project organization and providing other facilities such that the project start-up was rapid and effective. In the beginning, project direction was provided by the Regional Director in the existing Regional Office in Barranquilla. This greatly faci- litated operations as a certain amount of organizational support was already in place and there was no delay while waiting for a project headquarters to be constructed in the project area. Initially, enthusiasm was high and there were great expectations for the success of the project. Decisions by INCORA's top management were taken quickly and forcefully and day-to-day operations were facilitated in every way possible to achieve satisfactory progress. Physical Progress 3.03 In general, progress in implementing the project can only be viewed as poor or unsatisfactory since it has taken almost four years longer to com- plete the principal objectives than originally scheduled. Even today, about 2,100 ha in Part I which have been provided with sprinkler irrigation systems have not been prepared for cultivation. The two main reasons for delay in completing the project were discovery that about 1,250 ha in the western part of Part I were unsuitable for crop production, making it necessary to replan the project, and the delay, for technical reasons, in completing the San Pedrito pumping plant on which irrigation of all land in Part I depended. It is interesting to note that the first plan of operation for the project pre- pared early in 1968 called for completion of all physical works by the end of 1971, when in fact the last and most important feature, the San Pedrito plant, was completed in April 1977, more than five years later. It -9- is also relevant that the soils problem was identified in May 1969 but it was not until April 1972 that the Bank agreed to eliminate these lands and re- place them by expanding the project into an area of more suitable soils. Three years for making such a decision cannot be justified. 3.04 Project operations on surveys and final design made good progress during 1968 and 1969 and contracts were signed during 1970 and 1971 for major infrastructure works including the flood protection interceptors, drainage systems for both Parts I and II, the San Pedrito and Boquitas pumping plants, the diesel powered electric generating plant, the new project headquarters, a part of the main roads in the South Sector and raising the embarkments along both the Canal del Dique and the Rio Magdalena. The Santa Lucia and Malambito experimental farms were completed and applied research work ini- tiated. Several experimental crops were planted, including about 280 ha of oranges at Santa Lucia, together with plots of pineapples, tomatoes, cotton, onions, peanuts, and some traditional crops. An extension training program was started and the land acquisition and settlement program made good pro- gress during these early years. Staffing of the project by both INCORA and TAHAL was exceptionally good which contributed to the rapid progress made at first on all aspects of the project. However, it was during the last part of 1969 and early 1970 that the problems that were to cause serious delays in completing the project began to appear. 3.05 Reconnaisance soil surveys and groundwater testing over 8,000 ha in the South Sector by TAHAL established that salinity and alkalinity could be found to varying degress throughout the area, either in the topsoils (30 cm) or at depth (120 cm) and that the groundwater, generally one to two meters below the ground surface, was also saline. The reasons for this condi- tion are that geologically the South Sector, including the Repelon Sector and the former cienaga Guajaro, is a natural depression and a closed hydrologic basin which is cut off on the south by the Canal del Dique. This canal was constructed in the late 1700s by the Spaniards for navigation from the Rio Magdalena to Cartagena. At one time a large part of the area was below sea level and subject to flooding by salt water. Materials of sedimentary origin have gradually filled the area until now the topography is relatively uniform and elevations range from sea level to 4 meters above sea level. In the soil profile, a saline bluish marine clay of tertiary origin forms the lowest layer and this is the source of salinity and alkalinity in the area. In the lower areas previously under lakes or swamps, the tertiary formation is covered by-materials of alluvial-lacustrine origin which are fine textured forming grumosolic gleyic soils. More recent alluvial materials of variable texture and depth are found in strips parallel to the Rio Magdalena and Canal de Dique which were deposited by flooding of these two water courses. These are lighter textured soils. Throughout the South Sector, and espe- cially in Part I of Stage I, the nature of the material and the salt con- tent of the layers which form the soil profile are extremely variable, even over short distances. Soil borings revealed saline layers of varying inten- sities at all depths, interspersed with nonsaline layers. With a high saline water table, the capillary rise of water serves to transport and dis- perse these salts throughout the soil profile and cause salinization of the - 10 - surface and sub-soils. This condition has existed for many decades since the basin has no natural outlet and there was no possibility for rainfall and periodic flooding with fresh water to flush the salts out of the soils or the groundwater. Salinity and alkalinity occurs in a discontinous and spotty pattern throughout the South Sector, making it difficult to find large contiguous areas suitable for field crops. Sorghum is often used as a test crop to delineate the salt affected and non-affected areas. 3.06 Once the magnitude of the problem of salt affected soils had been revealed, TAHAL undertook a detailed soil survey of the Part I area. It was found that the area west of the Santa Lucia experimental farm, known as Block II and covering about 1,250 ha net, was unsuitable for field crops and it was recommended that this area be replaced by an equal area with more suitable soils. The area in the eastern part of Part I, known as Block I and covering about 1,800 ha net, is less affected by salts and, in fact, has about 1,000 ha of very good land in one contiguous block. The area selected to replace Block II was located to the north of Block I, parallel to the north boundary from east to west, where the soils are of heavier texture but with a lower incidence of salinity. The area is known as Block III and covers about 1,600 ha net. INCORA made this change official in July 1971 and the Bank concurred following the visit of a highly qualified consultant in April 1972, who confirmed what had been known since May 1969. With this delay in replanning of the project, the secondary irrigation and drainage works in Part I (Blocks I and III) were not completed until in 1974, or two years after the original completion date. It could be noted here that Block I was equipped with fixed sprinkler systems but the new plan for Block III is based on portable systems which can be supplied at a much lower cost. 3.07 The other serious delay in project implementation had to do with difficulties encountered in constructing the San Pedrito pumping plant which will supply irrigation water for Part I. The first contract for construction of this plant was awarded in May 1969 to a firm who also happened to be the only bidder and this proved to be a mistake. The contractor did not have sufficient experience or proper equipment for this type of work. The sheet piles, driven to form a cofferdam to dewater the site, were not deep enough and during the next flood stage of the Rio Magdalena, water and mud came in under the piles and filled the area that had been excavated. The contractor attempted to remedy the situation but after several months it was agreed with INCORA in April 1972, that the contract should be cancelled. At about the same time the site selected for the Boquitas pumping plant, which had already been changed once from the original location near San Cristobal, was found unsuitable, requiring that the site be moved still further east along the Canal del Dique. A new contract for the San Pedrito Plant was not signed until November 1972 and the new contractor, having also experienced some problems and delays, actually completed construction and installation of equipment in March 1976, leaving only removal of the double row of sheet piles to put the plant into operation. It is expected that an irrigation supply for all the land in Part I will be available during the first semes- ter cropping season in 1977, almost five years later than originally planned. - 11 - 3.08 By late 1974 all infrastructure works for Stage I had been com- pleted, with the exception of the San Pedrito plant, but irrigation could not begin on the 3,300 ha in Part I (Tables 1 and 2). Because of this, INCORA installed temporary pumps in 1972 which had sufficient capacity to supply about 900 ha. INCORA had acquired about 1,000 ha of land with good soils in the eastern part of Part I and this land had been settled by about 250 families. This area was developed rapidly under irrigation and at the present time about 400 ha are cropped mainly to a sorghum-sesame-maize rotation and 500 ha are in livestock cooperatives. With completion of the drainage systems in Part I and II, some expansion of the area farmed under rainfed conditions was realized by reducing the area subject to annual flooding and by 1972 about 4,780 ha were being cropped, which included 2,500 ha used for pasture. The proportion of the area cropped has decreased in recent years with a corresponding increase in pasture, the reasons being the low yields obtained on salt affected areas and the undependable distri- bution of rainfall. This, of course, illustrates the problem in the dry-farm area where irrigation is required to overcome the risks involved in inten- sive cropping of the land on the one hand and the justification for invest- ment in irrigation on lands with such a high incidence of salininty and alkalinity on the other. The Manati Pilot Farm to be established under the Stage II project financed by Loan 849-CO should help to find answers to these problems. 3.09 During the course of the project from November 1967 to the early part of 1976, a little more than 8 years, there were several changes or de- letions in the original plan, some additions, and several other proposals which were agreed upon and approved for Bank financing but never carried out. The main items are listed below as many of these had either a positive or negative effect on the final outcome of the project: (a) Loan 502-CO funds were used to provide flood protection from runoff from the northern hills for the entire area of Stages I and II rather than just the 6,000 ha dry farm area originally stipulated for Stage I; (b) several main roads in the Stage II area were constructed or rehabilitated under Loan 502-CO; (c) the Boquitas drainage pumping plant and the main drainage canal in the Stage II area were constructed to a capacity sufficient to accomodate all the estimated drainage from the Stage II area (30,000 ha) as well as the Stage I area; (d) with the unsuitable soils the plan to produce high value export crops had to be abandoned and there obviously was no need to construct plants for storage, grading, packing and processing of these products. After showing good growth for about four years the citrus tress died when their roots reached the saline water table and the pineapples did not bear fruit. Only tomatoes and peppers produced well when planted in carefully selected areas where salinity was slight to moderate; - 12 - (e) the plans to develop marketing arrangements and channels were not viable when it became apparent that the cropping pattern would largely consist of traditional crops, for which marketing arrangements already existed; (f) the proposal to bring electric power into the South Sector by means of an interconnection with the main regional grid has not been constructed, however, this has once again been approved for Bank financing under Loan 849-CO; (g) the proposal to establish the Manati Experimental Farm with a water supply for irrigation from Guajaro Reservoir was not carried out due to the delay in preparing plans and tender documents, however, this is now being considered for imple- mentation under Loan 849-CO. This is important for future development of the Stage II area since it would determine if irrigation on the heavy soils is feasibly and if leaching of the saline soils would be effective; (h) in April 1973 the transfer of US$1.1 million from unallocated loan funds to Category BI for the purchase of farm machinery was approved. It was proposed that the Central de Cooperativas de la Reforma Agraria (CECORA) would make this machinery avail- able to the farmers by rental from a machinery pool or, subse- quently, arrange to transfer the machinery to cooperatives, groups of farmers or even individual farmers on deferred pur- chase agreements. The plan was never implemented or the machinery purchased. The new Government which took office in August 1974 adopted a policy of not establishing machinery pools for small farmers, but proposes to provide credit funds for cooperatives and groups of farmers to purchase their own machinery. A proposal to use funds provided under Loan 849-CO to implement such a plan under the Stage II project, and possibly for farmers in the Stage I area, is presently under consideration by INCORA and the Bank. Funds are available for this purpose but an amendment of the Loan Agreement for Loan 849-CO will be required; and (i) during 1975 INCORA finally undertook the purchase of equipment for operation and maintenance of both Stage I and II and this equipment, financed from Loan 502-CO funds, is presently in the last stage of being delivered to the project. It appears that with this equipment, the operation and maintenance division, which has not been too effective in the past, will be able to improve their performance. Land Acquisition and Settlement 3.10 A consideration of the land tenure situation in the project area, both before and after the project, must necessarily be based on the whole - 13 - of the South Sector, as INCORA does not distinguish between Part II of Stage I and Stage II. Prior to the project, cadastral surveys indicated that about 30,000 ha in the South Sector was occupied by 852 farms, of which 31.3% were smaller than 10 ha, 54.3% ranged from 10 ha to 100 ha, and 14.4% were larger than 100 ha. The group of less than 10 ha occupied only 3.8% of the land, indicating a predominance of farms in the 1-ha to 2-ha range. The 10-ha to 100-ha group occupied 39.0% while farms larger than 100 ha accounted for 57.2% of the area. It was found that only a small per- centage of the landowners had legal titles to the land and that most of the farmers claimed ownership by right of occupancy. INCORA wisely decided to accept these claims and to proceed with negotiations for acquisition of land on the same basis as with owners who possessed titles. Initially Law 135 stipulated that existing owners could retain up to a maximum of 100 ha and INCORA initiated the agrarian reform program on this basis, however, the law was amended in 1973 to reduce the limit to 50 ha, with the condition that owners who had already complied with the 100 ha limit could retain holdings of this size. 3.11 Stage I and II together include about 22,000 ha of land suitable for cultivation. This excludes an additional 13,000 ha to 14,000 ha which are permanently inundated in lakes or reservoirs, urban areas, hilly or saline areas which cannot be utilized, and some privately owned lands which are not subject to further acquisition under the agrarian reform laws. It was initially projected that INCORA would acquire as much as 14,000 ha out of the 22,000 ha and redistribute it to settlers. However, the program en- countered delays in completing the negotiations with many landowners and sufficient funds were not provided to purchase the land. The best estimate as of the end of 1975 was that INCORA had actually acquired a little more than 8,000 ha and settled about 840 families in both Stage I and II, compared to the 2,000 originally projected. In Part I of Stage I, 1,533 ha have been acquired on which 340 families were settled. Actual figures are not avail- able for Part II as it overlaps with Stage II but it appears that about 4,000 ha have been acquired on which an estimated 250-300 families were settled. Thus the project in Stage I counts with about 5,500 ha, out of a total of 9,300 ha, as acquired land and some 600-640 new settlers. The re- maining 3,500 ha in private ownership are distributed in about 310 farms. Only nine farms out of the 340 in Part I have more than 50 ha, which supports INCORA's claim that more than 90% of the farms in the project area are in compliance with the requirements of the agrarian reform laws and that the program cannot proceed any further in this area. Additional acquisitions are in process in Stage II but it is clear that INCORA is not making the same effort to complete the program in this area as it did during the early years in the project area and that the original goals will not be met. - 14 - TABLE 1 COLOMBIA ATLANTICO NO. 3 IRRIGATION PROJECT List of Completed Project Works I. Stage I - Part I (Santa Lucia) (a) main irrigation pumping station at San Pedrito-capacity 4,800 liters/second; (b) five fixed pumping stations for sprinkler irrigation (located on main canal); (c) 17 kms of main irrigation canals (concrete lined); (d) 53.8 kms of secondary irrigation canals (asbestos cement pipe); (e) Boquitas drainage pumping station - capacity 5,000 liters/second; (f) 112 kms of main and lateral drainage canals with structures; (g) 150 kms of highways and roads, including those along canals; (h) San Pedrito diesel-electric powerplant - 2,600 kva; (i) power sub-station at San Pedrito - 2,600 kva; (j) power sub-station at Boquitas - 1,000 kva; (k) five power sub-stations for fixed sprinkler pumping plants; (1) power transmission line from San Pedrito to Boquitas - 15 km; (m) two desilting basins at San Pedrito with inlet and outlet structures; (n) one aircraft landing strips for aerial spraying, 0.85 km; and (0) two experimental farms at Santa Lucia and Malambito, covering 200 ha. II. Stage I - Part II (Manati) (a) 30 kms of secondary drainage canals; (b) 19 kms of flood interceptor; (c) 83 kms of roads including roads along canals; and (d) 1 km aircraft landing strip for aerial spraying. III. Administrative Center at El Limon, with public utilities TABLE 2 Page 1 COLOMBIA ATLANTICO NO. 3 IRRIGATION PROJECT Main Roads Constructed in Stage I and II (Financed from Loan 502-CO Funds) Length Route km a) Carreto-Candelaria 5.0 b) Compuertas - San Pedrito 27.0 c) El Limon - Canal IV - Manati 4.4 d) Canal Principal de Drenaje - Canal II - Manati 3.9 e) Canal Principal de Drenaje - Campo de la Cruz 7.2 - 16 - IV. PROCUREMENT AND CONSTRUCTION 4.01 The construction of all project works in both Parts I and II was carried out under contracts with local firms. These contracts were adver- tised according to the Bank's procedures for international competitive bid- ding but there was never any response from foreign firms. This was probably due to the overall value of the contracts, of which the largest was US$2.5 million, which were too low to attract foreign bidders. Further, the relatively low unit costs offered by local contractors, due in part to the absence of strong inflationary pressures in the national economy until recent years, and correspondingly low price levels for all goods and services in the country, made it infeasible for foreign firms to compete for these con- tracts. The procurement of all major items of equipment was by international competitive bidding and this equipment was imported through local represen- tatives of foreign suppliers. Minor items of equipment, materials and supplies were procured under local bidding procedures which was provided for in the Loan Agreement up to an amount of US$10,000, without prior approval of the Bank. A limitation of US$25,000 was also provided for awarding contracts for construction and other services without prior review of tender documents and contracts by the Bank. The total value of all contracts for construction of works and equipment purchases was about US$13.0 million. The sources of supply for equipment items included manufacturers in Japan, Italy, Federal Republic of Germany, Great Britain, Canada and the United States. A break- down of the monetary value imported from each country is not available. 4.02 Overall, about 95 contracts were awarded during the course of the project. This appears to be an excessive number for a relatively small proj- ect. Many of the contracts were for specific items of equipment or specific types of work. It is customary in Colombia for contractors to specialize in one type of work; such as canals, roads and concrete structures, so that it is difficult to award one general contract covering several types of work. Further, most contractors do not have the capacity to undertake large con- tracts, mainly for lack of managerial competence or financial reserves and suitable equipment in good working order. INCORA basically follows a policy of limiting the size of contracts in order to reduce the risk of non- compliance. This appears to have been an effective procedure for the project as there was only one cancellation for non-compliance and most contracts were completed on schedule and with an acceptable quality of work. The main dis- advantage is the time it takes to carry out the tender process and negotiate a contract for each case, which partially accounts for the overall delay in completing the project. 4.03 With respect to side Letter No. 3, which outlined the procurement and contracting procedures to be followed, it must be stated that INCORA did not fully comply with these requirement. Performance was erratic as in many cases prequalification was not used, tender documents were not submitted to the Bank for approval prior to requesting tenders, information on evaluation of bids and selection of the successful bidder was either not submitted to - 17 - the Bank or was received at the same time as the signed contract, which did not allow the Bank to review or comment on the bid evaluation or draft con- tract. However, despite these omissions, it is evident that INCORA's handling of procurement was always straightforward and legal and that proper use was made of the loan funds. 4.04 The first contract with TAHAL Consulting Engineers, Ltd., was negotiated and signed in October 1967 and extended in 1970 and again in 1973. While Side Letter No. 2 provided that consultants would be maintained on the project until June 30, 1977 it became evident early in 1975 that the delay in completing the project and the drastic change in the prospects for crop development had greatly reduced the need for these services. Further, Loan 502-CO funds were used for a small group of consultants to assist the plan- ning department of INCORA in Bogota to prepare feasibility studies for rehabi- litation and completion of other existing INCORA projects for irrigation and drainage development with agrarian reform. With advent of the new Government in 1974, support for a continuing program on these projects was withdrawn and the technical office responsible for the planning work was discontinued. In view of this situation, it was agreed that TABAL's services were no longer required and the last of the consultant group left Colombia in June 1975. The performance of TAHAL on the project was exceptionally good. The initial surveys, investigations and designs were carried out very efficiently, per- mitting the award of contracts for major works within a relatively short time after the project started. It was during this period that field investigations by TAHAL revealed the true extent of the salinity problem. With this problem the progress slowed somewhat, pending more detailed surveys and decisions by INCORA and the Bank on changes in the plan for the project. TAHAL conducted a number of studies on agricultural development, particularly on export crops and processing facilities, which ultimately could not materialize. The working relationships with INCORA staff was good and a large amount of in- service training was accomplished. It is interesting to note that, while TAHAL's permanent staff in the country normally included about 10 members during the early years, about 60 specialists were assigned under the contract for varying periods of service during the seven and one half years that ser- vices were provided. The total cost of consultant services amounted to roughly US$2.3 million. V. COSTS AND DISBURSEMENTS Total Project Costs 5.01 The total project expenditures as of June 30, 1976, together with the estimated costs at appraisal, are presented in Table 3. The expenditures for the several items or activities included in the table, as expressed in US dollar equivalents, take into account changes in the rate of exchange during each year of the implementation period. The range of variation during the course of the project was from Col$ 13.50 in 1967 to Col$ 34.82 in early 1976. The total expenditures of US$ 17.211 million exceeds the original estimated - 18 - costs of US$15.740 million by US$1.471 million or about 9%. This relatively low increase in total cost over a period of about eight years, taking into account the high internal and external inflation during the last part of this period, 1973-75, may be explained by several factors. The first of these is that all the major works were either completed or under contract by 1973, before the high inflationary period began. As noted previously the delay in completing the project during 1974 and 1975 was due almost entirely to the delay in completing the San Pedrito pumping plant. The second con- tract for this plant was signed in 1972 and subsequent payments required under the escalation clause did not significantly increase the cost. In other words, the high inflation that started in 1973 (22%) did not mate- rially affect project costs. The second factor was that changes in the proj- ect plan eliminated or reduced the cost of certain items, which partially offset the overruns on other items. As may be noted in the table, the main items with overruns were the civil works in Part I (36%), purchase of addi- tional equipment for operation and maintenance which had Bank approval (250%)s consultant services (24%) and interest during construction (16%). The total overrun amounted to US$4.156 million. Savings amounting to US$2.685 million were achieved on several items, including all the works in Part II, purchase of agricultural machinery, elimination of packing and processing plants for oranges and other export crops, non-completion of the training program and failure to reach the anticipated goal on land acquisition. A third factor which is reflected in the US dollar equivalents of local costs paid in Colombian pesos was the periodic deflation of the exchange rate to offset inflation. Government provided the additional financing to cover the in- creased costs and, as will be noted further on, about US$8.7 million were disbursed out of the loan. A contingency of 15% was included in the esti- mated cost for each item and these funds were totally expended. The Govern- ment (INCORA) and the loan were the only sources of project funds except for a small contribution by the University of Utah for research on the saline soils. The loan covered the foreign exchange costs of the project, as shown in Table 3. Disbursements 5.02 Actual disbursements by annual semesters for the full term of the project are presented in Table 4. The delay in completion of the project is reflected in the extended disbursement period. The final Closing Date was June 30, 1976, following the last extension of the Completion Date to December 31, 1975, and a total of US$8.7 million was disbursed as of August 31, 1976, leaving about US$300,000 to be cancelled. As shown in the table only about 60% of the loan was disbursed by the original target date. None of the project targets were met by the original Completion Date of December 31, 1972 and thus a comparison of the original project schedule with the actual disbursement schedule would be meaningless. It is also unrealistic to com- pare the original project schedules with actual total project expenditures because of the almost four year delay in completing the project. Extension of the implementation period increased the commitment charges and interest during construction which were paid directly by Government. - 19 - Allocation of the Proceeds of the Loan 5.03 The original allocation of the proceeds of the loan to various categories were set out in Side Letter No. 4, dated June 29, 1967. This was amended twice during the course of the project; the first time was in April 1973 at the request of Government to transfer US$1.1 million of un- allocated funds from Category C to Category B to purchase additional farm machinery, which actually was used subsequently in 1975 for operation and maintenance equipment; and the second time was in September 1974 to make minor adjustments in the allocations to conform more closely to actual ex- penditures. Table 5 presents the original allocation, the two amendments, and final use of the funds by categories. Covenants 5.04 The thirteen Side Letters which were signed together with the Loan Agreement are listed in paragraph 3.01 of Section III, with brief comments on the status of compliance. With the exception of the covenant on project charges most of the covernants were reasonably fulfilled or there were exte- nuating circumstance which made full compliance impracticable or unnecessary. The situation with respect to the covenant on project charges is described in paragraph 7.09 of Section VII and it is clear that the delay in bringing project lands into full production makes it impracticable to implement a sys- tem of project charges until farm incomes reach a level adequate to support such charges. VI. INSTITUTIONAL DEVELOPMENT AND PERFORMANCE Institutional Development and Performance 6.01 The Instituto Colombiano de la Reforma Agraria (INCORA) was the exe- cuting agency for the project. INCORA was created by Law 135 of 1961 which gave the new organization authority to undertake land and water development projects in conjunction with agrarian reform. During the next several years INCORA initiated agrarian reform and/or land development in 35 specific areas or districts throughout the country of which 16 included irrigation and drain- age systems, together with flood protection and roads. These 16 projects, which serve about 150,000 ha, are essentially integrated agricultural develop- ment projects in which INCORA provides the required supporting services to settlers as well as to small privately owned farms. During the development period for these projects, 1963-1975, INCORA became the only institution in the country capable of executing large land development projects and providing assistance to small farm owners. 6.02 It is generally recognized that the planning and implementation of the Atlantico No. 3 project, which was the first project of this type to be undertaken by INCORA, was a strong influence in the early development of the organization. Many of the procedures and methodology which became standards COLOMBIA ATLANTICO NO. 3 IRRIGATION PROJECT Comparison of Estimated Costs and Actual Expenditures Estimated Costs Expenditures as of 6/30/76 ITEMS Loan Local Total Loan Local Total ------------------------- US$'000----------------------------- Part I Irrigation 1. Engineering Works a) Main Pumping Stations 440 150 590 415 283 698 b) Canals and Structures 230 115 345 400 529 929 c) Sprinkler Systems 1,510 100 1,610 1,097 - 1,097 d) Drainage and Dikes 350 540 890 921 1,222 2,143 e) Roads and Structures 230 115 345 130 170 300 f) Power Generation and Distribution 660 60 720 672 51 723 g) Land Preparation 130 70 200 64 206 270 1 h) Pilot Farms 465 275 740 231 549 780 i) Engineering and Supervision 285 1,075 1,360 - 600 600 2. Operation and Maintenance Equipment 210 - 210 1,038 - 1,038 3. Spare Parts for Equipment 160 - 160 - - 4. Agricultural Machinery 820 - 820 717 - 717 5. Establishing Perennial Crops - 220 220 - 220 220 6. Orange Packing Plant and Equipment 200 170 370 - - 7. Field Trial Farms and Nurseries 220 90 310 - 230 230 01 8. Consulting Services 1,520 120 1,640 1,692 624 2,316 9. Vehicles 150 - 150 241 - 241 o 10. Buildings and Utilities 30 220 250 214 284 498 October 1976 Sub-total Part I 7,610 3,320 10,930 7,832 4,968 12,800 Estimated Costs Expenditures as of 6/30/76 Loan Local Total Loan Local Total - ----U --------------------------- US---------------- ---- Part II Flood Protection 11. Engineering Works a) Interceptor Canals 310 390 700 300 397 697 b) Drainage and Access Roads 250 370 620 230 305 535 c) Contingencies 85 115 200 - - - d) Engineering and Supervision 65 115 180 - 190 190 12. Operation and Maintenance Equipment 50 - 50 33 - 33 13. Building and Utilities 10 30 40 - - - Sub-total Part II 770 1,020 1,790 563 892 1,455 1 Other Costs 1 14. Future Buildings and Utilities 20 110 130 - - - 15. Feasibility Study for Stage II Project 100 200 300 85 215 300 16. Training 500 - 500 178 25 203 17. Interest During Construction - 1,290 1,290 - 2,093 2,093 18. Future Expansion of Orange Packing Plant - 300 300 - - - 19. Land Purchases - 500 500 - 360 360 Sub-total Other Costs 620 2,400 3,020 263 2,693 2,956 Total Cost of Project 9,000 6,740 15,740 8,658 8,553 17,211 October 1976 Mt 0 October1976', -22- COLOMBIA TABLE 4 ATLANTICO NO. 3 IRRIGATION PROJECT LOAN 502-CO SCHEDULE OF DISBURSEMENTS As of August 31, 1976 ACCUMULATED DISBURSEMENTS US$ MILLIONS EQUIVALENT IBRD FISCAL ' ACTUAL TOTAL APPRAISAL , ACTUAL DISBURSEMENTS YEAR AND DISBURSEMENTS ESTIMATE , AS A PERCENTAGE OF SEMESTER , APPRAISAL ESTIMATE 1 2 % 1969 1st 0.23 0.9 26 2nd 0.23 1970 let 0.32 2.3 , 14 2nd , 1.07 1971 let 2.16 5.4 40 2nd , 3.14 1972 let , 3.69 8.2 45 2nd 4.36 1973 let 5.36 9.0 , 60 2nd , 6.31 , 70 1974 , let 6.82 76 2nd 7.16 , 80 1975 let 7.62 , 85 2nd 7.70 , 86 I I 1976 let 8.00 89 2nd , 8.50 94 August 31, 1976 8.70 97 Closing Date: 6/30/76 COLOMBIA ATLANTICO NO. 3 IRRIGATION PROJECT LOAN NO. 502-CO Allocation of the Proceeds of the Loan Original As Revised As Revised Actual Disbursements Category June 29, 1967 April 18, 1973 September 12, 1974 August 31, 1976 -- - US$ million - - A. Civil Works I Construction and Installation 2.5 2.5 2.6 2.7 II Generators, pumps, line equipment, valves and accessories, sprinkler equipment, asbestos-cement pipes. orange packing-house equipment, and other equipment, supplies and materials to be incorporated into civil works 2.2 2.2 2.0 2.1 B. Machinery, Agricultural Items, Consulting Services and Training I Agricultural machinery and equip- ment, imported planting material, operation and maintenance equip- ment including motor vehicles and spare parts 1.3 2.4 2.4 1.9 II Consulting services and training 1.9 1.9 2.0 2.0 C. Unallocated 1.1 Total 9.0 9.0 9.0 A.7 October 1976 - 24 - for other projects, emerged from the operations and problems confronted on the Atlantic project. Many of the staff members who later assumed more responsible positions received their practical training on the project. The project provided a strong motivation and challenge to achieve competence and capability in every department of INCORA to effectively deal with the varied aspects and problems involved in integrated development. The general consensus is that INCORA developed this capability, but lack of support from the national Government made it impossible, over the years, for INCORA to achieve the comprehensive objectives outlined in Law 135. The Atlantico No. 3 project however, was an exception since INCORA had all the authority and support needed to execute the project and the failure to fully achieve the projects objectives was due to other causes which are discussed elsewhere in this report. 6.03 It was customary during the course of the project to blame the delays in implementation on poor management by INCORA. A more objective view based on a study of the records, indicates that this was not altogether true, as there were many delays which were beyond the control of INCORA. It is true that during the early years of the project, INCORA was a young organiza- tion in its formative years and efficiency at this stage was probably low. However, during the first four year of the project, INCORA was headed by two General Managers, both of whom were highly qualified and forceful, while the two Project Managers during this period were probably the two most capable professionals on INCORA's staff and their performance was exceptionally good. The organizational structure at the project level covered all project acti- vities and was adequately staffed with nearly 300 employees in the profes- sional, technical, skilled and ordinary labor categories. It would be hard to substantiate a charge of poor management during these critical years. In later years, the changes in General Managers and Project Managers came more often, with a final score of six of each by the end of the project, however, it is likely that this had less effect on progress than the full realization by 1971 of the seriousness of the soil problems and the fact that the project would never achieve the goals originally envisaged or have the impact ini- tially predicted. The pervasiveness of this feeling throughout INCORA and its depressive effects on work attitudes of the staff and interest of the Government was never fully recognized or appreciated by Bank supervision missions, perhaps because it was not until 1972 that the Bank accepted the reality of the soils problem. This situation, together with the limit on salaries that INCORA could pay, led to several resignations by key technical staff and a corresponding deterioration in staff morale and competence at the project level in the later years. In any case INCORA pressed on with the project in order to complete the works as planned and to carry out the agrarian reform program. By the end of 1973, INCORA had completed or carried out most of the planned works and activities under the project to the extent that was possible with the constraints on soil quality and before irrigation service became available to all lands in Part I. The delay in the last two years in getting all the area of Part I under irrigation and into produc- tion was due in a large part to technical delays in completing the San Pedrito pumping plant. It must be acknowledged, therefore, that INCORA's efforts - 25 - during the period up to 1973 to implement the physical infrastructure of the project were effective and fulfilled the immediate goals. Subsequently, and particularly at the present time when INCORA is undergoing a reorganization imposed by the new Government, interest in the project appears to have decreased and it has been given a lower priority, as evidenced by the minimal allocation of funds for 1977 from the national budget. This apparently also applies to the Stage II project (Loan 849-CO), even though considerable land and agricultural development remains to be accomplished in both areas. Supporting Services 6.04 INCORA had primary responsibility to provide supporting services to small farmers, both settlers and private, in the project area. Some of this support, such as social and technical assistance, was provided directly by INCORA to settlers under the agrarian reform program. Other services were provided by Government agencies specialized in specific fields under operating agreements with INCORA. Thus, the Instituto Colombiano Agropecuario (ICA) was responsible for operation of the Santa Lucia and Malambito experimental farms; the Servicio Nacional de Aprendizaje (SENA) carried out training programs for farmers, particularly for fiscal management of farms and opera- tion of machinery; the Central de Cooperativas de la Reforma Agraria (CECORA), an agency associated with INCORA, assisted with the organization and mangement of the Cooperativa Agropecuaria del Caribe, which provided inputs such as fertilizers, seeds, insecticides and machinery services to settlers with funds from INCORA's supervised credit program and also assisted with marketing; and the Caja de Credito Agrario, Industrial y Minero (Caja Agraria) and the Banco Ganadero provided production credits to farmers, partially from funds made available from the Fondo Financiero Agropecuario, which is managed by the Banco de Republica. An independent cooperative, Cooperativa Maquinaria de Manati, also provides machinery services, primarily serving the dry-farm area in Part II, and four private contractors, with a total of 10 tractors with auxiliary equipment, rent equipment to farmers in the Part I area. 6.05 Despite the efforts of INCORA it must be recognized the supporting services up to the present time have not been adequate. Since ICA has never undertaken to establish an extension service on a national scale for farm management planning and to link research with direct technical assistance to the farmers, INCORA has made an effort on several development districts to fill this gap by providing extension assistance. This was the case for the Atlantico project and, in fact, the first time that INCORA became involved in this activity. About 20 professional and technical staff were provided for this purpose but due to a lack of training and experience the assistance to farmers has not been too effective. The consultants also attempted to develop and strengthen this service and while some progress was achieved, the project never provided adequate technical assistance to all the farmers. Further, the performance of other agencies was only partially effective. In the early years ICA gave priority to applied research on high value export crops such as fruits and vegetables, which was actually initiated by INCORA with the planting of orange and pineapple groves, but when these failed it became necessary to shift the emphasis to traditional crops and there appears - 26 - to be a limited amount of useful information coming out of this program. There is evidence that SENA gave the training program for farmers a high priority for only a short time and the impact was not very strong as a limited number of courses were conducted and these only with Empresas Communitarias. CECORA organized, and is continuing to manage, the Coopera- tiva Agropecuaria del Caribe which has provided credits for production inputs and marketing assistance but the operation is limited since it mainly serves INCORA settlers and funds for the supervised credit program have decreased markedly in recent years. Further, the Caja Agraria and Banco Ganadero have never adequately met the credit needs of the privately owned farms. It also appears that CECORA gives a higher priority to its operations in the Repelon Sector and, in fact, the farm machinery purchased with funds from Loan 502-CO has been moved to the central machinery pool in the Repelon area. It is not known if this machinery is available to the Bank financed project but INCORA has stated that under the Government's new policy to terminate the establish- ment of machinery pools, farmers in the South Sector would mainly be serviced by private contractors and the existing machinery cooperative at Manati. It is unlikely that the US$750,000 invested in farm machinery is benefitting the project, except for a small part assigned to the Santa Lucia Experimental Farm, and it is more likely that the Repelon Sector is receiving a greater share of the benefit. It has been noted in several progress reports that delays by CECORA or the cooperatives in providing machinery for land prepara- tion in the Manati area has resulted in delayed planting, leading to crop fail- ure or low yields because the cropping schedule did not correlate with normal rainfall distribution. Further, a large part of the machinery purchased was bought prematurely for harvest and processing of the export crops and now there is no need for this type of equipment. The situation in the Santa Lucia area is not critical, with only 900 ha under irrigation at present, but development of the additional 2,100 ha which now have the necessary irrigation infrastructure will require that all supporting services be expanded and im- proved over what they have been in the past, however, INCORA does not appear to have any plans or to be seriously taking any actions to rapidly bring this area into production. The loan agreement did not include any provision for on-farm development, so now this has been left to the initiative of INCORA or the farmers themselves and with Government's present attitude toward the project expeditious development of this area is certainly not assured. Agricultural Credit 6.06 The loan agreement did not directly include any funds for production or development credit. Assurances were obtained that Government would supply adequate amounts of such credit through several agencies, funds or programs which existed or were to be established. In general, settlers received credit from INCORA's supervised credit program; private farms (cropped), from Caja Agraria; and livestock enterprises, from Banco Ganadero. INCORA settlers received supervised credit loans for both field crops and livestock, either as individuals or in communal enterprises (Empresas Comunitarias). Most of the livestock development among settlers was by means of these communal groups. The INCORA credit was not supplied from the Bank financed agricultural credit - 27 - project (Loan 624-CO) as Atlantico was not one of the projects designated under this loan. Proposals to have this project qualified to receive credit loans from these funds were considered by the Bank, but since this would have diverted these much needed funds from other INCORA projects, it was decided that the Atlantic project should draw from other sources as originally planned. The Caja Agraria had the obligation under the project to provide production credit, mainly to privately owned farms, and this was done to a certain extent, but neither INCORA or the Bank followed upon the situation relative to the need for credit and the amount being supplied. Since the amount of funds to be made available was not established at the time of appraisal, it is difficult to evaluate to what extent Caja Agraria met this obligation. 6.07 The data on production credit made available in the project area for 1973, 1974 and 1975 is difficult to analyze since the information at hand is incomplete and in some years the totals given are for all sectors, making it impossible to determine that part applicable to the Stage I proj- ect. Data were not recorded for years prior to 1973 since the agricultural development phase of the project did not come into operation until 1972, at which time most of the major work, especially for flood control and drain- age were nearing completion. The attached Table 6 presents a summary of the total credit loans for both field crops and livestock in both the Santa Lucia (Part I) and Manati (Part II) areas during the years 1973, 1974 and 1975. This table basically indicates that the supply of credit reached a peak in 1973 when livestock purchases to stock the new communal enterprises were underway and field crops in the Manati area reached maximum of about 3,200 ha. Both the area cultivated and the amount of loans decreased significantly during the next two years. It is unfortunate that full information is not available for these years but it is known that the cropped area in Manati has decreased to about 1,200 ha and credit loans during 1975, except for livestock, were inadequate to meet project needs. This was due to depletion of INCORA's supervised credit funds and restrictions on Caja Agraria's loans to private farmers. The recovery of production credits in the area has been unexpectedly high, over 80%, indicating that the farmers understand and appreciate the value of a credit program and that the availability of adequate credit in the future could be the most important factor in reaching full development of all project lands. Staff and Training Issues 6.08 INCORA expanded very rapidly in the early 1960s as it opened new project areas or assumed responsibility for ongoing projects. By 1975 the overall staffing was in excess of 4,500 employees. On the project the total was more than 300 by 1973 and it remained at that level until 1976 when some reduction began to occur. Under these conditions it was to be expected that most of the field staff in the professional or technical categories would be lacking in experience and in fact, working on the project and being associated with the consultants provided a valuable training experience. Most of the staff was working in the field on a project of this type for the first time. -28- TABLE 6 COLOMBIA ATLANTICO NO. 3 IRRIGATION PROJECT Summary of Credit Loans Source of Funds Pondo Financiero Area Year Crop I Agropecuario Caia Total - - - - - - - - - - - - Col $ - - - - - - - - - - - - - Santa Lucia (Part 1) 1973 Sorghum 138,975.00 - - 138,975.00 Cotton - 791,000.00 1,373,617.00 2,164,617.00 Tomatoes 90,000.00 - - 90,000.00 Sub-total 2,393,592.00 1974 Sorghum - 461,520.00 - 461,520.00 Cotton 48,000.00 - - 48,000.00 Sub-total 509,520.00 1975 Maize - - - /1 1973 Livestock 1,146,900.00 - - 1,146,900.00 1974 Livestock 260,000.00 - - 260,000.00 1975 Livestock 465,000.00 - 189,900.00 654,900.00 Sub-total 2,061,800.00 Manati (Part II) 1973 Sorghum 1,997,329.00 2,816,350.00 1,546,712.00 6,360,391.00 Cotton - 3,064,500.00 5,157,553.00 8,222,053.00 Tomatoes - - 1,170,000.00 1,170,000.00 Soybeans - 456,000.00 148,200.00 604,200.00 Sub-total 16,356,644.00 1973 Livestock 1,497,900.00 - - 1,497,900.00 1974 Cotton - -- ( Sesame - -- ( 6,400,000.00 Soybeans - -- (Estimated) Tomatoes - -- /1 In 1975 maize was double-cropped on 350 ha under irrigation due to a scarcity of credit for other crops and disease problems. The farmers used their own financial resources. October 1976 - 29 - The recruitment and retention of staff was not a problem in the early years but as the professional and technical staff gained in training and expe- rience, they found better opportunities in the private sector where salaries were beginning to be more attractive than the Government's fixed scale. This led to loss of some of the best qualified staff and a general lowering of competence and morale. Government increased the salary scale in 1975 and this has helped to secure and retain qualified staff. 6.09 From the beginning, INCORA was aware of the need for training and the overall project budget and each of the loan agreements for Loan 502-CO and 849-CO included a provision and funds for training of professional staff outside the country. In all, more than 20 fellowships were arranged for study in specific fields related to the planning, implementation and manage- ment of land development projects. These studies were undertaken in Mexico, Israel and Spain. In addition, INCORA carried out a comprehensive national program for training support through courses organized and conducted by senior staff of INCORA, assisted by local specialists and consultants. The initial plan was to conduct 106 courses in agricultural development, engi- neering, legal aspects and administration with about 2,500 participants. The courses were to cover some 36 specific subjects related to the four general categories. The participants were planned to include all field staff on INCORA projects at all levels of management and operation. The courses were to be conducted in five central locations. The total estimated cost was Col$ 10,500,000 and the Bank agreed to finance 40%, which was the estimated foreign exchange cost. The program was started in 1974 and a number of courses were in progress when the new Government took over. In view of the proposals to reorganize INCORA, the program was terminated with only a small part of the original objectives accomplished. Consultant Services 6.10 The participation of consultants from TAHAL Consulting Engineers, Ltd., Israel in the project in described in paragraph 4.04 of Chapter IV. The performance of the consultants and working relations with INCORA staff were satisfactory in every way. The consultants had a major responsibility for studies, planning, final design and supervision of construction, which was accepted by INCORA and which produced a high standard for quality of the project works. There were no serious problems with recruitment, working relations with local staff or personality conflicts and TAHAL staff worked as an integral part of the overall project staff. Accounting and Reporting 6.11 Some difficulty was experienced with INCORA's methods in keeping project accounts, as accounts for all projects were entered into the ac- counting machines according to a code system and in chronological sequence. Separate project costs could be obtained by identifying the specific coded charges and separating them from all the rest. INCORA eventually accepted the Bank's requirement to submit accounts separately for the Atlantico project - 30 - and this system was maintained but not without periodic pressure. Auditing of the accounts was carried out by the Contraloria General, an independent agency of the Government with responsibility to audit all Government accounts, and reports were submitted to the Bank for each fiscal (calendar) year but these reports were usually received in December in the year following the year covered by the audit. These audits did not reveal any mismanagement of funds but did reveal some deficiencies in INCORA's accounting system. However, since this system was designed by the Contraloria General for all Government agencies, there did not appear to be much possibility to change or improve the system. 6.12 Quarterly progress reports were submitted to the Bank on a regular basis during the early years, until about 1972, when it was agreed to prepare the reports on a semi-annual basis to conform to the two cropping seasons each year. The reports were submitted according to schedule but a review of these indicates that complete data on agricultural production was not always included and the data given usually applied only to INCORA settlers, with no data for privately owned farms. In some cases, no distinction was made be- tween overall production for Stages I and II of the South Sector and Repelon Sector and consequently, the reports cannot be used to determine the produc- tion for each individual project. The reports were strongly oriented to progress on implementation of works and weak on reporting other activities on the project. One fact that always created confusion in dealing with the project was INCORA's inability to view Atlantico No. 3 project as three separate units and to assemble data on this basis rather than combining the three units, as was usually done. Further, INCORA tended to work only with settlers as the private owners did not always accept INCORA's intervention in their affairs and even today INCORA has very little influence with these private farmers. Institution Building 6.13 The influence of the project on the early development of INCORA as an institution and on establishing policies and procedures for carrying out other projects has been discussed in paragraph 6.02 of this chapter. INCORA became one of the strongest of all Government agencies to the point, in fact, that this strength became a threat to its survival and this is one of the factors in the reoganization ordered by the new Government. INCORA will survive but its scope and authority to implement land development projects will be curtailed. The project has a very limited capacity to generate revenue and will probably do well to cover its own operation and maintenance costs. The initial preoccupation during appraisal with INCORA's managerial capacity was partially confirmed during the course of the project but other problems were encountered, soil salinity for example, which overshadowed the problems of management and as stated previously in this report, the perfor- mance of INCORA was better than it was given credit for. - 31 - VII. AGRICULTURAL AND SOCIAL IMPACT Stage of Present Development 7.01 In order to evaluate the impact of the project it is necessary to understand that, while the project works have been completed, the full stage of agricultural development and production will probably not be reached for another three to five years. It is not possible, therefore, to measure the impact on the basis of actual production data, but only on the basis of part actual data and part projected data. A tentative evaluation of the impact based on production achieved up to the present time (1976) is also possible but this will only partially represent the full potential of the project. 7.02 The total area that may be cultivated under irrigation in Part I of Stage I is about 3,300 ha, consisting of about 3,100 ha in Blocks I and III and 200 ha in the Santa Lucia and Malambito experimental farms. During 1968 a temporary pump was installed on the Canal del Dique near Santa Lucia to irrigate 300 ha in the citrus and pineapple plantations and 100 ha in the experimental farm proper. Later, with the failure of the plantation crops, the 300 ha was parceled out to settlers who continue to crop the land to sorghum, maize, cotton and tomatoes. With the evident delay in completing the San Pedrito pumping plant, INCORA installed another temporary pump on the Rio Magdalena to provide full irrigation for an additional 500 ha during the dry season in the eastern section of Part I where the best soils are found. Early in the project INCORA had acquired about 1,000 ha in this section and because of the better soils, development was pushed ahead rapidly in order to test and demonstrate the production potential with irrigation and double- cropping. This continues to be the most productive area in Part I. Both pumps have the capacity to provide supplemental irrigation to 1,000 ha during the rainy season. During the past several years the irrigated area has been used for field crops (average about 400 ha) and pasture for livestock (ave- rage about 500 ha). The balance of Part I is used for dry farm crops (300 ha), usually one crop during the first semester rainy season from April to August, and with 2,100 ha in natural pasture or idle. Some of the idle land is uncleared and all the 2,400 ha of non-irrigated land needs leveling and deep plowing or subsoiling to bring it into production. Thus, the full impact in Part I will not-be realized until these 2,400 ha are fully developed. 7.03 The plan for Part II of Stage I envisaged development of 6,000 ha under dry-farm conditions with flood protection, drainage and adequate sup- porting services for the farmers. The location ,of the area was not definitely establ ished at the time of appraisal but was eventually accepted as the north- western,part of the South Sector, bounded on the east by the main drainage canal, on the west.by Guajaro reservoir, on the north by the northern hills and on the south by the El Limon hills. In any case, funds from Loan 502-CO were used to construct the drainage system in this part, which had the effect of making this area a part of the Stage I project. Loan 502-CO funds were also used to construct the flood protection works against runoff from the - 32 - the northern hills for the whole of the South Sector comprising some 35,000 ha instead of protection for only the 6,000 ha. Further, with the approval of Loan 849-CO (Stage II) for development of 17,000 ha in the northern two thirds of the South Sector, the 6,000 ha were included as part of this project. Thus the initial development of the 6,000 ha, was financed by the Stage I project and the Stage II project includes funds for land clearing, leveling and preparation. 7.04 INCORA has made a strong effort to introduce intensive cropping, mainly with sorghum, sesame and cotton in this area, which is known as the Manati district. Since 1972 the area in field crops has varied from about 2,100 ha to a maximum of 3,200 ha. Before completion of the flood protection works in late 1973, this area suffered annual inundations which destroyed crops and lowered yields. Crop production in this area is also constrained by the heavy textured soils with poor internal drainage; the vagaries of rain- fall distribution which can bring flooding and drought in the same year, and the widespread occurrence of salt-affected soils. Soils data indicate that almost all the lands are affected to some degree and that about 15% are un- suitable for cultivation for this reason. There is a high risk to double- cropping because of the erratic rainfall, which accounts for the wide varia- tions in crop production value from year to year and the tendency to use more and more of the area for pasture. The area in pasture normally is about 4,000 ha and livestock production is relatively low since pastures are not improved and the level of management is poor. The Stage II project envisaged the introduction of a higher intensity of land use for a diversity of crops and livestock, including dairy development, but it is evident that these goals will not be achieved, the same as those for the Stage I project fall short of the original expectations. Incremental Output and Impact of the Project 7.05 Despite the delays and problems on the project, it has achieved a positive impact, which, even in 1975, prior to full development, has contri- buted to improving the standard of living of the local inhabitants. In the appraisal report, certain assumptions were made regarding the expected value of production and income that would derive from the project. The attached Table 7 presents actual gross and net values of production for the years 1972 and 1975 and for both Parts I and II. I/ These two years are the only ones for which complete and consistent data on agricultural production are available. The table also includes a revised projection of production value as of 1980 when full development should be reached. Table 8 illustrates the relation of key indicators at various stages of project development and also reflects the shortfalls in reaching its objectives as originally foreseen. I/ For the purpose of this analysis all values are expressed in 1975 dollars (US$1-C$ 30.95). - 33 - 7.06 Some distortion will be noted in the values for 1972 and 1975 due to the latter being a poor year for production because of prolonged drought during the first semester and a severe shortage of production credit throughout the year. In the appraisal report, it was estimated that total net annual income from agriculture in 1966 in the project area was US$605,000 and that, with the project, this would increase to US$5.7 million. Table 8 indicates that, while the net value of pro- duction at full development may be only about 25% of that originally estimated, the net value in 1975, during which there was good pro- duction in the irrigated area and low production in the dry-farm area, reached an estimated US$649,000, which was only 1.1 times the net annual income before the benefits of the project began to be realized. The increase of the net value production in Part I, from US$182,000 in 1966 to US$435,000 in 1975 was realized from increased production, which was entirely attributable to the project. Prices for traditional crops in- creased in real terms from 22% to 45% during the period 1969-1975 (Table 9) and this provided a strong incentive to the farmers. The production in- creases were basically due to bringing new lands into production but part of the increase was obtained by double-cropping with irrigation, flood pro- tection with a corresponding decrease in flood damage, availability of agri- cultural credit for production inputs, and supporting services for technical assistance and training for the inexperienced farmers. Increases in live- stock production were directly attributable to extensive purchases of breeding stock with credit funds for the newly created communal livestock enterprises. In effect it was an integrated package applied by INCORA in which some factors had more weight than others. Both INCORA settlers and private farmers shared in the benefits provided by the project. The values shown in Table 8 and for full development in 1980 indicate the magnitude of the potential benefits, as estimated at present, and how these compare with the appraisal estimates. This indicates that in both areas the minimum goals for family and per capita income will not be met. The appraisal report estimated an increase in per family income of 12 times for Part I and 3.8 times for Part II (up from an average of US$330 in 1966). The revised projections indicate that for 1980 per family income will increase only five times in Part I and 1.4 times in Part II. These increases however smaller than the appraisal estimates are nevertheless important and demonstrate, especially in Part I of the project, the value of irrigation to supplement the erratic and often deficient rainfall. 7.07 The impact of the project must be evaluated in conjunction with the Stage II project where increases in production value are also taking place, due primarily to flood protection and drainage, and contributing to an im- proving economy in the region. Further, the Repelon Sector, which has better soils, has developed rapidly, especially in production of tomatoes and cotton, which are export crops, and has had a correlative impact along with develop- ment in the South Sector. Thus, the original intention of the Government to improve living conditions in this depressed region is beginning to show positive results as may be observed among the inhabitants throughout the area. In addition to agriculture, social services have been improved includ- ing new schools, health centers and hospitals, rural electrification, commu- nication facilities and new highways and roads. The benefits of all three projects have accrued, either directly or indirectly, to all the 50,000 inhabitants of the region. - 34 - TABLE 7 COLOMBIA ATLANTICO NO. 3 IRRIGATION PROJECT Summary of Actual and Projected Value of Production Area Cultivated Area and Type Including Double- Gross Value Gross Costs Net Value of Crops Cropped of Production of Production of Production (ha) -------------- US$'000 (1975) ----------------- 1972 Part I Field crops 649 179.0 108.1 70.8 Livestock 183 13.7 11.8 1.9 Total 832 192.7 119.9 72.7 Part II Field crops 3,393 814.7 476.0 338.7 Livestock 3,700 323.1 239.1 84.0 Total 7,093 1,137.8 715.1 422.7 1975 Part I Field crops 650 161.3 105.7 55.6 Livestock 2,600 535.2 156.0 379.2 Total 2,950 696.5 261.7 434.8 Part II Field crops 2,188 615.1 487.2 127.9 Livestock 3,812 332.5 246.3 86.2 Total 6,000 947.6 733.5 214.1 1980 Part I Field crops 4,000 1,809.4 1,033.9 775.4 Livestock 400 81.4 24.4 57.0 Total 4,400 1,890.8 1,058.3 832.4 Part II Field crops 3,000 1,163.2 678.5 484.6 Livestock 4,000 452.3 361.9 90.5 Total 7,000 1,615.5 1,040.4 575.1 1/ All values computed at constant 1975 prices. September 14, 1977 - 35 - TABLE 8 COLOMBIA ATLANTICO NO. 3 IRRIGATION PROJECT Comparison of Key Indicators 1982 (Appraisal 1980 Report 1972 1975 (Revised Indicators Projection) (Actual) (Actual) Projection) -------------------- US$ 000 (1975) ---------------- Gross Value of Production: Part I 5,630 193 697 1,891 Part II 3,572 1,138 948 1,616 Total 9,202 1,331 1,645 3,507 Net Value of Production: Part I 3,900 73 435 833 Part II 1,800 423 214 575 Total 5,700 496 649 1,408 ---------------------- US$ (1975) --------------------- Gross Value of Production/ha a Part I 988 232 236 430 Part II 297 160 158 231 Net Value of Production/ha a Part I 684 88 147 189 Part II 150 60 36 82 Net Income per Family: Part I 2,800-4,00 162 967 1,666 Part II 1,250 353 178 479 Net Per Capita Income: Part I 466-666 27 161 278 Part II 208 59 30 80 a/ Included double cropping. September 14,1977 COLOMBIA ATLANTICO NO. 3 IRRIGATION PROJECT Domestic Market Price for Agricultural Products/1 (Atlantico Department) Calendar Years Products 1969 1970 1971 1972 1973 1974 1975 ------------------- - - - Col$ - - - --------------- --- Sorghum 1,050 1,050 1,220 1,350 2,980 3,200 3,900 Cotton 3,500 4,430 4,180 4,650 11,100 9,720 13,000 Tomatoe 600 600 650 900 1,250 1,680 1,900 Sesame 3,500 4,500 5,000 4,800 5,500 11,500 13,000 Maize - - - - - - 3,800 Soybean 2,500 2,750 3,000 3,500 6,650 7,000 7,800 Peanuts 3,000 3,200 3,200 - - - - /l In current pesos/mt. October 1976 02 ko - 37 - Technological Change 7.08 During the past eight years, agriculture in the Atlantico region has been characterized by a transition from traditional toward modern market oriented agriculture, which has been accelerated by the project and INCORA's activities. Prior to the project, the traditional agriculture practiced in the South Sector consisted of extensive livestock farms for beef production and cultivation of subsistence crops such as yuca, maize, pulses and some vegetables, generally on small plots of one to two hectares and primarily for household use or the local market. With the project and improvement of conditions such that more efficient agriculture became possible, the intro- duction of crops such as sorghum, cotton, sesame and tomatoes to supply markets outside the region took place rather rapidly. INCORA also supported this transition by initiating the use of machinery for land preparation and harvesting; providing production credit through newly created cooperatives for fertilizers, insecticides, herbicides and improved seeds; purchasing breeding stock for the livestock enterprises; providing technical and social assistance to new settlers; and developing new marketing channels. The level of technology would have reached an even higher level had it been possible to carry out the plans for production and processing of high value export crops, as envisaged in the appraisal report. The situation in the Repelon Sector demonstrates an even more rapid adaptation to modern technology where better soils provide the possibility and incentive to achieve higher production. This stage may never be reached in the South Sector but at this point all farmers use whatever technology is available to them and are oriented to modern agriculture. 7.09 The project, together with the Stage II project, has created more employment since a great deal more land is in productive use; however, the work is seasonal, with two peaks at the land preparation-planting and harvest- ing periods. Further, a major proportion of the land, 70% in Stage II, is used for livestock, which is not labor intensive. There is still emigration from the area by adult males seeking part-time employment elsewhere in the country or in Venezuela. As a result of the agrarian reform program, which has been applied to about one half of the land, a larger percentage of the families in the area are directly engaged in agriculture and have a higher family income. The agrarian law limits the maximum farm size to 50 ha. In the Part I area, 90% of the privately owned farms are below this limit, re- presenting about 60% of the land. INCORA settlers are limited to 8 ha for field crops and 16 ha for livestock. This tenure pattern is conducive to an equitable distribution of the increased income, which also reaches out to the indirect beneficiaries. There is no evidence of exploitation by middlemen as marketing is largely controlled by the CECORA or private cooperatives, who are in constant contact with the major buyers in Barranquilla. Project Charges 7.10 Under agrarian reform law 135 of 1961, INCORA is empowered to impose project charges to cover operation and maintenance costs and recover capital costs of improvements within irrigation and drainage districts. In - 38 - Side Letter No. 9 of the Loan Agreement, INCORA undertook to carry out a study of the capacity of the farmers to pay these charges and to submit a plan to the Bank within two years of project effectiveness for imposing a system of project charges which would recover operation and maintenance costs and as high a proportion of capital investment as would be practical while retaining the necessary level of incentive on the part of the farmers to maximize production. Subsequently, TAHAL prepared this study but unfortu- nately it was based on the originally projected farm budgets, cropping patterns and production values which could not be realized. The Bank has requested several times that a new study be completed but this was never done. In December 1975 INCORA issued a resolution establishing rates to be paid during 1976 for irrigation and drainage services in all sectors of the Atlantico No. 3 area, including Repelon and both Stage I and II in the South Sector. There is no information available on the basis for these charges or rates, although this was also requested but not received; nevertheless, the rates at Col$ 700/ha for both Irrigation and drainage, Col$ 200/ha for drainage only, and Col$ 0.12/m for water supplied, would appear to be about adequate to cover operation and maintenance costs. A summary of total O&M costs in the South Sector for 1975 adds up to Col$ 5,927,817 (US$191,528), how- ever, there is also no information on how much and what part of the overall area benefitted from these services. Road maintenance for instance could bene- fit most of the 35,000 ha in the South Sector while operation and maintenance of irrigation works would benefit only about 900 ha in Stage I at this time. It is safe to assume that these charges are not adequate to recover any part of the capital investment and that INCORA has not taken any action to implement Article 68 of Law 135 and the new valorization regulations established by the Junta Directiva of INCORA on October 29, 1975. The Law provides for a grace period to be determined by local conditions before implementing these regu- lations and INCORA will very likely wait until all lands in the project area are in production before imposing a system of charges which would also include a provision to recover investment costs. It would not be possible to determine the actual value of production from all the farms until this condition is reached, as a basis to determine the farmer's ability to pay. With so much of the project area still to be brought in to full production, it will be several years before all the farmers will have sufficient income to meet these obligations and comply with the law. Overall Assessment 7.11 From the standpoint of increased production value and the number of new landowners to be settled in the area, the original goals have been scaled down significantly. A rough judgment is that net value of produc- tion at full development will be only about 25% of the original estimate and the amount of land acquired and settled by INCORA will be about 60% of what was projected. As noted earlier in this report, even this level of development has had and will have a highly beneficial impact on the incomes and standards of living of the area's inhabitants. In view of the adverse soil conditions, which were not fully known at the time, the original goals were overestimated but the project will still achieve important benefits for the local people and the decision of Government to undertake agrarian reform and agricultural development to replace dependence on fishing was justified. - 39 - III. RATES OF RETURN Financial and Economic Rates 8.01 As noted in paragraph 7.01, the full stage of agricultural develop- ment in the project area will not be reached for another three to five years and therefore a realistic determination of the rates of return is not possible at this time. However, on the basis of the incomplete information available at present, an attempt was made to estimate the rates of return with actual data on production value for the years 1972 and 1975 and a projection for 1980 as prepared by INCORA and revised by the Bank. 8.02 In the appraisal report, it was estimated that the rate of return on Part I would be 11% and on Part II, 25%. The high rate for Part II is justified in the report by the low investment for only flood protection and the assumed benefits from double-cropping sorghum and other relatively high value crops, part from increased production on 3,200 ha already under culti- vation and the balance from 2,800 ha of uncultivated land. In view of the un- favorable soil conditions and the high risk of double-cropping under rainfed conditions, these assumptions appear optimistic and actual experience, together with revised projections, indicate that the gross and net value of production at full development would reach about 38% and 25% respectively of the original projections. Also, a greater proportion of the area than originally estimated is used for extensive livestock farming, which gives a lower return per hectare than field crops. The low rate of return for Part I is difficult to explain since production in this area was projected on the basis of double-cropping high value export crops under irrigation. The reason may have been the relatively high investment per hectare and low prices for agricultural products. In any case, these rates are not relevant because of the soil conditions subsequently revealed in the project area, which led to a major change in types of crops that could be grown and the overall cropping and land use pattern. 8.03 Data on expenditures for each year of the project term could not be compiled with reliable accuracy and the total investment applicable to the project was distributed in accordance with the actual loan disbursement in order to arrive at a cost stream for the present studies on a revised rate of return. Operation and maintenance costs were estimated on the basis of actual costs during 1975. The benefit stream was developed by using a linear projection of the data available on net production value for 1972 and 1975 and the new projection for full development in 1980, all as presented in Section VII. Benefits allocable to the project were first realized in 1972 and the new analysis extends over a period of 40 years as used in the appraisal report. Further, the analysis covers both Parts I and II and does not distinguish between the two, since part of the investments in drainage, roads and flood protection benefitted both areas and even Stage II and it would be impractical to attempt to allocate these costs precisely to each part. The new analysis on the basis described above indicates that a rate of return of about 2.2% would be achieved, using current 1975 domestic prices for - 40 - agricultural commodities produced in the project area. Domestic prices are those paid by local processing plants or wholesale distributors. A higher rate of return would result using the value of processed exportable products, such as cotton, beef, rice, bananas and tomatoes, based on world market prices sufficient information on production of individual crops was not available to determine the rate of return using these prices. IX. SPECIAL ISSUES Weather and Risk 9.01 Dry farming under rainfed conditions is subject to a very high risk in the South Sector. Average annual rainfall is about 1,000 mm spread over seven months from mid-April to mid-November. A short dry season usually occurs in July or August. Rainfall distribution is irregular with about 50% of annual precipitation occurring in rainstorms of more than 20 mm during an average of only 12 days per year. These storms are of high intensity and short duration with the result that most of the rainfall is lost to runoff and not retained in the soil. Following these storms, dry periods of 10 days or more may occur with a consequent serious depletion of soil moisture, which affects plant growth and lowers yields. Double-cropping during the 7-month rainy season carries even more risk and it is only in an above normal rainfall year that two good crops may be obtained. Supplemental irrigation removes this risk and makes it possible to double-crop over a 12-months period. Many farmers are not willing to take the investment risk on intensive farming with field crops without irrigation and this is one of the reasons that 70% of the South Sector is in unimproved natural pasture. On the other hand, the heavy soils and occurrence of salinity and alkalinity raise serious doubts as to the justification for investment in irrigation and this requires more study and investigations before the benefits of irrigation may be evaluated. Research and Technical Availabilities 9.02 As noted in paragraph 7.07 of Section VII, the level of technology made available to farmers was relatively high and there was no problem with their adaptive capacity. The real problems have been with the quantity of supporting services available, such as not enough tractors and plows during the planting season, not enough credit for inputs in recent years, and lack of aerial spraying for cotton and other crops. Adaptive research was built into the project with two experimental farms, one for irrigation and one for dry farming, located in the project area, and the level of research was good during the early years, particularly when concerned with export crops, but the productivity has decreased since the two stations began working in recent years on only traditional crops. For research on livestock produc- tion, the project relies on the Turipana station near Monteria in the TABLE 10 - 41 - COLOMBIA ATLANTICO NO. 3 IRRIGATION PROJECT Economic Rate of Return Calculations Incremental Incremental Incremental Operatingl/ Value of Net Benefit Years Investment Costs - Production from Project ---------------------------US$'000 (1975) --------------------- 1 234 - - -234 2 911 27 -938 3 2,425 78 - -2,503 4 1,568 734 517 1,785 5 2,714 843 688 2,869 6 1,353 908 881 1,380 7 981 977 831 1,127 8 2,056 1,162 1,345 1,873 9 - 1,349 1,623 274 10 - 1,565 1,935 370 11 - 1,815 2,290 475 12-40 - 2,106 2,693 587 ERR - 2.2% 1/ Includes operation and maintenance costs. September 14,1977 - 42 - Cordoba No. 2 project area. The transfer of research results to the farmers through the extension service has been relatively good because INCORA's extension agents maintain close contact with ICA's specialists on the research farms. It is clear, however, that an upgrading of both the quality of research work and extension assistance is needed, especially in view of the rather adverse conditions which exist in the area. Sector Influences 9.03 Within the context of the objectives established in Law 135 for improvement of conditions in the rural sector, the project included and conformed with these objectives and, in fact, was the first project for integrated agricultural development to be undertaken by INCORA. The project was planned around the new policy for agrarian reform which, for a few years gave new hope to landless families and the rural poor. The failure of subse- quent Administrations to support this policy did not seriously affect the project, but in later years there was a slackening in the effort,to acquire and redistribute land to new settlers. There were no changes in project design due to outside changes in sector or national policies. Integrated Development 9.04 The many semi-autonomous institutes in Colombia, with responsibility for the several aspects of rural and agricultural development, are not favor- ably disposed to full cooperation with one another and this always presents a problem in attaining the objectives of integrated development. Normal practice has been for INCORA to enter into operational agreements covering the partici- pation of other institutes or agencies in specific projects but this procedure does not work too well since the other institutes usually give higher priority to their own programs rather than those of INCORA. It is commonly recognized in Colombia that ICA and INCORA do not work well together when associated in the same project. ICA apparently took no interest in extension work or assist- ing small farmers, especially beneficiaries of agrarian reform, and was dedi- cated to research for the sake of research. Even so, the results of research are not very impressive or useful to the farmers, and it is left to INCORA to organize extension and training programs to assist small farmers. The coopera- tion of SENA in the project on certain types of training programs was good but only for a limited time and number of courses and this program has now been terminated. It was evident that CECORA gave higher priority to providing supporting services through the local cooperative in the Repelon Sector than in the Bank financed project. There was a reason for this in that the more favorable conditions in Repelon made it possible to achieve high production of export crops, without the limiting constraint of poor soils existing in the South Sector. Thus, the incentive was stronger to move ahead rapidly with development of this sector and the performance of INCORA and other agencies in this area seemed to have a greater sense of purpose than in the South Sector. This was also true for Caja Agraria which has never provided adequate credit for the small private farmers, not only in the project area but also country wide, and this presents another obstacle in achieving full development as more than 60% of the land in both Stage I and II is in private ownership as distinct from land acquired by INCORA and distributed to settlers. - 43 - Settlement 9.05 Prior to the project, almost all the land in the project area suit- able for agricultural use for both field crops and livestock was occupied, either by owners with legal titles or those who claimed ownership by right of occupancy. There were also a number of squatters who had voluntarily occupied small tracts of I to 2 ha and refused to move. More than 50% of the land was owned or occupied in tracts of more than 100 ha. This created a difficult task for INCORA to carry out an orderly agrarian reform program but, following eight years of effort, an acceptable and stable condition of land tenure has been achieved. The main problems were the time required to acquire lands in excess of 50 ha, as provided by law, from the private owners and occupiers and the availability of funds to purchase these lands. There were no social problems and the best evidence of stability is that 90% of the area's inhabitants were born there and show no tendency to leave, especially now that many families have become landowners for the first time. X. BANK PERFORMANCE 10.01 At this late date, so many years after important decisions were taken or actions occurred, it is difficult to evaluate the Bank's performance in the project. This was the first project of its type for the Bank as well as INCORA and for this reason the preappraisal studies and negotiations with Government and the final appraisal were undertaken carefully and cautiously over a period of two years with the proposed project evaluated in considerable detail. The decision to reduce the scope of the project from that proposed in the feasibility study was a good one but perhaps not for the right reason. The Bank was preoccupied with the managerial capacity of INCORA but, in consi- deration of the soil problems which became known later, the introduction of irrigation on all of the 35,000 ha in the South Sector, as proposed in the feasibility report, was not technically and economically feasible. The Bank was concerned with reducing the risk and, in the light of future developments, this proved to be sound judgment. The Bank's insistence on the use of inter- national consultants for planning and implementation of the project was also justified and, as it developed, the consultants were able to identify the real problems and modify the design such that the project was completed in the best possible way. It should be pointed out that the consultants were con- fronted with a proposed project to which both the Bank and INCORA were committed. It was two years after this that the problem with the soils was revealed and there was no opportunity to reconsider the overall feasibility or plan for the project, which could have resulted in an entirely different approach in developing the area. It remains to be determined if the project design at the appraisal stage, which included both irrigation and dry farming, was the most suitable. Flood protection and drainage were certainly necessary if the area was to be used for agriculture and with the rainfall distribution, irrigation will produce significant benefits. However, the feasibility of heavy investment for irrigation on these low quality soils must still be tested and, in a sense, the 3,300 ha in Part I provided with - 44 - irrigation is a pilot project which could determine the best course for further development of the area presently used under rainfed conditions in Part II and also in Stage II. In this respect the initial concept to test irrigation in Part I and dry farming in Part II has proved to be a practical approach to the problem. 10.02 The design of the project, even with the reduced scope, was too optimistic, particularly with respect to production of high value export crops, but with reasonably good soils the yields and production values could have been achieved. In retrospect, the real condition of the soils was not known at the time of appraisal and the delays in completing the project were due as much to circumstances as to management or other factors, most of which could not have been foreseen. In view of how the project developed the intervention of the Bank in helping to solve the problems was probably as good as it could be, with the exception that certain deci- sions, or encouraging INCORA to make a decision, could have been taken more rapidly and thus prevented some of the delays in implementation. 10.03 Bank supervision of the project would appear to have been adequate as 14 missions visited the project, starting in March 1968, with the last mission in March 1976. It would appear that one criticism of nearly all of the missions was that not enough time was spent in the project area, normally from one to three days at most. As a consequence of this, the missions' perception of local problems and conditions was formed hastily and under pressure which led to many decisions and recommendations which were not valid and which in the end were largely ignored. Another criticism could be that information and data accepted from INCORA or project staff was not reviewed critically for accuracy, completeness and consistency and the inclusion of this information in the supervision reports did not serve any useful purpose. The missions lacked continuity in staff participation and several staff members visited the project for the first and only time during the mission. Also due to the long term of the project the staff who participated in the beginning were all gone at the end, both in the Bank and INCORA, and this made it difficult to maintain a continuing and accurate concept of the project and its progress. XI. CONCLUSIONS 11.01 It has been noted in Section VII that the project will not reach full development for at least another 3 to 5 years, by 1980 or possibly later, even though all physical works have now been completed. In considera- tion of production achieved by the end of 1975, the project together with the Stage II project has already achieved a positive impact on the economy in the South Sector. On the basis of a crop inventory for both cropping seasons in 1975, which is the latest and most reliable information on production, the net annual value of production in the project area was estimated as US$649,000 (Table 8) as compared to an estimated US$605,000 prior to the project. The total increase, however small, had a significant impact in per family income, especially in Part I of the project. This does not take into account the loss - 45 - in income from fishing which formerly was one of the sources of income and which is negligible at present. However, prior to the project income from fishing had decreased to a critical level which did not meet the subsistence requirements of a family. The introduction of modern agriculture has already more than replaced this income and provided an annual family income of about US$967 for Part I and US$178 for Part II (seriously affected by drought in 1975). It is further estimated that at full development the net value of production will increase to US$1.4 million annually with a corresponding increase in family income. This would be less than the appraisal estimate of US$5.7 million for net value of production at full development in the project area but, in any case, the objectives of improving the standard of living of the local inhabitants and stabilizing the economy in the area would be achieved. 11.02 The decision of Government to transform the economy of the area through agrarian reform and agricultural development was the right one. It is unfortunate that more complete and reliable information on the soils was not available and that the feasibility study was rather superficial and lacked a perception of the realities of development in Colombia and in a very depressed area of Atlantico Department. The project could have been planned in a more rational way to fit the conditions and achieve realistic goals, while benefitting a greater number of families with the same investment. There is a question as to whether irrigation should have been included in the first phase before the overall area of 35,000 ha was fully developed under rainfed conditions and the farmers had gained some experience with agri- culture. The investment per ha and family is higher for irrigation and, even though the benefits are also greater, the justification in this particular case for this additional investment to benefit a limited number of families would appear to be fairly weak. This is especially so since Block I was pro- vided with fixed sprinkler systems which were too sophisticated and costly for the level of development that could be achieved under the prevailing condi- tions and with new settlers. There is no doubt that with better soils, irri- gation would be justified throughout the South Sector since the climate is favorable to high production, as has been achieved and demonstrated in the Repelon Sector. These factors were considerd in the feasibility study pre- pared by TAHAL for the Stage II Project and the decision to develop this area under rainfed conditions reflects the uncertainty of additional invest- ments in irrigation at this time. Thus, the original decision to provide irrigation for only a small part of the total arable area in the South Sector is difficult to rationalize and the main benefit to be gained from this area may be the opportunity to test and demonstrate the feasibility of extending irrigation to other suitable lands in the South Sector. The final judgement at this time is that regardless of the many problems and delays encountered in planning and implementing the project, it has not been a failure, and it has already transformed the economy of the area and still greater benefits will be realized in the future.  75 a To Cartagenoa 75"To Sabnalargo To Burraiqudla '7452' To Brranqudi COLMl BlA ATLANTICO ]X PROJECT, STAGE I& . EXISTING FEATURES C' 32'- Maia roads Roods with embankrent Ror ne Goaoro dom ond reservoir Aquad de Poblo Canal del Dique Strearns Effi Areas susceptible to temporary flooding S V4IRE roldo PROJECT FEATURES Repe1o 0 a a® Main roads -- -- -- Secondary roads Roads with embankment Auxiliary embankments OUTLET MANATI PUNTA POLONA Man ringecrcl STRUCTURE RESERVOIR PANTANG SAAL IEMaon drainge canlESRVOR -STRUCT E 'e Lateral drainage canols C- INTAKE- Main irrigation canals STRUCTURE * Pomping plants C2ý1. Reservoirs Gualaro Stage I irrigated areas Dam Stage I dry farm 0rea Stage I ,dry Farm area Vo 0aRosa Proposed pilot project Ta CaagonaeRESE V®R-- , ¯¯¯ San Crst61bal PNAM ATON VENEZUELA ATLANTICO N03 PROJECW c, LOAN 502C0, Stage I Part I Irrigated Area - Drain Il Bogota Boquitas Pumping Plant Son Pedritc P.nmping Ploint Sta L,,c; STAGE I rrigaHion systemn (part I) Irrigated area COLOM81A Part || DryFormingArea Flood lnter,Ceptor Works<P Droin M D rains IVand V with laterals Road 1, road along Drain V and other roads LOAN 849-CO, Stage il ECUADOR Dry Farming Area -10'6.Balance of drainagesystem A4 PEDRITO Kroetr- BRAZIL Balance al roads PING PLANT 0)D P PERU .Projec lands 0 i 2 4 0 0 0 3040 500Pert ' '00 ~ Prlot Protect BJadge \ Z:¯ To-M' ' ' ' d 0 o 2m I, 75°a8f 75- To Medeitin 74°52 74 ..2|