Announcement of Eight Million Dollars to Assist Philippine Reforestation and Tree Farming on December 23, 1977

-NorldBank 1818 H Street. N. W., Washington. D.C. 20433, U.S.A. • Telephone: (202) 393-6360 BANK NEw'S RELEASE NO. 78/32 DECEMBER 23, 1977 $8 MILLION TO ASSIST PHILIPPINE REFORESTATION AND TREE FARMING A World Bank loan of $8 million to the Philippines will help farmers with small and medium-sized holdings to develop tree farms. It will also support a reforestation program of long fibre pine for pulpwood and soil conservation purposes. Tree farm,ers wi 11 be provided credit and techn i ca 1 services to he Ip them develop comnercially viable tree farms on marginal agricultural lands. Approximately 28,600 hectares (70,640 acres) of tree farm development will be financed under the project. Almost all the 7,400 farmers to be assisted are 1 iving in conditions of poverty, with per capita incomes of $50 to $80 a year, compared to the national average per capita income of $390 in 1975. The project is expected • to heip more than double their incomes in four to eight years • Some 3,000 hectares (7,400 acres) of pine plantation will be established in· Abra Province of Northern Luzon. This component of the project is designed to pave the way for a larger industrial reforestation program in the future. Plantation development will be carried out by the Bureau of Forestry Development (BFD), a government agency, which will be assisted in strengthening its planning and implementation capabilities. The $8 mi 11 ion World Bank loan is being made to the Republic of the Philippines. It is for a term of 20 years, including five years of grace, with interest at 7.9%. The Philippine Government will rel end $4.3 mill ion of the loan proceeds to the Development Bank of the Philippines on the same terms as the World Bank loan for on-lending to tree farmers. The balance of the loan will be used by the Governmen~ for the following purposes: $2.1 million by BFD for forestry development; $700,000 for project prepara- tion units in the Departments of Natural Resources and Agriculture; · $300,000 by the Philippine Council for Agricultural Resources Research for research purposes; $40,000 by the Bureau of Plant Industry; and $600,000 for a wood industries development study by BFD. • NOTE: Money figures are expressed in U.S. dollar equivalents . FORM NO. 1121 (5-76) T EC HN I CAL DA TA PROJECT: COUNTRY: TOTAL COST: Smallholder Tree Farming & Forestry Philippines $16 mi 11 ion • BANK FINANCING: $8 mi 11 ion OTHER FINANCING: Government of the Philippines, $7.4 million Project beneficiaries, $600,000 IMPLEMENTING ORGANIZATION: The credit component of the project (smallholder tree farming) will be administer~d by the Development Bank of the Philippines, Buendia Avenue, Makati, Rizal, Philippines. The plantation development component of the project will be ca~ried out by the Bureau of Forestry Development (BFD) of the Department of Natural Resources in Quezon City. PROJECT DESCRIPTION: The project includes the following components: (1) Small- holder tree farming -- (a) supervised credit and technical services for tree farm development; (b) increased nursery capacity and facilities for the B~reau of Plan Industry; (c) vehicles and office equipment for DBP branch offices·· serving the project; (d) research and monitoring of tree fanning component to provide basis for future programs~ (2) Piantation development -- (a) nursery facilities; (b) development of 3,000 hectares of pine plantations in Abra Province of Northern Luzon; (c) construction and maintenance of forest roads, paths, firebreaks and catchtowers; (d) project headquarters buildings and supporting facilities; (e) specialist technical services and support; (f) monitoring of program; (g) consultant services for wood industry development study. (3) Establishment of project preparation units within both the Department of Agriculture and the Department of Natural Resources. PROCUREMENT: Smallholder tree farming: Bulk procurement and interna= tional competitive bidding will not be warranted as individual contracts will be relatively small due to wide variety of ii:ems to be procured and purchases being phased over 4-year period. Plantation development: Pine seed (pinus caribaea) will be obtained from foreign sources, in accordance with international shopping procedures acceptable to the Bank from among the limited number of suppliers. Fertilizer purchases of less than $50,000 will be from local conmercial outlets; when annual requirements exceed $50,000, fertilizer will be procured after local advertising. Vehicles and equipment for BFD will be procured in accordance with Government procedures acceptable to the Bank. Civil works contracts totaling about $600,000 over 5 years will be tendered through competitive bidding advertised locally. CONSULTANTS: Funds will be provided for some 8 man-years of consultant services to assist in conducting a study of wood industry development. ECONOMIC RATE OF RETURN: ESTIMATED COMPLETION DATE: 65% for smallholder tree farming; development. 1983 - 0 - 11% for plantation •