Thailand - Second Chao Phya Irrigation Improvement Project

Document of The World Bank FILEa ED'Pay FOR OFFICIAL USE ONLY Report No. 1412a-TH THAILAND CHAO PHYA IRRIGATION IMPROVEMENT PROJECT II STAFF PROJECT REPORT June 1, 1977 Projects Department East Asia and Pacific Regional Office This document has a restricted distribution and may be used by recipients only in the performanc2 of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit - Baht US$1.00 = B 20.4 B 1.00 = US$0.049 US$1 million B 20.4 million B 1 million = US$49,000 WEIGHTS AND MEASURES (METRIC SYSTEM) 1 meter (m) 3.28 feet 2! kilometer (km) = 0.62 mile 1 hectare (ha) 2.47 acres = 6.25 rai 1 million cubic meters (M cu m) = 810 acre-feet 1 cubic meter per second (cu m/s) = 35.3 cubic feet per second 1 ton 1,000 kilograms (kg) = 2,205 pounds 1 megawatt (MW) = 1,340 horsepower (hp) ABBREVIATIONS BAAC - Bank for Agriculture and Agricultural Cooperatives cif - Cost, insurance and freight COLC - Central Office of Land Consolidation DAE - Department of Agricultural Extension DG - Director-General EGAT - Electricity Generating Authority of Thailand fob - Free on board 4-H Club - Young Farmers' Club HYV - High-Yielding Variety LS - Lump Sum MOAC - Ministry of Agriculture and Cooperatives O&M - Operation and Maintenance RID - Royal Irrigation Department USAID - United States Agency for International Development NOTATION -- Less than half the smallest unit shown - Nil or negligible ... Not available separately but included in total Not available Not applicable e Mission estimate ROYAL GOVERNMENT OF THAILAND FISCAL YEAR October 1 - September 30  FOR OFFICIAL USE ONLY This report is based on the findings of two preappraisal missions and an appraisal mission. The personnel involved included: Messrs. P.W. Whitford, C.M.F. Bruce, Y. Matoba and Mrs. Y. Kimaro (Bank), and Messrs. N. Ahmed, F.D. Gorrez Jr., R.C.Y. Ng, P. Judd and J.W. Robins (Consultants). Messrs. R.L.P. Harris, E.B. Boerema and J.G. Stemp and Ms. N.K. Boetker also contributed to the preparation of the report. This document hus a restricted distribution and may be used by recipients or'y in the performance of their official duties. Its contents may not otherwise be disclosed without WI.Vorld Dank authorinztion.   THAILAND CHAO PHYA IRRIGATION IMPROVEMENT PROJECT II Staff Project Report TABLE OF CONTENTS Page No. INTRODUCTION AND SUMMARY i xii 1. PROJECT BACKGROUND .1.................... . . Introduction ................ ..... 1 The Agricultural Sector ..... . . . . . . .. . . ... 1 Role of Irrigation in Agricultural Development . . . . . . . . 3 Irrigation Development in the Central Plain . . . . . . . . . 3 Chao Phya Irrigation Improvement Project I (Credit 379-TH) . . 6 Standards of On-Farm Development . . . . . . . . . . . . . . . 7 Legal Basis for On-Farm Development . . . . . . . . . . . . . 8 Project Formulation . . . . . . . . . . . . . . . . . . . . . 8 2. THE PROJECT AREA ....................... . 10 Climate . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Soils, Topography and Drainage . . . . . . . . . . . . . . . . 10 Farm Size and Land Tenure. . . . . . . . . . . . . . . . . . . 12 Subproject Selection . . . . . . . . . . . . . . . . . . . . . 12 Agricultural Conditions . . . . . . . . . . . . . . . . . . . 16 Transport and Marketing . . . . . . . . . . . . . . . . . . . 18 Fisheries Development . . . . . . . . . . . . . . . . . . . . 18 3. PROJECT COMPONENTS, COSTS AND FINANCING . . . . . . . . . . . . . 19 Part A (Rehabilitation and On-Farm Development) . . . . . . . 19 Part B (Rehabilitation) ..... . . . .. ...... . . . 21 Part C (Mae Klong Development) . . . . . . . . . . . . . . . . 21 Part D (Consultant Services) .... . . . ........ . . 25 Water Supply, Demand and Quality . . . . . . . . . . . . . . . 26 Status of Surveys and Design .... . . . ........ . . 26 Implementation Schedule ..... . . . . ....... . . . 27 Construction Methods ...... . .. . .......... . 27 Cost Estimates . . . . . . . . . . . . . . . . . . . . . . . . 27 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Procurement . . . . . . . . . . . . . . . . . . . . . . . . . 31 Disbursements ....... .. ... ........... . 34 Accounts and Audits ...... . .. . ........ . . . 34 Environmental Effects ..... .. . . ........ .. . 36 4. PROJECT ORGANIZATION ...... .. . .. .. .. .. .. . . . 37 Project Management ...... .. .. . ......... . . 37 Project Coordination ..... .. .. . ......... . . 38 Acceleration of Project Implementation . . . . . . . . . . . . 38 Agricultural Supporting Services . . . . . . . . . . . . . . . 39 Operation and Maintenance ..... . . . ....... . . . 42 Monitoring and Evaluation . . ................ . 43  -2- Page No. 5. CROPPING PATTERNS, YIELDS AND PRODUCTION . . . . . . . . . . . . 44 Future Cropping Pattern . . . . . . . . . . . . . . . . . . . . 44 Future Crop Yields . . . . . . . . . . . . . . . . . . . . . . 45 Cropping Calendar . . . . . . . . . . . . . . . . . . . . . . . 48 Cultural Practices . . . . . . . . . . . . . . . . . . . . . . 48 Crop Production ......... ... .... ... .... . 50 6. MARKET PROSPECTS AND PRICES ..... .. . .. . .. .. . .. . 52 Market Prospects . . . . . . . . . . . . . . . . . . . . . . . 52 Prices ..................... ...... . 52 7. CROP AND FARM BUDGETS . . . . . . . . . . . . . . . . . . . . . . 56 8. RENT AND COST RECOVERY ...... .. .. .. ... .. .. . . 63 Introduction .......... .... ..... .... . . 63 Ability to Pay ......... ... .... ... ... . . 63 Proposed Project Charges ..... .. . .. . .. .. . .. . 65 Rent and Cost Recovery Indices . . . . . . . . . . . . . . . . 66 Fiscal Impact .......... .... ..... .... . . 67 Willingness to Pay . . . . . . . . . . . . . . . . . . . . . . 67 9. BENEFITS, JUSTIFICATION AND RISKS . . . . . . . . . . . . . . . . 68 Part A - Rehabilitation and On-Farm Development . . . . . . . . 68 Parts B and C - Rehabilitation and Service Roads . . . . . . . 75 Risks ......... ... ... ... ... ... .... . 76 Overall Rate of Return ...... .. . .. .. .. .. . . . 76 10. AGREEMENTS REACHED AND RECOMMENDATION . . . . . . . . . . . . . . 78 ANNEX: ADDITIONAL DOCUMENTS AND DATA AVAILABLE IN THE PROJECT FILE LIST OF TABLES Table No. 2.1 Farm Size Distribution for Part A of the Project . . . . . . . . 13 2.2 Subproject Data for Part A of the Project . . . . . . . . . . . . 15 3.1 List of Rehabilitation Works (Part A) . . . . . . . . . . . . . . 22 3.2 List of Rehabilitation Works (Part B) . . . . . . . . . . . . . . 23 3.3 Equipment List (Summarized) . . . . . . . . . . . . . . . . . . . 28 3.4 Cost Estimates (Summarized) . . . . . . . . . . . . . . . . . . . 29 3.5 Estimated Schedule of Expenditures . . . . . . . . . . . . . . . 33 3.6 Proposed Allocation of the Proceeds of the Loan . . . . . . . . . 35 3.7 Estimated Schedule of Disbursements . . . . . . . . . . . . . . . 36 5.1 Area Cropping Patterns . . . . . . . . . . . . . . . . . . . . . 46 5.2 Crop Yields: Present, Future With and Without Project . . . . . 47 5.3 Crop Production (Part A). . . . . . . . . . . . . . . . . . . . . 51 6.1 Price Structure of Rice/Paddy . . . . . . . . . . . . . . . . . . 53 6.2 Breakdown of Ex-Mill Value of Paddy . . . . . . . . . . . . . . . 54  -3- Page No. 6.3 Farm Gate Prices of Inputs and Outputs . . . . . . . . . . 55 7.1 Crop Inputs . . . . . . . . . . . . . . . . . . . . . . . 58 7.2 Financial Crop Budgets . . . . . . . . . . . . . . . . . . 59 7.3 Monthly Farm Labor Requirements . . . . . . . . . . . . . 60 7.4 Farm Budgets . . . . . . . . . . . . . . . . . . . . . . . 61 7.5 Cash Flow Projection for 2.3 ha Farm . . . . . . . . . . . 62 8.1 Rent and Cost Recovery . . . . . . . . . . . . . . . . . . 64 9.1 Net Value of Production at Full Development - Total Part A 69 9.2 A Summary List of National Parameters. . . . . . . . . . . 70 9.3 Marginal Product of Labor at Domestic Prices . . . . . . . 72 9.4 Economic Costs and Benefits . . . . . . . . . . . . . . . 74 LIST OF FIGURES Figure No. 3.1 Implementation Schedule . . . . . . . . . . . . . . . . . 30 5.1 Area Cropping Calendar . . . . . . . . . . . . . . . . . . 49 9.1 Marginal Opportunity Cost of Farm Labor . . . . . . . . .77 LIST OF MAPS IBRD 12540 - Project Location IBRD 12541 - Northern Chao Phya Area IBRD 10401R - Mae Klong Irrigation Area   THAILAND CHAO PHYA IRRIGATION IMPROVEMENT PROJECT II Staff Project Report INTRODUCTION AND SUMMARY The Agricultural Sector 1. The agricultural sector in Thailand accounts for 37% of GNP and employs 78% of the labor force. Agricultural commodities have accounted for 50% to 60% of total exports in recent years. Thailand is one of the world's largest rice exporters. The growth rate in agricultural production over the past five years has been 3.7%, compared to a 6.2% growth rate for the economy as a whole. However, allowing for relative price changes and population growth, the real per capita income of the rural population rose nearly 35% over the past four years. 2. Since the mid-1960s, the growth in agricultural production has come both from expansion of the cultivated area and improvement in yields. Rice continues to be the principal crop, accounting for 63% of cultivated area and about 30% of production value. In the last five years, rice production grew at only 2.2% p.a., the lowest growth rate of any major crop (except kenaf); almost all this growth came from expansion of the area harvested, while average yields remained virtually stagnant. Fertilizer consumption in Thailand remains among the lowest in Asia. The area planted to high-yielding dry season rice has recently expanded, but the second crop still accounts for only 6% of total production. 3. The principal sector issues are: (a) Productivity. As the supply of uncultivated land is now virtually exhausted, further increases in food and other agricultural production will have to come from increases in cropping intensity and yield, requiring large capital investments and strengthened agricultural supporting services. (b) Income Distribution. Large inequities of income exist between urban and rural areas, between regions and, to a lesser extent, within rural communities. (c) Pricing Policy. Traditionally, Government policy in Thailand has been to keep prices to the producer low (through export taxes) and to tolerate high input prices, leading to a continuation of an "extensive" form of agriculture, with a low use of inputs and low yields. Even though this policy has been significantly changed in the past three years (for example, a fertilizer monopoly has been abolished), distortions still exist. (d) Environmental Degradation. Increasing population pressure on the land is leading to the destruction of over 1% of Thailand's forest resources each year. The land being opened up is characterized by shallow soils and steep slopes and continuing problems of soil erosion and low returns from agriculture may be expected.  - ii - (e) Organization. Responsibility for agricultural development is fragmented between many agencies and there are often severe problems of coordination within and between these agencies. (f) Agricultural Credit. Institutional credit to the sector is not adequate to the needs; commercial banks are reluctant to lend directly (g) Land Tenancy. In recent years, land tenancy has increased substan- tially in certain areas, and there are indications that the average farm size is declining. 4. To tackle these problems, the Government intends to accelerate implementation and planning of agricultural development projects in general and irrigation projects in particular. Development of the irrigation subsector plays a major role in the Government's efforts. Irrigation typically leads to large increases in productivity and farm incomes and can also serve income distribution goals, provided investment is directed at lower income groups and regions and is accompanied by the introduction of more equitable taxation and cost recovery policies. Intensification of production on existing culti- vated land would also ease encroachment into forest areas. The Irrigation Subsector 5. Most of the irrigable areas in Thailand are in the flood plains of the major rivers where a combination of heavy rainfall and flooding precludes the cultivation of crops other than paddy in the wet season. In the Chao Phya Plain, heavy soils predominate and paddy is the preferred crop in the dry season as well. The situation is similar in the coastal plains of the south. Dry season cropping is more diversified on the alluvial soils of the north, and in the small areas so far developed for irrigation in the northeast. 6. In the wet season, the harvested area of rice averages about 7.7 mil- lion ha of which the irrigated areas account for some 1.8 million ha. Close to 0.4 million ha of rice is irrigated in the dry season. Since virtually all land suitable for rice is now cultivated in the wet season, any major gains in rice production will have to come from higher yields in both rainfed and irrigated areas, and increases in the area cropped in the dry season. 7. To meet domestic demand and maintain Thailand's share of the world's export market, production would have to increase from 15.1 million tons of paddy in 1976 to 22.7 million tons in 1990. Over the same period, assuming a yield increase of 20% in rainfed areas, irrigated paddy production would have to more than double from 5.5 million to 12 million tons. 8. The Bank has been associated with the irrigation subsector in Thailand since 1950 (Loan 36-TH). In recent years, it has become apparent that the pace of the subsector's development would not accelerate without improvements in its organizational efficiency. In the Phitsanulok Project (Loan 1149-TH), it was agreed with the Government and the Royal Irrigation Department (RID) of the Ministry of Agriculture and Cooperatives (MOAC) that  - iii - RID's administration, organization and procedures should be reviewed and where necessary revised to ensure efficient implementation of future programs. As a preliminary step the Government requested a Bank mission to review Thailand's irrigation program and RID's organization to help prepare terms of reference for an organization study (to be financed under Loan 1149-TH). RID is now selecting consultants and is appointing a counterpart team to monitor and advise the consultants. 9. The principle underlying the recommendations of the Bank mission on RID's organization is that all aspects of an irrigation project (from planning, design and survey through the construction of main and tertiary distribution systems, service and farm roads) are integral parts of a whole and should be under the direct control of a single project manager. Service divisions should be available to provide necessary technical support, but the present fragmentation of project activities along functional lines leads to serious coordination problems and an unwillingness of any individual to accept overall responsibility. While RID and its consultants conduct the administra- tion and organization study, this principle of responsibility along project lines should be adopted as an interim solution. This modest change would begin to define more clearly the authority, responsibility and accountability for better coordination of the project activities. 10. Since its formation in 1904, RID has constructed irrigation, flood control and navigation systems which benefit nearly two million ha. Through the 1930s, RID concentrated on the construction of a network of navigation/ drainage canals and control structures over more than 500,000 ha in the South- ern Chao Phya Plain. In 1950, following the wartime slowdown in construction, RID began a program to develop gravity irrigation systems covering 600,000 ha in the Northern Chao Phya which continued through the 1960s. At the same time navigation/drainage systems of the Southern Chao Phya were extended to nearly 200,000 ha in the adjacent Bang Pakong Basin. The Bank helped finance part of this development through Loans 36-TH (which helped finance construction of the Chai Nat diversion dam, associated headworks and main canals in the Northern Chao Phya area) and 328-TH (which helped finance the construction of a tertiary distribution system in the Chao Phya area). Also, in parallel with the develop- ment of the Northern Chao Phya, the Bhumiphol Dam (Loan 175-TH) was completed in 1964. This first step in controlling the flow of the Chao Phya's northern tributaries and providing some dry season storage was followed by the Sirikit Dam (Loan 514-TH), completed in 1972. Over the past 20 years, RID has also turned its attention to other river basins and regions. A 160,000 ha first-stage gravity irrigation system (financed under Loan 394-TH) was constructed in the Mae Klong Basin and a 50,000 ha scheme in the Petchaburi basin (Loan 327-TH). RID has also built some large reservoirs and main canals in the northeast and numerous small schemes in the north, northeast and south. 11. In developing the Chao Phya Plain, RID's aim was to modify the natural flood regime over large tracts of land. In the Southern Chao Phya, which is subject to deep and prolonged flooding, the canals were designed as flood-relief channels to spread the flood waters more evenly and to promote drainage at the end of the flood season. These canals also opened large areas  - iv - of uncultivated land. In the Northern Chao Phya, drought is more of a con- straint to rice production than floods, and therefore the diversion dams and irrigation canals were designed to provide semicontrolled inundation. 12. This approach, which is appropriate to the vast areas of flat lands in the Chao Phya Plain, was also applied in other regions and basins with different topography. The results of this approach were generally unsuccessful in those areas where flood irrigation is precluded by the uneven terrain, and much higher standards of mapping and design required under such conditions have been neglected. These problems are particularly acute in the Northeast Region and the Mae Klong Basin. 13. Furthermore, the circumstances that favored extensive agricultural techniques have now changed. Farms are becoming smaller because of population pressure, farmers are using more intensive farming methods, and current and projected prices give the incentives for farmers to take advantage of higher standards of on-farm development. Thus, further exploitation of Thailand's irrigation potential will require much more emphasis on a reliable and timely delivery of water to the fields. This will involve upgrading of virtually all existing irrigation systems, incorporating higher standards of water control in these and in new systems. 14. The Bank mission (see paragraph 28) discussed with the Government an indicative irrigation development program to be carried out in the period 1977-90 which comprises improvement of existing systems (710,000 ha), extension of existing systems (290,000 ha), and new projects (315,000 ha). A major feature of the program is the widespread introduction of higher standards of tertiary or on-farm development, that is, the construction of ditches, drains and farm roads needed to achieve the timely and reliable supply of water to farmers' fields. To be most effective, on-farm development should be carried out along with improvement or new construction of main systems, and coordinated with system operation and maintenance. On-farm development can take various forms ranging from simple tertiary ditches to intensive development, which is designed to serve each farm with ditches, drains and roads and may require land leveling and boundary realignment. 15. A rough estimate of the construction cost of the indicative program, in 1976 prices, is $1,400 million, to which should be added about $150 million for initiation of new projects. Annual expenditures would average $110 million through 1990. Annual operation and maintenance (at $10-15/ha) would average about $30 million. Allowing for RID overhead and expenditures on other RID activities, such as navigation works and channel improvement, RID's annual budgetary requirement would be around $150 million, which is roughly in line with the budget appropriations to RID in recent years. However, if these invest- ments are to achieve the 1990 production targets, the planning, design and imple- mentation of projects would have to be improved. This, in turn, would require improvements in RID's organization and management (see paragraphs 28 and 29). 16. A start has been made on some major elements of this program. Projects to improve existing systems in the Northern Chao Phya Plain (Credit 379-TH) and Northeast Region (Credit 461-TH) are under way. Major works under the Phitsanulok Project (Loan 1149-TH) will begin soon.  - v - 17. The first Chao Phya Irrigation Improvement Project (Credit 379-TH) covering 17,000 ha was designed to meet the requirements necessary to overcome some of the major constraints of the existing irrigation network and agricul- tural supporting services in the area. Close monitoring of results to date has confirmed that a rapid increase in cropping intensity, yields and water efficiency and control can be obtained on moderately large areas at reasonable cost following the rehabilitation of main and secondary irrigation and drainage systems and the construction of on-farm works. Progress in imple- menting stage one has been generally satisfactory. Targets were fully achieved in the first two years of construction but administrative problems in 1976 resulted in a reduction in that year's target. The overall degree of completion is expected to be about 90% by the end of July 1977, the original completion date for the project. The remaining works will be completed early in 1978. Under this project, a nucleus of trained staff has been developed and procedures established for the planning, design and execution of on-farm works, including the use of contractors. Based on these achievements, the Government has proposed to the Bank a project to expand this mode of develop- ment to a larger area in the Northern Chao Phya Plain. 18. The existing irrigation system in the Mae Klong area has been designed for supplementary irrigation of rice in the wet season. At present a large area is, however, under rainfed sugarcane. While clearly some form of on-farm development will be required, it would be unwise to go ahead with the large-scale implementation of systems developed elsewhere, as the topographic conditions and cropping patterns of the Mae Klong area may require different solutions. For this reason the Government has proposed to the Bank a two year program of pilot projects. Since there are no usable topographic maps and very few service roads in the Mae Klong area, provision for mapping and road construction is also proposed. Project Description 19. The proposed project would benefit directly more than 130,000 farm families, i.e., more than three quarters of a million people. The project would improve existing irrigation facilities on 201,000 ha in the Northern Chao Phya. The construction of three pilot projects and service roads in the Mae Klong area, together with mapping and feasibility studies in both Northern Chao Phya and Mae Klong would provide a basis for further development of irrigation in both project areas. The main components of the proposed project are: Part A. Rehabilitation and on-farm development works consisting of ditches, drains and roads to serve individual farms, boundary realignment and land leveling, which together would improve water control and farm access for a net cultivable area of about 63,000 ha in the Northern Chao Phya Plain. These works are expected to cost about $140/ha (rehabilitation) and $300-600/ha (on-farm development) for a total of $47 million./1 Part B. Rehabilitation works such as canal reshaping, additional structures and bridges, improvement of service roads and drains, for more efficient water control over 138,000 ha (at a cost of $80/ha), as well as topographic mapping for about 300,000 ha of the Northern Chao Phya Plain. The total cost is expected to be $14 million./I /1 Without contingencies.  - vi - Part C. Topographic and cadastral mapping of about 50,000 ha, construction of three pilot projects (to demonstrate on-farm development techniques) and 360 km of service roads and associated works in the Mae Klong irrigation area ($13 million)./l Part D. Consultant services for (a) implementing the above works, (b) prepar- ing feasibility studies for (i) a third stage project in the Chao Phya Plain and (ii) a second stage project in the Mae Klong area, and (c) studies of agricultural supporting services ($3 million)./l Provision would also be made in the proposed project for improvements in operation and maintenance, a fisheries development program, and project monitoring and evaluation. Project Cost and Financing 20. The total project cost is estimated at $112 million with a foreign exchange component of $55 million (49%). Physical contingencies of 15% have been added to the cost of rehabilitation and road works under Part C of the project. A contingency of 10% has been added to the cost of on-farm development, mapping and miscellaneous works. Contingencies amounting to 33% of the baseline costs have also been provided to cover expected price increases over the project implementation period. The foreign exchange compenent has been estimated on the assumption that all civil works contracts would be won by local contractors and all equipment contracts by foreign suppliers. Local expenditures would be met through annual government budgetary allocations to RID and the other agencies responsible for carrying out the project. The proposed $55 million Bank loan would finance the estimated foreign exchange component of the project. 21. The proposed loan includes an amount of $1.2 million to finance the foreign exchange costs of the pilot projects and the feasibility study in the Mae Klong area. The Governments of Japan and Thailand, however, are discussing the possibility of Japan providing a grant to finance the above costs. Should this financing become available, the amount provided in the proposed loan for the.pilot projects and the feasibility study would be reallocated to finance other project-related activities to be agreed with the Bank. Implementation Period 22. The implementation period for the proposed project is expected to be five years. However, the Government has informed the Bank that as part of its policy to accelerate implementation of agricultural projects (see paragraph 24), it intends to implement the proposed project in four years. There are no technical or engineering obstacles which should prevent RID from achieving this goal and the Government intends to remove existing organ- izational and procedural bottlenecks which are causing delays in project implementation. In particular the Government proposes to: (a) appoint, in a timely manner, able project directors and managers to whom ample authority would be delegated; (b) provide these directors and managers with full-time /1 Without contingencies.  - vii - support staff with proper technical and management skills; (c) streamline procedures for procurement and employment of consultants; (d) eliminate progressively execution of works by force account (see paragraph 50). Project Organization 23. The proposed project organization is designed to help the Government accelerate project implementation. The proposed organization is based upon the principle of responsibility along project lines (see paragraph 29) and may be modified following the review of RID's organization, administration and procedures (see paragraph 28). 24. RID would have direct responsibility for project implementation. Within RID, responsibility for all the rehabilitation and on-farm development works in the Northern Chao Phya Plain would rest with the Deputy Director- General (Operation and Maintenance) who would act as Project Director. A senior RID engineer, who has been appointed Project Manager after consultation with the Bank, would be responsible for day-to-day activities (Section 3.07(a) of the draft Loan Agreement). A Project Director (to be appointed after consultation with the Bank) would have ultimate responsibility for all RID's activities in the Mae Klong area, which are loosely coordinated at present. A Project Manager (also to be appointed after consultation with the Bank) would be designated to be directly in charge of all irrigation, drainage and road construction, and on-farm development in the Mae Klong area (Section 3.07(b) of the draft Loan Agreement). 25. Several other departments within the Ministry of Agriculture and Cooperatives (MOAC) would also have a role in implementing Part A of the project. As under the first Chao Phya Irrigation Improvement Project, the Central Office of Land Consolidation would prepare Royal Decrees to permit land consolidation and would further assist RID with on-farm development. These decrees would be issued in advance of the construction season in areas to be incorporated under the project (Section 3.09 of the draft Loan Agreement). The Land Department of the Ministry of the Interior would be responsible for cadastral surveys and issuance of title deeds in all parts of the project area subject to on-farm development. The Land Development Department of MOAC would be responsible for detailed land classification surveys in advance of the design work for on-farm development. 26. The Deputy Under-Secretary of State for Agriculture would act as Project Coordinator with responsibility for coordinating all project activities. To facilitate project execution and speed up cumbersome procurement procedures, a Project Coordination Committee would be established (as a condition of effect- iveness of the proposed loan) under the chairmanship of the Under-Secretary of Agriculture to be in charge of decisions on procurement, budgeting, staffing and the appointment of consultants (Sections 3.06 and 5.01 of the draft Loan Agreement). This Committee would appoint a Procurement Subcommittee in charge of approving the bidding documents and bid evaluation. RID would also attempt to standardize bidding documents for the proposed project to the extent possible. Consultants 27. Consultants would be engaged to assist in the implementation of the rehabilitation and on-farm development works in the Northern Chao Phya area  - viii - (Parts A and B of the project) and to undertake a feasibility study for a third stage of development. About 230 man-months of assistance are expected to be required. Consultants would also be engaged to assist in the implementa- tion of the works in the Mae Klong area (Part C of the project) and to under- take a feasibility study for a second stage of development in the area; an additional 40 man-months of assistance are expected to be required. Cost estimates for the consultants' services are based on recent contracts concluded with international consulting firms in Thailand and countries in the area. These costs average $7,100 per man-month, including all overheads. In contrast with the first stage Project, these consultants would take little part in the day-to-day work of design and construction but would concentrate on broader aspects such as planning, procurement, monitoring and evaluation, and improve- ments to Operation and Maintenance (O&M). Procurement 28. Contracts for roads and associated works in the Mae Klong area ($7.0 million) /1 and the supply of vehicles and equipment ($15.7 million),/1 would be procured following international competitive bidding in accordance with Bank Group Guidelines. A preferential margin of 15%, or the prevailing customs duty if lower, would be extended to local manufacturers in the evaluation of bids. Off-the-shelf items costing less than $10,000 each and limited to a total of $300,000, would be purchased through normal government procurement procedures, which ensure adequate competition. 29. The civil works under Parts A and B of the proposed project consist mainly of rehabilitation works ($18.5 million)/1 and on-farm development works ($32.5 million)./l These works either consist of many small, scattered items or need to be planned and executed on short notice. They would be undertaken largely by force account (Schedule 4(D) of the draft Loan Agreement). However, RID is also building up its capability for preparing bid documents and super- vising contractors for this kind of work and at least 35% of the on-farm works will be contracted. Works of this nature cannot be grouped into packages large enough to interest international contractors and thus locally advertized bidding procedures (in which foreign firms will be eligible to participate) will be applicable (Schedule 4(B) (1) and (2) of the draft Loan Agreement). Disbursements 30. Disbursements would be made at the rate of 100% against the c.i.f. cost of directly imported equipment, or the ex-factory price net of taxes for equipment manufactured locally, and at a rate of 65% of total costs for imported equipment procured locally. For consultants' services and overseas training, disbursements would equal 100% of total costs. Disbursements for civil works and mapping would be on a percentage basis. Disbursements for force account works would be made against certified statements of completed work. Appointment of a Project Director, a Project Manager and consultants for the Mae Klong component (see paragraph 45) would be conditions of disbursement for expenditures related to this component (Schedule 1(4)(b) of the draft Loan Agreement). /1 Without contingencies.  - ix - Agricultural Supporting Services 31. The Government has recently laid much stress on the need to integrate irrigation development with agricultural supporting services. The existing fertilizer supply network in Thailand has expanded adequately to meet overall demand and is expected to continue to expand in the project area to meet the increased needs generated by the project. Production credit would be available from the Bank for Agriculture and Agricultural Cooperatives (BAAC) and/or cooperative societies which are rapidly expanding their activities in the project areas. The existing research stations in the project areas are providing a sound technological base for the project; improved strains of rice and other major crops are being produced periodically and fertilizer response and control measures for the major pests are well understood. Extension services, which are provided by the Department of Agricultural Extension (DAE), will be expanded and made more effective under the National Extension Project (Loan 1393-TH) which will begin to cover the Chao Phya and part of the Mae Klong project areas in 1978 and 1979. Also, improved seed would be provided through the DAE. DAE would expand its seed production and distribution program to meet the needs of the project (Section 3.10 of the draft Loan Agreement). Operation and Maintenance 32. Operation and Maintenance (O&M) of the main irrigation and drainage systems and service roads would be the responsibility of RID. O&M standards are inadequate in the project area at present, due primarily to insufficient funding, and would be improved under the project. The annual cost of adequate O&M has been tentatively estimated at $12/ha (early 1977 prices). RID would operate and maintain all the irrigation and drainage systems and service roads under its jurisdiction in the Chao Phya area in accordance with sound engineer- ing standards (Section 4.03 of the draft Loan Agreement). Operation and maintenance of on-farm works, i.e. ditches, drains and roads below the farm turnout, would be the responsibility of the farmers in each service unit who will have the choice of either executing these works directly or using hired labor. RID would assist in the establishment of farmers' groups in each service area. The cost is tentatively estimated to range from $2 to $4/ha/yr. Cost Recovery 33. To date no water charges have been levied on irrigation schemes operated by RID. The Government felt that the taxes on rice production and export (which depressed the price received by farmers) were high enough to recover indirectly the public investments in irrigation. When these taxes began to be lowered, the Government became aware of the need to recover directly part of the costs. Under the first Chao Phya Irrigation Improvement Project, it was agreed that MOAC would carry out a cost recovery study and start collecting water charges in that project area. Farmers in the Part A area would be required to pay 50% of the investment cost of on-farm develop- ment works over 15 years (including a two-year grace period) beginning on the completion of these works, at an interest rate of 12%. Before December 31, 1977, the Government would make arrangements acceptable to the Bank for the collection of these amounts by BAAC or other institutions acceptable to the Bank (Section 4.04 of the draft Loan Agreement). A general irrigation  charge, to apply eventually to all irrigated areas in Thailand, would also be introduced to cover O&M costs. The Government has agreed that prior to July 31, 1978, it would introduce an annual charge of not less than the average cost of operating and maintaining the irrigation and drainage works of the Bank financed projects in the Northern Chao Phya area, including on-farm works, and would promptly collect or cause to be collected such charges from beneficiaries (Section 4.05 of the draft Loan Agreement). 34. In terms of present discounted values, the proposed charges would recover 42% of the total capital and recurrent public sector expenditures on Part A of the project, assuming a 5% rate of inflation. O&M charges will reflect actual costs. If all taxes (including the taxes on rice production at the current level) paid by beneficiaries of Part A are also considered, the Government would more than recover the cost of constructing, operating and maintaining the project works. Monitoring and Evaluation 35. The Land Policy Division of the Land Development Department of MOAC would be responsible for monitoring the changes resulting from the project on a seasonal basis. Evaluation of the performance of the agencies responsible for construction and supporting services would be carried out by the agencies themselves. Evaluation of the extent to which the project is meeting its objectives or the priority of projects of this kind in Thailand's agricultural development would be carried out from time to time by the Division of Agricultural Economics of MOAC. Environmental Effects 36. Minimal changes in environmental conditions are anticipated as a result of the project. Improved drainage should reduce the hazards of water- borne diseases. Fish production may be adversely affected by better control of irrigation water and the increased use of chemical pesticides. To counter- act this tendency, a program of fisheries development, based on private fishponds, has been included in the project. Benefits and Risks 37. About 24,400 farm families, or a total of 137,000 persons live in the area of Part A of the proposed project. The average farm size is 2.3 ha. The degree of tenancy varies from 10% to 37%. These farms presently have an average income of about $800 p.a.; after the project this income should increase to about $1,700 p.a. In addition, about 2,000 families of landless laborers would benefit directly from increased production and employment opportunities. The project area is currently characterized by high seasonal unemployment. With the project at full development, the incremental labor requirement would be about 4.3 million man-days or some 15,000 full-time agricultural jobs. Most of the additional labor would be needed in the dry season when employment would otherwise be lowest. While no recent surveys have been made in the areas to benefit from Part B of the project, it is reasonable to assume that farm sizes and tenancy patterns are similar to those described above. The gross area is 138,000 ha; assuming an average farm size of about 2.5 ha, about 50,000 families would benefit from the project. The  - xi - average farm size in the 160,000 ha area of Part C is about 3.0 ha. Tenancy varies from 20% to 40% and may be increasing. The type of works under Part C are so varied in nature and intensity that it is impossible to estimate the number of beneficiaries. However, it is reasonable to assume that about half of the 55,000 farm families living in the area would benefit directly from the improved facilities. 38. Part A of the project would increase yields and cropping intensity on about 63,000 ha, and would take advantage of substantial sunk costs from investments over the past 25 years in diversion and storage dams and the main water distribution and drainage system. The economic rate of return for Part A (which accounts for 65% of total project costs) is estimated to be 39%. Although this rate is high, it is realistic for this type of investment which provides (at a relatively low cost of $835 per ha and $2,160 per beneficiary family) an advanced stage of development which would allow farmers to benefit from substantial past investments in water control facilities. The high rate of return also indicates the high priority which should be given to this type of investment in Thailand. 39. The estimated income distribution effects of Part A of the proposed project are encouraging. Farm budget estimates indicate that (a) 25-30% of the farmers in the project area have a household income at about the absolute poverty level,/l while the regional average of households at a comparable income level is 15-20%; and (b) 70-75% of the farmers in the project area have a household income level at or below the level of the poorest 40% of the region. The average regional household income level is of the same order of magnitude as the national average. Although income distribution data in Thailand are subject to wide interpretation, it is nevertheless significant that the concentration of the farm population around critical income levels is higher in the area of Part A of the project than elsewhere in the region and in the country. 40. As the rehabilitation works to be constructed under Part B of the project (which accounts for 18% of total project costs) are varied in character, it would be difficult to establish a direct relationship betweell costs and benefits. The following analysis should therefore be treated as approximate. The proposed rehabilitation works would cost about $83/ha and would lead to an increase in paddy yields of about 10% (230 kg/ha), giving an economic rate of return of 15%. For Part C (which accounts for 17% of total project costs), the pilot projects for on-farm development would be expected to have about the same rate of return as similar works under Part A, in addition to their applied research value. The service roads in the Mae Klong area should permit more efficient operation and maintenance of the irrigation system, especially after dry season water becomes available in 1979. Improved service roads should lead to an increase in the operational efficiency of the irrigation system of at least 1%. This corresponds to an increase in the dry-season cropped area of about 3,000 ha; giving an economic rate of return of at least /1 Absolute poverty income level is defined as the level of income which is necessary to purchase (a) a nutritionally adequate, typical subsistence diet and (b) minimum nonfood requirements. This level is estimated at about $435 p.a. per household in the region, and $445 p.a. per household country-wide.  - xii - 15%. Additional benefits of even greater magnitude would result from the reduction in transport costs for the region's produce and the likely increase in the sugar extraction rate, but few data are available to quantify these. 41. The rate of return of the project as a whole is estimated at 31%. 42. There are no unusual risks associated with this project. The risks normally associated with irrigation projects (i.e., (a) lower than expected yields and (b) smaller than expected area used for double cropping) have been taken into account in estimating project benefits.  THAILAND CHAO PHYA IRRIGATION IMPROVEMENT PROJECT II Staff Project Report 1. PROJECT BACKGROUND Introduction 1.01 The Government of the Kingdom of Thailand has requested Bank assis- tance in financing the second stage of the Chao Phya Irrigation Improvement Project. The project includes rehabilitation works and on-farm development over 63,000 ha (Part A) and rehabilitation works only over an additional 138,000 ha (Part B) of the Northern Chao Phya Plain, as well as high-priority development activities in the Mae Klong area (Part C) and studies for future projects and for agricultural supporting services (Part D). This would be the tenth Bank Group operation for promoting irrigated agriculture in Thailand and the sixth project for improving irrigation in the Chao Phya Plain. 1.02 The project was prepared by the Government, with the assistance of consultants (Ilaco, Netherlands). The feasibility of Part A of the project was established in a report dated September 1975 (Reference B-1),l Part B was devised during the course of appraisal, while Part C is derived from a prefeasi- bility study dated November 1974 (Reference B-2). 1.03 This report is based on the findings of two preappraisal missions, which visited Thailand in February and May 1976, and an appraisal mission in September 1976. The personnel involved included: Messrs. P.W. Whitford, C.M.F. Bruce, Y. Matoba and Mrs. Y. Kimaro (Bank), and Messrs. N. Ahmed, F.D. Gorrez Jr., R.C.Y. Ng, P. Judd and J.W. Robins (consultants). Messrs. R.L.P. Harris , E.B. Boerema and J.G. Stemp and Ms. N.K. Boetker also contri- buted to the preparation of this report. The Agricultural Sector 1.04 A detailed review of the agricultural sector in Thailand is given in the Bank's Agricultural Sector Survey, dated May 1, 1972 (Reference A-2). More recent statistics are given in recent economic reports and in the Government's publication "Agricultural Statistics of Thailand: Crop Year 1974/75" (Reference A-3). Major issues related to irrigated agriculture are discussed in the Irrigation Program Review Report, dated December 1976 (Reference A-5). The major agricultural sector issues are briefly summarized below. 1.05 The agricultural sector in Thailand accounts for 37% of GNP, an increase from 31% in 1971, and employs 78% of the labor force. Agricul- tural commodities have accounted for 50 to 60% of total exports in recent years. Although Thailand is the world's largest rice exporter, this commodity represents only 17% of total export value. The growth rate in /1 References and Working Papers are listed in the Annex and are available on request.  agricultural production over the past five years has been 3.7%, compared to a 6.2%"o growth rate for the economy as a whole. However, allowing for relative price changes and population growth, the real per capita income of the rural population rose nearly 35% over the past four years. 1.06 Since the mid-1960s, the growth in agricultural production has come both from expansion of the cultivated area and improvement in yields. Rice continues to be the principal crop, accounting for 63% of cultivated area and about 30% of production value. In the last five years, rice pro- duction grew at only 2.2% per annum, the lowest growth rate of any major crop (except kenaf). Almost all this growth came from expansion of the area harvested, while average yields were virtually stagnant. Fertilizer consumption in Thailand remains among the lowest in Asia. The area of higher yielding dry season rice production has recently expanded as a result of the construction of storage reservoirs in the Chao Phya basin, but the second crop still accounts for only 6% of total production. 1.07 The principal sector issues are: (i) Productivity - As the supply of uncultivated land is now virtually used up, further increases in food and other agricultural production will have to come from increases in cropping intensity and yield, requiring large capital investments and strengthened agricultural supporting services; (ii) Income Distribution - Large inequities of income exist between urban and rural areas, between regions and, to a lesser extent, within rural communities; (iii) Pricing Policy - Traditionally, Government policy in Thailand has been to keep product prices low (through export taxes) and to tolerate high input prices (for example, for fertili- zer), leading to a continuation of an "extensive" form of agriculture, with a low use of inputs and low yields. Even though this policy has been significantly changed in the past two years, inequities still exist; (iv) Environmental Degradation - Increasing population pres- sure on the land is leading to the destruction of over 1% of Thailand's forest resources each year. The land being opened up is characterized by shallow soils and steep slopes and continuing problems of soil erosion and low returns from agriculture may be expected; and (v) Organization - Responsibility for agricultural develop- ment is fragmented between many agencies and there are often severe problems of coordination within and between these agencies.  - 3 - Other sector issues of a more localized character include land tenancy, credit and marketing. Role of Irrigation in Agricultural Development 1.08 Development of new and improved irrigation facilities can clearly play a major role in overcoming the above problems and ensuring continuing self-sufficiency in the major foodgrain, rice. Irrigation typically leads to large increases in productivity and farm incomes and can also serve income distributional goals, provided investment is directed at lower income groups and regions and is accompanied by introduction of more equitable taxation and cost recovery policies. Intensification of production on existing cultivated lands should ease overexploitation of forest lands. However, accelerating the pace of irrigation development will depend on improvements in organizational efficiency, as discussed in the Irrigation Program Review. The Review also outlines a program of irrigation development needed to satisfy domestic food- grain requirements and maintain Thailand's position as a major rice exporter. A major component of the proposed program is improvement of existing irrigation systems (Reference A-5). Irrigation Development in the Central Plain 1.09 The Chao Phya River drains an area of 180,000 sq km while a further 30,000 sq km is drained by the adjacent Mae Klong River (Map 12540). The northern part of the Chao Phya Basin is drained by four major rivers: the Ping, Wang, Yom and Nan, which join about 200 km north of Bangkok to form the Chao Phya. The flat, alluvial part of the basin is known as the Central Plain. The triangular portion of the Central Plain, with its apex at Chai Nat and its base along the northern coast of the Gulf of Thailand, is known as the Chao Phya Plain (Map 12541). Its cultivable area is 1,120,000 ha. 1.10 In the southern part of the Chao Phya Plain (512,000 ha), there is an extensive system of canals and control works, some dating back to the 1890s, which serve for drainage and navigation, as well as for irri- gation by uncontrolled flooding in the wet season or by pumping in the dry season. The Northern Chao Phya Plain covers 608,000 ha of cultivable land of which 470,000 ha is above 4.5 m mean sea level and thus is con- sidered to have potential for intensive gravity irrigation. Apart from some small pre-existing schemes, major irrigation in the Northern Chao Phya Plain dates from the construction of the Chai Nat barrage on the main stem of the Chao Phya, and the associated headworks, main and secondary canal systems, and partial drainage system built in the 1950s, with assistance from Loan 36-TH. 1.11 Water for the Northern Chao Phya area is diverted by the Chai Nat barrage into five major natural or artificial channels: the Makamthao- Uthong Canal, and the Suphan and Noi Rivers on the west bank; and the Chai Nat-Ayudhya and Chai Nat-Pasak Canals on the east bank. Headworks on the rivers or canals serve independent irrigation systems or "projects", of which there are eight on the west bank and five on the east bank (not including the areas of partly controlled or uncontrolled irrigation in the Southern Chao Phya). Each project is headed by a Project Engineer for  - 4 - operation and maintenance purposes and is divided into two to five regions, each headed by a watermaster. Each region is further divided into zones of about 1,500 ha, headed by a zoneman. 1.12 Despite the completion of the main and lateral canal systems by 1961, field-to-field irrigation over long distances was still required, only wet season irrigation of rice was possible and yields remained low. In order to improve these conditions at a low cost per unit area, a system of tertiary ditches, at about 400 m spacing, together with some drains and feeder roads and a campaign to have farmers bund their paddy fields was executed by the "Ditches and Dikes" Unit within the Operation and Maintenance (0&M) Divison of the Royal Irrigation Department. Between 1963 and 1967, 20,000 km of ditches, covering 800,000 ha, were construc- ted with assistance from Loan 328-TH. These investments have permitted a modest increase in wet season yields and an expansion of dry season cropping. 1.13 The main and lateral canal system has been designed for a water duty of 0.81 1/s/ha for the canals and 0.91 1/s/ha for the structures. However, some of the canals are natural watercourses with artificially raised banks and have large evaporation losses and other operational problems as a result. Check structures are widely spaced, as the system was designed only for full flow conditions, and many of the ditches are not fully useful because of lack of command or other problems. The design and construction of the main and collector drainage system through- out the Northern Chao Phya area began at a later stage and is now about 45% complete, many of the drainage lines having been constructed to only half their ultimate section. As a result of these design inadequacies, impeded drainage is a major constraint on wet season production, while lack of water control, because of deteriorated canals, lack of check structures and ditches which do not function, is the major physical limitation on dry season cropping. 1.14 Concurrently with the Ditches and Dikes phase of development, a measure of flood control and dry season reservoir storage, as well as hydroelectric power, was provided by the Bhumiphol Dam on the Ping River, the westernmost tributary of the Chao Phya (Mtap 12540). Construction of the dam, completed in 1964, was assisted by Loan 175-TH. The next major project was the Sirikit Dam on the Nan River, the easternmost tributary of the Chao Phya. Construction of the dam, which was partly financed by Loan 514-TH, began in 1968 and was completed in 1972. The dry season irrigation potential of the two dams has been estimated at about 600,000 ha. During the late 1960s, the Bank became seriously con- cerned at the apparent lag between the provision of irrigation facilities and reservoir storage and the raising of cropping intensity and yields by the farmers. Therefore, provision was made under the Sirikit Project, for a program of studies to analyze the constraints to more intensive cultivation in the Chao Phya Plain. These studies identified the main problems as:  -5- (a) the inability of the existing canal system to deliver water in the dry season, due to lack of command and insufficient check structures; (b) the need for ditches, drains and roads within a tertiary irrigation command to improve water control and to permit the more timely cultivation needed for double cropping; (c) the need for land shaping and leveling to facilitate the transition from broadcast to transplanted varieties and from traditional to high-yielding varieties; and (d) the need for greatly improved extension and other agricul- tural supporting services. In 1968, all available information was drawn together by an FAO/UNDP survey mission and a set of recommendations given in the Gaitskell Report (Reference A-4). 1.15 In the Mae Klong area (Map 10401R), irrigation facilities have been completed for the upper part of Stage I, a net cultivable area of 104,000 ha, divided into four subprojects. With the exception of the first 15 km of the main canal, all main and lateral canals have been concrete-lined. The lower part of Stage I (a net cultivable area of 60,000 ha) is served by partly controlled tailwater from the canal system but, as it is deeply flooded in the wet season, the benefits of this are minimal. Canal construction is continuing on the upper part of the right bank area and is scheduled to commence this year in the Stage II left bank area. A significant proportion of these canals are being concrete-lined. 1.16 The upper part of Stage I has been covered by the Ditches and Dikes Program but the problems found in the Chao Phya area are compounded by the more undulating topography and the rapid increase in the area devoted to sugarcane. The sugarcane growers, who are normally situated on the higher ground adjacent to the canals, do not want irrigation water (at least under the present conditions of only partial control) and also have great difficulty in draining their fields. Rice growers in the lower-lying areas have difficulty getting water when they need it. Due to a lack of topographic mapping at the time the system was designed, many of the canals do not occupy the highest ground and 20 to 40% of the upper part of Stage I cannot be commanded by gravity. Construction of the main drainage system is only 30% complete in the upper part of Stage I, a critical deficiency for sugarcane and upland crops. Few of the canals have service roads on their embankments, which hampers operations. Sugarcane growers have developed their own network of private roads but these are of very low standard and transport of the cane is slow and expensive and results in a low sugar content.  -6- Chao PhRJta Irrigation Improvement Project I (Credit 379-TH) 1.17 ral of the studies proposed under the Sirikit Project were grouped together into the "Northern Chao Phya Study", which was carried out by Nedeco-DHV-Ilaco (Netherlands) between 1968 and 1970. Their report (Reference A-6) outlined a phased long-term program of mapping, improve- ments to the irrigation, drainage and roads systems, and on-farm develop- ment throughout the Northern Chao Phya Plain. During the same period, Nedeco/Ilaco was retained under Netherlands bilateral financing to conduct a feasibility study and implement a pilot project at Chanasutr for "land consolidation" (on-farm development). The pilot project, which was implemented in stages, eventually totalled 1,800 ha. A second pilot project was constructed at Sapphaya, with assistance from Taiwan, and operated as a multi-purpose cooperative. 1.18 During the identification and appraisal of the Chao Phya Irriga- tion Improvement Project I in mid-1972, the Government and the Bank attempted to combine the best features of both pilot projects, namely the pragmatic approach to the technical design of Chanasutr and the well integrated agricul- tural supporting services of Sapphaya. In line with the recommendations of the Northern Chao Phya Study, provision was also made for complementary improve- ments in the irrigation, drainage and road systems serving the two subproject areas. The Stage I Project, partly financed by Credit 379-TH, covered 17,000 ha (adjusted to 16,200 ha after final design) of irrigable land and was kept to a modest size to permit the development of staff expertise in the design and construction of on-farm works. For this reason, a large technical assist- ance element was also included, both to assist in project implementation and to prepare a follow up project of larger dimensions. 1.19 Progress in implementing Stage I has been generally satisfactory. Targets were fully achieved in the first two years of construction but admini- strative problems in 1976 resulted in a reduction in that year's target. The overall degree of completion is expected to be about 90% at the end of July 1977, the original completion date for the project. The remaining works will be completed early in 1978. Under the project, a nucleus of trained staff has been developed and procedures established for the planning, design and execution of on-farm works, including the use of contractors. The agricultural aspects of the project are also progressing well and prospects are reasonably good that the appraisal targets for yields will be met and for cropping intensity exceeded. 1.20 During the course of the last four years, the management of the project has been gradually modified. At appraisal it was felt that, in order to obtain full coordination between the various disciplines involved and to secure staff who were fully committed to the project, it would be necessary to establish a semi-autonomous project unit within the Office of the Under Secretary of Agriculture, using staff seconded from the various technical departments of the Ministry. It was soon realized, however, that separation of the project from the normal activities of the Royal Irrigation Department (RID) would not be feasible or desirable and so RID personnel have remained responsible for all design and construction activities to date. A small staff in the Ministry, now organized as the  - 7 - Central Office of Land Consolidation, has been responsible for overall planning, budgeting, coordination between departments, and for providing logistic support to the project consultants (Ilaco, Netherlands). This pattern of project management would be modified only slightly for the present project. Standards of On-Farm Development 1.21 On-farm development may be defined as the provision of irrigation ditches, drains and roads in the service area of an existing turnout on a lateral canal. This service area averages 70 ha in the Chao Phya Plain. In the work implemented to date, following the "intensive" model, the ditch to drain spacing is 150 to 250 m. Earth-surfaced roads, 4 m wide, are located along each irrigation ditch with a pipe culvert crossing to serve each pair of farm holdings. Division boxes and other structures in the ditches are provided as required and each farm holding is served by an asbestos-cement pipe outlet closed by a wooden board. In order to obtain a rational layout of the irrigation and drainage systems, realignment of faFm boundaries to a quasi-rectangular shape is generally required. In about 95% of cases, it is possible to design this so that each new plot (which averages about 1 ha in size) overlaps at least 50% with the old, thus minimizing disputes over the relative value of the land. However, during the realignment process, each farm loses 3 to 6% of its area, to provide land for the ditches, drains and roads. If requested by the farmers, plots may be either consolidated or sub- divided during this procedure. Almost every plot is given direct access to a ditch, drain and road. Land leveling is generally required following boun- dary realignment, the average amount of earthmoving being about 300 cu m/ha. In order to minimize earthmoving, some plots are being leveled in two or more pieces. 1.22 "Extensive" on-farm development refers to a less dense network of facilities and does not normally require boundary realignment or a large amount of leveling. Facilities are located along the farm boundaries and land acquisition may be necessary, at least for drains and roads. However, recent experience on the Phitsanulok Project (Loan 1149-TH) indicates that extensive development without land acquisition may be possible through localized, informal boundary realignments at least in areas where the plots are large. In the areas best suited to extensive development, plots are large and tend to have near-rectangular boundaries. In such areas, ditches and drains are constructed along the plot boundaries under the provisions of the Dikes and Ditches Act (para. 1.26). Farm roads are provided at 500 to 1,000 m spacings and the required land for these is acquired or else a simple boundary realignment scheme is instituted. Little or no land leveling is required in the flat, low-lying areas in which this kind of development would apply. 1.23 At appraisal of the Chao Phya I Project, it was envisaged that about 60% of the project area would be developed to an intensive standard, similar to the Chanasutr pilot project, while the remaining area, having a lower agronomic potential, was intended to be developed extensively. In practice it was found that a clearcut distinction between the two areas was difficult and there was strong pressure from the farmers for all areas to be developed intensively. The Bank agreed to this proposal, on  - 8 - the understanding that the additional costs would be borne by the Government. However, an area of 900 ha has been found suitable for a less intensive stan- dard of development. This block, which is part of an old settlement scheme, has fairly straight rectangular boundaries and experience gained on its design and construction would be valuable in formulating design standards for extensive development under the present project. Because of problems in determining land ownership, construction of on-farm works in the block has been deferred to 1978. Legal Basis for On-Farm Development 1.24 As part of the technical assistance provided during the pilot project phase, Ilaco assisted the Government in drafting an "Agricultural Land Consolidation Act", which was enacted on September 6, 1974. The law establishes a Central Land Consolidation Committee, Provincial Land Consolidation Committees and a Central Office for Land Consolidation within the Ministry of Agriculture and Cooperatives. Areas become subject to the Act by the promulgation of a Royal Decree which must list all land holders affected by the scheme and the amounts of land they own. Intensive on-farm development (called "tand Consolidation" in the Act) is compulsory if more than half the affected land owners approve it. The Government has the power to acquire the land of any farmer who is unwillirig to participate in the scheme. Compensation is paid for land taken for ditches, drains and roads only in cases where more than 7% of the area of the farm is taken. The Act gives the Central Committee powers to determine the principles and procedures of cost recovery from project beneficiaries, with the specifi- cation that the cost of common facilities shall be repaid in annual install- mnents of not less than 10% of the capital cost, beginning with the third year after completion of the work, with a government subsidy of not less than 10% of the cost. The farmers are responsible for the operation and maintenance of all common on-farm works. 1.25 As Royal Decrees have only recently been issued for the Stage I project areas, all work to date has had to be done on the basis of 100% voluntary agreement of the farmers. While this has led to some problems, the fact that it was done at all indicates the value placed by the farmers on this kind of development. 1.26 A legal basis for extensive on-farm development exists in the form of the Field Dikes and Ditches Act of 1941. This Act requires farmers to construct bunds around their paddy fields (so as to permit transplanted rice cultivation) and to dig ditches to irrigate and drain blocks of 8 ha. If the farmers fail to do so, RID is empowered to construct the works at the expense of the owners. This Act has been used to permit the construction of tertiary ditches (virtually all by RID) over the whole of the Northern Chao Phya Plain, as well as many other irrigated areas in Thailand. However, the repayment provisions have never been enforced. The Act does not provide for the con- struction of farm roads. Project Formulation 1.27 Close monitoring of results to date on the Stage I area has confirmed that a rapid increase in cropping intensity, water efficiency  -9- and yields following the rehabilitation of the main and secondary irrigation and drainage system and the construction of on-farm works could be readily obtained on large areas at reasonable cost. Based on these achievements the Government has decided to expand this mode of development to a larger area in the Northern Chao Phya Plain. The need for such an expansion has become more urgent in recent years, in light of the slow growth in Thailand's rice production, the diminishing farm size in the Central Plain, the need to conserve scarce water supplies in the dry season, and the wish to improve farm incomes and productivity. 1.28 At the time of appraisal of Chao Phya I, it was envisaged that it would be followed by a second and possibly a third stage of development, on a larger scale, and funds were included for the necessary feasibility studies. The size of the project area, approximately three times the first-stage area, was selected to be within the implementation capacity of RID at the end of Stage I. As in the first stage, the recommended project (corresponding to Part A of the present project) includes rehabilitation works, on-farm develop- ment works, equipment for force account construction and O&M, and consultant services for project implementation. Alternative standards for on-farm development were described, analyzed and costed in the feasibility study. 1.29 While there is little doubt that some form of on-farm development will eventually be needed over much of the Northern Chao Phya Plain, there are real administrative and budgetary constraints to the rate at which it can be implemented. In the meantime, there are various low-cost and easily administered improvements which are justified alone, as well as being a prerequisite for future more intensive improvements. Examples are given in para 3.02. While these are called "Rehabilitation Works", most of them involve works which were omitted from the original irrigation and drainage systems. These works, together with the topographic mapping of a large part of the Northern Chao Phya Plain, which is also a clear prerequisite for future development, would form Part B of the project. 1.30 Bank involvement in the Mae Klong Project dates from 1964 when construction of the diversion dam and the Stage I irrigation and drainage system of 150,000 ha was initiated, with assistance from Loan 394-TH, largely for the financing of construction equipment. While project construction was completed, except for the drainage system, for which work is still continuing (para. 3.11), benefits have been slow to materialize, due to inadequate design in some cases and a marked shift in the cropping pattern from rice to sugarcane, which is presently grown under rainfed conditions. A major storage dam (Ban Chao Nen) is now under construction on the Quae Yai River, a major tributary of the Mae Klong, with assistance from Loan 977-TH. While justified primarily as a hydroelectric project, the reservoir, to be completed in 1978, will make available a dry season water supply for a considerable part of the Mae Klong irrigation area. Meanwhile, RID is proceeding with the construction of irrigation and drainage systems in the Stage II area of 230,000 ha. Very little investment is being made to overcome the problems of Stage I. 1.31 General guidelines for the future development of the Mae Klong area were given in a "Study of the Development Priorities of the Greater  - 10 - Meklong Irrigation Project" (Reference B-2). Part C of the project incorporates several relatively low-cost, high priority activities identified in that study. 1.32 Part D of the project includes consultant services for project implementation and feasibility studies for the next phase of development in the Chao Phya Plain and in the Mae Klong area. None of the works to be financed under the project were included in any previous Bank-financed project. 2. THE PROJECT AREA Climate 2.01 The Northern Chao Phya Plain and the Mae Klong irrigation areas have similar and fairly homogeneous climatic regimes. The climate throughout the project areas is tropical and monsoonal. The lowest average monthly temperature (25 degrees C) is in December and the warm temperatures through- out the year provide a potential twelve-month growing season. Average rainfall in the Northern Chao Phya Plain varies from 1,100 to 1,400 mm per annum in various localities, while in the Mae Klong area the range is 900 mm to 1,300 mm. Rainfall is highly concentrated in the wet season from May to October, which accounts for 80% of annual rainfall (85% in the Mae Klong area). Rainfall varies moderately from year to year and at the beginning of the wet season tends to be erratic. For example, at Singburi, a 30-day period with less than 40 mm of rainfall will be encountered at the peak transplanting season of June-July once in five years on average. Rainfall becomes more intense in August, reaches its peak in September and October and falls off rapidly in November. Irrigation is, therefore, needed for all crops in the dry season and as a supplementary water source for rice in the wet season. Soils, Topography and Drainage 2.02 The Northern Chao Phya area has a variety of landforms, soils and topography, which are to a great extent interdependent, are largely responsible for the current land use and will also influence agricultural development in the future. In the southern part of the plain, fine-textured marine clays have been deposited while, further north, recent river alluvium is found. On the fringes of the Northern Chao Phya Plain marl (a soil rich in lime), marl-based clays and low terraces and alluvial fans are found. The river alluvia, which cover most of the subproject areas, show a distinct topo-sequential pattern of levees with medium textured soils shading off into lower depressions with fairly fine textured soil. The semi-recent terraces adjacent to the main rivers have been aggraded to a height above the normal river flood level. 2.03 Two topographic patterns prevail in the Northern Chao Phya area. One is a gradual slope of 15 cm/km towards the south. The other is the difference in elevation between the river channels with their high natural  - 11 - levees and the low back-swamp or basin areas further away from the rivers. The differences become more pronounced adjacent to the larger rivers, espe- cially towards the north where east-west slopes of up to 1% are observed. The levee soils generally have good natural drainage but deep flooding often occurs in the basin areas, due to the inadequate capacity of the drains and natural channels which drain the area and high tailwater levels in the rivers into which they flow. Provision of adequate drainage through- out the Northern Chao Phya is a long-term possibility and is being further studied under the Chao Phya Basin study, which is being carried out under the Phitsanulok Project (Loan 1149-TH). For the present project, care has been taken to avoid areas subject to deep flooding in the selection of subproject areas and in the selection of appropriate on-farm design standards. 2.04 Land classification has been carried out by RID at a semi-detailed level for the whole Northern Chao Phya Plain. Lands are classed as to their suitability for irrigated rice or irrigated upland crop cultivation and soils, topography and drainage limitations noted. Soils suitable for upland crops are generally the most elevated levee soils while the basin soils are suitable only for rice. Some intermediate soils are suited either to rice or upland crops with appropriate land and drainage development. In the subproject areas under Part A of the project, 77% of the gross area is suited only to rice, 13% is equally suited to rice or upland crops, 9% is occupied by villages, roads, swamps, etc., while less than 1% is best suited for upland crops. However, the land capability distribution varies considerably between subproject areas. 2.05 The landforms of the Mae Klong area are similar to those described above, except that the proportion of semi-recent terraces is much higher, especially in the upper part of the Stage I area, which is a former delta of the Mae Klong River. On the other hand, the lower part of Stage I is a very flat, marine alluvium deposit, subject to deep annual inundation. As the prevailing slope in the Stage I area is from west to east, floodwaters from the Mae Klong tend to flow across the project area towards the Nakhon Chaisri (or Tachin) River. Similar landforms are found in the Stage II (left bank) area, with sharply defined terraces in the western part and a flat flood plain in the east. The Stage II (right bank) area consists of old terraces and some sedentary soils, of medium fertility and suited mainly for rice. On the left bank, the alluvial flood plains are used mainly for long-stemmed rice but some more favorable areas have been reclaimed by bunding and produce high-value crops such as fruits, grapes and vegetables. The terrace soils are well suited to a wide variety of upland crops, the predominant crop at present being sugarcane. The intervening basins are suited to rice or upland crops in better drained areas. For the Mae Klong project area as a whole, about 30% of the net area is best suited to upland crops, 60% for rice and the balance is equally well suited to rice or upland crops. The proportion of land best suited for upland crops decreases from 60% in the western part of the Stage II (left bank) area to zero in the lower part of Stage I (without heavy investment in land development and bunding). In general, the potential for diversified cropping is greater in the Mae Klong area than in the Northern Chao Phya area.  - 12 - Farm Size and Land Tenure 2.06 About 24,400 farm families, or a total of 137,000 persons, live in the six subproject areas affected by Part A of the project. Based on surveys conducted by RID in 1974 and 1976 the average farm size is 2.3 ha, with some variation between the subproject areas (Table 2.1). /1 The farm size distribution is moderately skewed but not more so than in other parts of Thailand. Most holdings are fragmented into two or three plots and one plot is commonly located in the lower-lying broadcast rice area with another in a better-drained transplanted area. 2.07 The degree of tenancy (including landowners who rent additional land) varies from 10% to 37% between the subproject areas. Renting is normally from relatives or neighbors and there are very few cases of absentee landlords. Rent is paid in various ways. Land is sometimes leased without charge, usually to a close relative or sometimes to a stranger for the dry season, when the owner does not wish to use the land. Sharecropping, whereby the landowner receives 25% to 40% of the crop, is also practiced. However, cash rents are becoming the normal method of payment. Average land in the project area rents for about B 1,400/ha per crop season. 2.08 The farmers' houses are generally situated along the river banks, canals, roads or other high spots. Thus, the distance to the farm is generally only 1 to 2 km, except in the Manorom and Koke Kathiem subprojects, where villages are more clustered. While no recent surveys have been made in the areas to benefit from Part B of the project, it is reasonable to assume that farm sizes and tenancy patterns are similar to those described above. 2.09 The average farm size in the Mae Klong area is about 3.0 ha, varying from 2.4 ha in the intensively cultivated terrace areas to 3.6 ha in the lower-lying broadcast rice areas. The farm size distri- bution is similar to that recorded in Table 2.1 but slightly more skewed and includes some large estates. Tenancy varies from 20% to 40% and may be increasing. This situation, coupled with the rather feudal structure of the sugar industry, warrants more careful investigation as part of any long-term development plan. Subproject Selection 2.10 Quantitative selection criteria were used to choose the areas to be developed under Part A of the project, probably for the first time in Thailand. The selection was carried out in two stages. In the first stage, promising areas were preselected, in close consultation with the RID engineers in charge of operation and maintenance in each irrigation "iproject" of the Northern Chao Phya. The following criteria were used: /1 Other surveys give an average farm size as high as 4.6 ha. This variable will clearly need to be checked during project monitoring.  - 13 - Table 2.1: FARM SIZE DISTRIBUTION FOR PART A OF PROJECT Subproject Farm Size Number of % of Area % of Avg. farm Area Category Holdings Holdings (ha) Area size (ha) (ha) Group I Boromdhart 0-1.0 1,810 14 980 4 0.7 Chanasutr 1.0-2.0 4,780 38 6,210 23 1.5 2.0-3.2 4,040 32 9,160 35 2.8 3.2-6.4 1,830 14 7,690 30 4.0 over 6.4 250 2 1,990 8 7.8 Subtotal 12,710 100 26,030 100 2.0 Group II Koke Kathiem 0-1.0 390 6 310 2 0.8 Manorom 1.0-2.0 1,180 19 1,790 9 1.6 2.0-3.2 2,780 46 6,760 36 2.5 3.2-6.4 1,440 23 6,810 36 4.6 over 6.4 360 6 3,220 17 8.6 Subtotal 6,150 100 18,890 100 3.0 Group III Samchook 0-1.0 210 4 10 -- /a -- /a Don Chedi 1.0-2.0 1,240 23 1,800 10 1.4 2.0-3.2 2,100 38 5,450 31 2.6 3.2-6.4 1,560 28 7,490 41 4.7 over 6.4 380 7 3,330 18 8.4 Subtotal 5,490 100 18,080 100 3.2 Total Area 0-1.0 2,410 10 1,300 2 0.6 1.0-2.0 7,200 30 9,800 16 1.5 2.0-3.2 8,920 36 21,370 33 2.6 3.2-6.4 4,830 20 21,990 35 4.4 over 6.4 990 4 8,540 14 8.3 Total 24,350 100 63,000 100 2.5 /a Not significant, due to small sample size.  - 14 - (a) accessibility; (b) irrigable area; (c) condition of the main irrigation and drainage systems; (d) land capability; (e) average farm size and degree of fragmentation; (f) land tenancy; and (g) farmers' attitudes. 2.11 Land capability was based on the agro-economic regions devel- oped by Small (Reference A-8) and RID soils mapping, with preference being given to soils capable of diversified cropping. Areas selected in this way totalled 100,000 ha and their suitability was further assessed by questionnaires answered by and discussions with the RID O&M engineers. In the final selection, the following criteria were given equal weight: (a) land tenancy; (b) population density; and (c) farm size distribution. Areas with a low degree of tenancy, a high population density (or small average farm size) or a low proportion of farms over six ha were given a higher priority. The average farm size criterion reflects the fact that the intensive type of agriculture to be introduced under the project is better suited to small farms. Large farm sizes also frequently indicate low-lying lands subject to flooding, in this part of Thailand. The reason for choosing areas with a low degree of tenancy and an even distribution of farm sizes is that the project does involve some subsidy to the benefi- ciaries and the Government felt that it was more appropriate that any subsidies should go to small owner-operators rather than large operators or landlords. 2.12 The area finally selected for Part A of the project comprised 37 complete irrigation "zones" (an operational unit of about 1,500 ha) in eight noncontiguous blocks in six RID "project" areas (Map 12541). For convenience, the three blocks in the Chanasutr Project have been grouped as one subproject, giving a total of six subprojects. Basic data on the subprojects is given in Table 2.2. 2.13 The areas listed in Table 2.2 do not completely represent the final areas to be implemented for two reasons. First, it has been recognized that irrigation zone boundaries do not form ideal boundaries for on-farm develop- ment subprojects, as the zones are usually bounded by major drains and thus may include a significant amount of low-lying land with little development  - 15 - Table 2.2: SUBPROJECT DATA FOR PART A OF THE PROJECT Net Cultivable Subproject Province District Gross Area Area ('000 ha) ('000 ha) Boromdhart Chainat Muang Chainat 12 9 Sankhaburi Chanasutr Singburi Bang Rachan 18 15 King Khai Bang Rachan Tha Chang, Phromburi Angthong Sawaengha Pho Thong Wiset Chai Chan Koke Kathiem Lopburi Muang Lopburi 11 9 Saraburi Ban Mo Manorom Chainat Muang Chainat 8 7 Sapphaya Nakorn Sawan Takhli Samchook Suphanburi Si Prachan 13 10 Don Chedi Samchook Don Chedi Suphanburi Don Chedi 6 6 Total 68 56 Note: Net areas are derived by deducting the areas of villages, roads, irrigation facilities and so on from the gross areas. Areas shown are subject to final survey.  - 16 - potential. In addition, it has been found that it is easier to operate on-farm development projects which are bounded by canals or roads. lf a drain forms the boundary, farmers on the undeveloped side of the drain tend to block it to flood their land, disrupting the operation of the project. Therefore, RID and the consultants are in the process of adjust- ing the subproject boundaries to exclude any large areas of low-lying land and to avoid drains as boundaries. Measurements of flood levels in the 1976 wet season are being made for this purpose. The second reason for adjustment is that the introduction of a variable standard of on-farm development (para. 3.03) will permit the project area to be increased to about 63,000 ha net for the same total cost. While these additional areas will probably be obtained by contiguous additions to the blocks already selected, they will not be finally determined until sufficient topographic and cadastral mapping has been done to form a more accurate estimate of the extent of each standard of development. 2.14 In selecting areas for rehabilitation under Part B of the project it was first decided to focus efforts on large blocks of land rather than attempting a rather superficial coverage of the whole Northern Chiao Phya Plain. The 13 blocks so selected include some for which present defects are particularly serious and others which are considered to have a higher than average development potential. The latter areas were mostly included in the initial selection for Part A and are also likely to be considered for development in any third stage project. Agricultural Conditions 2.15 The Northern Chao Phya area is characterized by a traditional rice monoculture during the wet season, when mainly photosensitive local varieties are grown. In the basins, where the water level is likely to rise early and reach a depth of 80 cm or more, rice seeds are broadcast directly on the plowed fields. Such areas account for about 30% of the subproject areas under Part A, with significant variations between areas, and paddy yields of only about 2.1 ton/ha are achieved. On the levees, where water levels rise slowly and do not normally exceed 60 to 80 cm after maximum Lillering, rice seedlings are transplanted on plowed and harrowed fields. In favorable locations (about 8% of the subproject areas), water levels do not exceed 30 cm and high-yielding varieties are grown. Yields are about 2.4 ton/ha for native transplanted varieties and 2.8 ton/ha for high-yielding varieties (under present conditions of very low fertilizer use). 2.16 Land preparation, which was formerly done by buffaloes, is now largely done by machines in this part of Thailand. Heavy tractors with disc plows are used in the broadcast rice areas. Small 4-wheel tractors or 2-wheel puddling machines are being increasingly used in transplant areas. Field preparation begins in May and may continue through September. Harvesting, which is done entirely by hand, and threshing, which is assisted by buffaloes or tractors, starts late in November and continues through January. 2.17 Dry season rice cropping with nonphotosensitive, high-yielding varieties is generally confined to the areas adjacent to the canals, except  - 1 7 - in the Samchook and Samchook Extension subprojects, where even topography, a well-designed and operated irrigation system and a long history of irriga- tion have allowed a much more extensive adoption of dry season irrigation. The dry season cropping intensity varies from 15% in the east bank sub- projects to 60% in Samchook, with an average for Part A of 32% (27% rice and 5% upland crops). While this intensity has increased fairly rapidly over the last five years there is some evidence that, at least on the west bank, it may be reaching a plateau, unless further investments in water control are made. The reasons for the observed wide variations in cropping intensity across the Northern Chao Phya Plain are not simple, according to a sample survey carried out during appraisal (Working Papers Nos. C-15 and C-16). However, it appears that the main factors leading to greater double cropping are: a low degree of tenancy; security of tenure; inherent fertility; a dependable water supply; access to credit; and, access to agricultural advice. The project would aim at removing the last three constraints. Other factors, such as farm size and the availability of labor, do not appear to be significant. Dry season rice yields are at present about 2.7 ton/ha, the reduction from the wet season value being due to increased pest problems. Further information on varieties grown, cultural practices and pests and diseases is given in Reference B-1. 2.18 The main upland crops are sugarcane, soybean, mungbean, maize and peanuts, which are grown on the few areas with favorable topography and soils. There is a sugar factory adjacent to the project area and it is possible that the improved water control to be introduced under the project might lead to a significant increase in sugarcane cultivation. However, given projected prices and yields, it appears that there will be little difference in the income from sugarcane and rice and thus it is difficult to predict the future role of sugarcane very accurately. 2.19 Rice is grown on about 68% of the total cultivated area of the Mae Klong project and on about 65% of the irrigated upper part of Stage I. Broadcasting is widely practiced, especially in the lower part of Stage I and cultural practices and yields are similar to those described in para. 2.15 for Chao Phya. Sugarcane accounts for about 25% of the total project area and is concentrated in the upper part of Stage I and the western part of the Stage II left bank area. These areas are well served by 16 sugar factories along the Mae Klong River. However, under rainfed conditions, cane yields are low (about 50 ton/ha) with a low sugar extraction rate of 7.5%. Other upland crops, such as soybeans, cassava and castor beans are also well suited to a large part of the area but income from these crops is generally not compe- titive with sugarcane. Tree crops, such as mangoes, pomelos and apples, table grapes and vegetables, such as chillies, eggplant, cucumber, chinese cabbage, onions and tomatoes, are widely grown on raised beds inside polders in the low-lying southeastern part of the area, which has good road and water connections to the Bangkok market. Further details of present cropping conditions in the Mae Klong area are given in Reference B-2. Applied research in the Mae Klong area is being carried out jointly by three universities under the Mae Klong Integrated Rural Development Project (Reference B-9).  - 18 - Transport and Marketing 2.20 The Northern Chao Phya area is linked to the Bangkok market by good highway, railway and waterway connections. Within the area, there are roads along most of the canals and, in addition, a network of provincial roads links all the district centers, giving the area probably the densest network of feeder roads of any agricultural area in Thailand. The main transport constraint is the almost complete absence of farm roads. As transport of paddy by human labor to the roadside adds about BIOO/ton to the cost of production, it is not surprising that the attitude survey conducted during appraisal showed that many farmers value farm roads as the most valuable component of the on-farm development package. 2.21 The farmers sell their paddy through middlemen to the many private rice mills in the Chao Phya area. Due to the adequate competition and proximity to the Bangkok market, produce prices are generally high, compared with other parts of Thailand. Inputs are mostly purchased from private dealers, though recently some cooperatives have captured a significant share of the fertilizer market because they are able to guarantee the purity of their supplies. 2.22 The transport network is less well developed in the Mae Klong area, especially in view of the bulky nature of sugarcane. While the major highway network is reasonably good and further improvements are planned under the Bank's Sixth Highway Project, additional feeder roads and farm roads are required in the upper part of Stage I. The lower-lying areas are generally served by an adequate network of waterways. 2.23 Marketing conditions for rice in the Mae Klong area are generally satisfactory. Marketing of sugarcane is organized through a Sugar Growers' Association which, however, is dominated by the "quotamen", who are generally also large landowners, moneylenders and carriers. As a result, competition is inhibited and a semifeudal structure has developed. Up to now, the Government has not given much emphasis to the development of alternative marketing systems, such as cooperatives, as the recent era of rapidly rising prices for sugar, together with the relatively short history of the sugar industry in this part of Thailand, has not led the farmers to feel that they are being exploited. Fisheries Development 2.24 Fish constitute the main source of protein in the diet of the project area population. Fish are caught in the flooded paddy fields in the wet season and in the rivers and drains in the dry season. Little use is made of fish ponds at present.  - 19 - 3. PROJECT COMPONENTS, COSTS AND FINANCING 3.01 The project may be divided into the following semi-independent components: Part A (US$47 million) - Rehabilitation of the main irrigation, drainage and road networks and on-farm development works to improve water control and farm access to serve a net cultivable area of about 63,000 ha distributed among six subproject areas in the Northern Chao Phya Plain; Part B (US$14 million) - Rehabilitation works only, to improve water control and operational efficiency, for an area of 138,000 ha (additional to the Part A area), as well as topographic mapping for about 300,000 ha of the Northern Chao Phya Plain; Part C (US$13 million) - Topographic and cadastral mapping of about 50,000 ha, construction of three pilot projects and 360 km of service roads and associated works in the Mae Klong irriga- tion area; Part D (US$3 million) - Consultant services for implementing the above works, preparing feasibility studies for a third stage project in the Chao Phya Plain and a second stage of development at Mae Klong and for studies of agricultural supporting services. Provision would also be made under the project for improvements in operation and maintenance, a fisheries development program and project monitoring and evaluation. Each of the engineering components is described in more detail below. Part A (Rehabilitation and On-Farm Development) 3.02 Rehabilitation Works. Rehabilitation works are required to restore and upgrade the existing irrigation, drainage, roads and communi- cations systems serving the subproject areas, to enable efficient operaticn and to maximize water availability in the dry season. Works would include: reshaping of canals, with enlargement of capacity in critical sections; full canalization of natural watercourses where this is justified because of heavy water losses; replacement of deteriorated or obsolete canal structures; additional check structures to ensure full command of all laterals and outlets at flows down to 40% of full design flow; replacement of wooden road bridges by concrete structures (where justified by traffic and/or maintenance considerations) and addition of new bridges over canals and drains; installation of telephone lines to complete the  - 20 - connection of all zonemen's and gate tenders' houses; enlargement and exten- sion of main and collector drains, to give adequate drainage to all subproject areas at least in the dry season (adequate drainage at all times would not be feasible without massive investments); reconstruction or improvement of service roads along the canals; and construction of additional houses for O&M staff. Approximate quantities of works are given in Table 3.1. These works would cost about US$140/ha. Lists of works have been compiled by the RID O&M staff and have been reviewed by RID management and the consultants. Minor modifications will, however, probably be required as the designs of the on-farm works become available. 3.03 On-Farm Development Works. On-farm development works would be implemented over nearly all of the 63,000 ha included in Part A. There would, however, be some small low-lying areas with little or no develop- ment potential which would be excluded. The subproject area boundaries are being drawn to exclude any large tracts of this kind. The standard (or intensity) of development would be varied between and within tertiary command areas to suit the agro-economic potential of each small area, in a manner similar to the procedures adopted for the Phitsanulok Project (Ref. B-5). Factors which would be taken into account by the designers include: topography; size and shape of holdings; land capability; depth of flooding; present cropping pattern and intensity; and the farmers' attitudes towards land development and other technological innovations. Design criteria which would be flexibly applied include: the average spacing of ditches, drains and roads; whether or not boundary realignment would be required; and the need for land levelling. Cost estimates have been prepared on the basis that 75% of the area would require "intensive" development, with the remainder being developed "extensively" at a significantly lower cost. However, this assumption is an oversimplification - development standards would vary all the way from the intensive model which has been used throughout Stage I to a level wherein only widely spaced ditches, drains and roads are constructed, without land levelling. Costs would range from about US$300 to US$600/ha. Further details are given in Working Paper No. C-5. 3.04 Fisheries Development - The Department of Fisheries would initiate a program of demonstration fishponds under the project to help offset the decline in fishing opportunities caused by the improvement of water control, the increasing use of pesticides and the provision of more productive dry- season farm employment. Over the first two years of the project, about 12 such fishponds (1 for each 5,000 ha under Part A of the project) would be con- structed, each about 500 sq m in size, to demonstrate methods of growing and harvesting fish. A system of fish culture, using agricultural residues and household scraps as feed, has been shown to be financially viable, assuming only modest yields of fish, according to a reconnaissance study carried out under the Stage I Project (Reference B-8). If the pilot projects are suc- cessful, the farmers would be encouraged to request that fishponds be incor- porated in the design of the on-farm works affecting their holdings. if incorporated in such development, the marginal construction cost would be  - 21 - low. In order to inform the farmers of these opportunities, additional fisheries extension officers would be assigned to the Part A subproject areas. Motorcycles for these staff, miscellaneous equipment and demonstration fishponds would be financed under the project. Part B (Rehabilitation) 3.05 Rehabilitation Works. Rehabilitation works similar to those to be carried out under Part A would be constructed throughout an area of 138,000 ha, subdivided into 20 areas in 13 irrigation "projects". Works have been concentrated in defined areas rather than scattered throughout the Northern Chao Phya Plain in order to maximize benefits through complementary investments. A preliminary list of works to be constructed is given in Table 3.2. This list would be reviewed by the consultants to ensure that only high-priority items are included. Investment per ha (about US$80/ha) under this part of the project would not be as high as for the analogous works under Part A, as the agricultural potential and the need for water control and access would not be as great in the absence of on-farm development. 3.06 Mapping. Large-scale topographic mapping is a prerequisite to any future irrigation improvement. Under the project, a start would be made on the systematic mapping of the whole Northern Chao Phya Plain. A survey grid, indexing system and control points would be established for the whole Northern Chao Phya Plain, a gross area of about 700,000 ha. About 80,000 ha have been, or will have been, mapped in connection with the Stage I project and Part A of the present project. Under Part B of the project, an additional 300,000 ha would be mapped, to a scale of 1:10,000 with a 25 cm contour overlay. Areas with the greatest potential for future development would be selected for this program. Maps would be drawn in a suitable form for the design of rehabilita- tion works and for the planning of future on-farm works. At a later stage, the survey information could be replotted at a scale of 1:4,000 for the design of on-farm works, if desired. The size of the program (together with that to be undertaken under Part C - para 3.09) is believed to be about the limit of RID's ability to administer, assuming the introduction of the more efficient methods of work, as suggested by the survey advisor financed under Credit 461-TH and Loan 1149-TH, the use of equipment financed under various Bank Group projects and the use of contractors for all works beyond RID's force account capabilities. Equipment would be procured under the project to assist this program. 3.07 Miscellaneous. Equipment would be procured to allow the stan- dard of operation and maintenance to be upgraded in all areas covered under Parts A and B of the project. This assistance would include the replacement of worn out equipment and the provision of motorcycles to increase the mobility of the zonemen and thus improve the operational efficiency of the system. This equipment is listed in Working Paper No. C-13. Part C (Mae Klong Development) 3.08 On-Farm Development. Improvement in yields and the resolution of conflicts between rice and sugarcane growers in the Mae Klong area would appear to be constrained by the present lack of water control and the lack of road access to the farms. While clearly some form of on-farm  Table 3.1: LIST OF REHABILITATION WORKS (PART A) Subproject Total Koke Don Item Unit Boromdhart Chanasutr Manorom Kathiem Samchook Chedi Canal reshaping '000 cu m 462 2,013 119 30 470 88/a 3,182 Control structures each 21 9 8 - 9 - 47 Bridges: - canals each 13 10 7 6 13 1 50 - drains each 5 3 - 17 9 11 45 Telephone km 53 44 19 - 15 - 131 Drains '000 cu m 115 463 - 965 709 283 2,535 Service roads km 37 15 1 29 19 33 134 Houses each 16 19 8 3 5 7 58 Other buildings/b each 7 15 6 15 12 3 58 /a Also 12.8 km of lining has been requested - to be further examined. /b Includes construction offices, temporary housing, and farmers' meeting places.  Table 3.2: LIST OF REHABILITATION WORKS (PART B) RID Project Area Chong Koke Reong Chana- Yang Pho- Don Borom- Pho- Tha- Item Unit Manorom Kae Kathiem Rang sutr Manee phya Chedi dhart Samchook thep bote Maharaj Total Canal reshaping '000 cu m 81/a 38 68 43 135 562 - 302 1,267 420 129 1,182 300 4,527 Ditch reshaping Excavation each 159 46 2 3 - _- - 130 - - - 50 390 Lining/b km - - - - - - 2.6 - - - 0.2 - 2.8 Structures Check each 2 2 5 1 1 1 1 5 16 9 - - 3 46 Siphon each 3 4 - - - - - - - - - - - 7 Culvert each 2 - - - - 6 - - - - - 3 2 13 Turnout each 80 38 102 6 10 8 1 - - - - 26 25 296 Flume each - - - - - - - - 13 - 2 - - 15 Drain inlet each - - - - - - - - - 78 78 Others each 11 - - - - - - - - - - 7 - 18 Bridges Canals each 11 15 - _ _ 6 2 5 4 13 5 6 - 67 Drains each - - - - - - - - - - - -7 Drain km - 69 - - 28 23 12 42 40 - 5 28 247 O&M road km - - 68 38 3 - 36 53 - 58 - 19 _ 275  - 24 - development will be required, it would be rash to go ahead with the large-scale implementation of systems developed elsewhere, as the topographic conditions and cropping patterns of the Mae Klong area will require distinctive solutions. For this reason, a two-year program of pilot projects is proposed. Under the project, three pilot projects, each between 500 and 1,000 ha in size, would be constructed in locations which typify the major land form/crop combinations. The first site, a largely rice growing area, has been identified and a preliminary design prepared. As in the case of Chao Phya, the emphasis would be on flexible design procedures to suit the agronomic potential and cropping pattern of each area. In sugarcane areas, the emphasis would be on good field drainage and road access, together with the gradual introduction of supplementary irrigation. In the rice areas, the objective would be secure and timely water delivery, road access and major drainage. Experience gained on the pilot projects would be incorporated in the feasibility study to be prepared under Part D of the project, which would pave the way for large- scale investment in the future. 3.09 Mapping and Surveys. No usable topographic maps exist for the Stage I area of Mae Klong (150,000 ha). Under the project, a survey grid, indexing system and control points would be established by RID's Survey Division for the whole Stage I area and topographic mapping at a scale of 1:4,000 with 25 cm contours would be carried out for about 50,000 ha. The areas to be mapped in this two-year program would be generally those nearest the head of the system and those with particularly severe problems of water delivery. Questionnaire surveys would be made throughout the upper part of Stage I to identify areas not receiving irrigation water and to identify the causes. 3.10 Roads. Service roads have been constructed along only a few major canals in the Stage I area. Other canals have unshaped roadbeds or footpaths only. The lack of an adequate road network is a major constraint on agricul- cultural development in the Mae Klong area, especially for sugarcane, and also makes it difficult to operate the irrigation system efficiently. Under the project, 84 km of feeder roads (8 m wide) and 278 km of 0&M roads (6 m wide) would be constructed by RID over a three-year period. These roads are listed in Working Paper No. C-10. The final list of roads, as well as the design criteria, would be reviewed by the consultants and the Bank. Some changes in the lengths of roads to be constructed may be expected when detailed planning is undertaken, as some planned service roads may be found to parallel existing public or private sugarcane roads. 3.11 Drains. Lack of main drainage is a major problem in the upper part of Stage I. RID is planning to complete the drainage network by 1979. About 497 km of drains and 179 structures will be constructed over this three-year period. As these works were included in the project description for the Mae Klong Project I (Loan 394-TH) and the equipment for their force account construc- tion was financed under the loan, these works would not be financed out of the proposed loan. The drainage program has been slowed by the age of the equipment, budgetary stringencies, land acquisition problems and the low priority attached, until recently, to this activity. An assurance has been obtained that RID would complete the construction of the main drainage network for the Stage I area before October 1, 1979 (Section 3.08 of the Loan Agreement).  - 25 - 3.12 Miscellaneous. Funds would be provided for the rehabilitation of 164 km and the construction of 176 km of telephone lines, the purchase of 15 radio transceivers, and the procurement of additional vehicles and equipment to permit the efficient operation and maintenance of the Stage I system. These items are listed in Working Paper C-13. Part D (Consultant Services) 3.13 Chao Phya (US$1.6 million). Consultants would be employed to assist RID and the Ministry of Agriculture in the implementation of Parts A and B of the project and to undertake feasibility studies for a third stage of development. Draft terms of reference are given in Working Paper No. C-4. In contrast to the first stage project, the consultants would take little part in the day-to-day work of design and construction but would concentrate on broader aspects such as the planning of annual work programs, preparation of budgets, preparation of bidding documents and evaluation of bids, evaluation of each year's per- formance and the derivation of unit costs, analysis of the appropriateness of design standards, monitoring of project benefits, the establishment of improved standards of O&M at the farm level and at the project level, and measures to improve the efficiency of the total irrigation system. A special study of credit and marketing in the project area is also included. The feasi- bility report for Chao Phya III would be prepared within three years from Loan signing. As preparation of a self-contained, conventional feasibility report for Stage III would be a rather expensive undertaking and would involve a lot of unnecessary repetition, it would instead consist of a series of special studies (not necessarily all at the same time) on those aspects of this type of development which are not yet established practice. The third-stage project would thus be a time slice of an ongoing program. The process of selecting consultants is well advanced and the Government plans that a contract will be concluded by the end of July 1977. Assurances have been obtained that con- sultants acceptable to the Bank would be employed before October 31, 1977, under terms and conditions acceptable to the Bank. 3.14 Mae Klong (US$500,000). Consultants would also be required to assist RID and the Ministry of Agriculture in the implementation of Part C of the pro- ject, particularly the pilot projects, and to undertake a feasibility study for a major project for high priority developments in the Stages I and II areas of the Mae Klong irrigation area. The feasibility study would be completed within two years from Loan signing. Draft terms of reference are given in Working Paper No.C-12. The consultants would concentrate on implementation of the pilot projects and the selection and evaluation of appropriate systems of on-farm development for the Mae Klong area. They would also develop an outline for a medium-term plan for the physical and agricultural development of the area and a detailed plan for the utilization of dry season water to become available from the Ban Chao Nen reservoir. A condition of disbursement for Part C of the project would be that consultants acceptable to the Bank had been employed, under terms and conditions acceptable to the Bank. 3.15 Studies of Agricultural Supporting Services. The Government intends to carry out a program of studies of agricultural supporting services, such  - 26 - as agricultural research and marketing on a national scale. The scope and timing of these studies, which might lead to future projects, would be agreed between the Government and the Bank at the appropriate time. Water Supply, Demand and Quality 3.16 Water Supply. Water supply for the Chao Phya project area would be obtained from rainfall and the controlled discharges from the Bhumiphol and Sirikit Dams. Bhumiphol Dam has an average annual inflow of 6,000 M cu m and a live storage of 9,800 M cu m, while Sirikit Dam has an inflow of 5,000 M cu m and live storage of 7,200 M cu m. Reservoir releases are based on an annual plan of operations agreed between RID and the Electricity Generating Authority of Thailand (EGAT). Dry season releases from the two dams for irrigation, navigation and salinity repulsion have increased from 5,200 M cu m in 1972 to 6,700 M cu m in 1975. Studies under the preliminary phase of the Chao Phya Basin Study (para. 2.03) have updated previous operational studies, taking into account the continuing growth of dry-season irrigation demand. The feasibility study (Reference B-1, Annexes C and D) shows that, based on a simple model of the Northern and Southern Chao Phya Plain, the average and peak demands from the project area can be met under the existing operational rules. However, it appears that little surplus water will be available for future expansion unless the operating rules are changed and/or the irrigation efficiency of the system is improved. 3.17 Water Demand and Quality. The irrigation water requirements for the proposed cropping pattern have been calculated on the basis of theoretical computations (Penman method). The calculations are shown in Reference B-1. The net diversion requirements at the Chao Phya Barrage for a dry-season rice crop would be 1,180 M cu m, assuming a total system efficiency of 56%. Actual overall dry-season efficiencies in the Northern Chao Phya Plain have increased from 14% to 38% in the last four years, without on-farm develop- ment. The peak irrigation requirements would be 1.36 1/s/ha in April for high-yielding varieties or 0.8 1/s/ha in July for traditional varieties. Considering that only part of the area would be irrigated in the dry season, the present canal design criterion would generally be adequate and no problems are anticipated although more detailed investigations will be made during final design. The annual average diversion requirements for the 63,000 ha under Part A of the project would be about 620 M cu m, of which 440 M cu m would be required in the dry season. Extensive sampling and detailed chemical analyses have shown the water of the Chao Phya River to be of excellent quality for sustained irrigation. Status of Surveys and Design 3.18 Surveys. Topographic surveying (by the Survey Division of RID) was completed for 32,000 ha in the Samchook, Don Chedi, Chanasutr and Manorom subprojects in 1976. Ground control work is completed for all subproject areas and all topograhic mapping for Part A will be completed by October 1978. Cadastral surveys, by the Land Department, have been completed for 17,000 ha and are expected to reach 40,000 ha by October 1977. Detailed land classifi- cation surveys have been completed by the Land Development Department for an area of 3,000 ha in Samchook. An additional 15,000 ha will be completed by October 1977. No surveys have yet been made for Parts B and C of the project.  - 27 - 3.19 Designs. The only on-farm design work completed is for 740 ha in Samchook. In 1977, 10,200 ha of designs will be prepared, including 2,400 ha by contract. This situation is satisfactory, given that designs should not be finalized more than one year ahead of construction. Designs for rehabilitation works are straightforward and are usually prepared during the wet season before construction is scheduled. No design work has been completed for Parts B and C of the project, except for the preliminary design of one pilot project in Mae Klong. Implementation Schedule 3.20 The proposed implementation schedule for all components of the proj- ect is shown in Figure 3.1. Construction would begin in October 1977 and con- tinue through June 1982. However, the Governmnent would like to complete the project in four years, that is, by June 1981. There are no technical reasons why this accelerated schedule should not be achieved. However, a variety of administrative problems will have to be solved if accelerated implementation is to be achieved. The necessary administrative steps are discussed in para. 4.09. The construction season for on-farm development would be limited to January through June of each year because of the need to avoid the wet season and to coordinate the work with the cropping calendar. In areas imple- mented under Stage I where the farmers were already double cropping, no diffi- culty was experienced in convincing them to give up one year's dry season crop. Construction Methods 3.21 For most earthmoving operations, hand labor is not competitive with machines (either financially or economically) in Thailand. For land leveling and compaction of road pavements, machines are necessary to achieve the necessary standards. For works such as digging ditches and drains and trimming of embankments, some hand labor would be used, the decision depending on the relative availabilities of labor and machines in particular localities. The rehabilitation works would be more labor intensive, especially where concrete structures are being repaired or constructed. 3.22 While the on-farm development works are in principle suited to contract work, experience has been limited and some time will be needed to fully engage the interest of contractors and for RID to build up its capabilities for preparing bidding documents and supervising contractors. The Government has decided that RID's force account capability for on-farm works should be stabilized at about 8,000 ha per year - slightly larger than the present capability - and all works above this limit would be executed by contract. Equipment to be procured under the project (Table 3.3) would serve to fill gaps in the existing fleet, to replace presently obsolete machines and to replace equipment retired during the project construction period. Additional equipment would be procured to supplement the limited present capability for rehabilitation works. This equipment would be used for routine O&M after the completion of project construction. Cost Estimates 3.23 Based on early 1977 unit prices, the total cost of the project is estimated at US$112 million (Table 3.4). The foreign exchange component is estimated at about US$55 million, or 49% of total project cost, on the basis that all equipment contracts would be won by foreign suppliers and all civil works by local contractors.  - 28 - Table 3.3: EQUIPMENT LIST (SUMMARIZED) Item No. Required Unit Price Total Cost -------(US$'OOO)/a------ Part A /b Bulldozer, 140 hp 33 51 1,683 Motorscraper, 9 to 11 cu yd 3 69 207 Backhoe, 3/4 cu yd 4 127 508 Front-end loader 2 53 106 Dump truck 20 22 440 Water-tanker 11 22 242 Service and other truck 18 25 450 Field vehicle 40 8 320 Pick-up truck 29 5 145 Motorcycle 250 1 250 Other heavy equipment - LS 258 Other vehicles - LS 88 Survey equipment - LS 300 Office and misc. equipment - LS 160 Subtotal 5,157 Spare parts /c 1,043 Total 6,200 Part B Dragline, 3/4 to 1-1/2 cu yd 23 60 1,380 Backhoe, 3/4 cu yd 3 127 381 Motorscraper, 9 to 11 cu yd 15 69 1,035 Motorgrader 8 40 320 Bulldozer, 140 hp 12 51 612 Front-end loader 5 53 265 Truck 39 26 1,000 Field vehicle 30 8 240 Motorcycle 55 1 55 Other equipment - LS 175 Survey and office equipment LS 300 Subtotal 5,763 Spare parts /c 1,137 Total 6,900 Part C Survey and office equipment LS 100 On-farm development equipment - LS 300 O&M equipment and vehicles LS 1,810 Subtotal 2,210 Spare parts /c 390 Total 2,600 Grand total - equipment 15,700 /a In early 1977 prices. /b Combined requirements for on-farm works, rehabilitation, survey, supervision and O&M (minor revisions of quantities are likely). /c Includes spare parts for existing equipment.  - 29 - Table 3.4: COST ESTIMATES (SUMMARIZED) Total of Foreign Item Local Foreign Total Local Foreign /a Total Exchange ---- B million ---- --- US$ million -- Part A Rehabilitation 95 78 173 4.7 3.8 8.5 12 45 On-farm development - intensive (47,000 ha) 249 316 565 12.2 15.5 27.7 38 55 - extensive (16,000 ha) 49 49 98 2.4 2.4 4.8 6 50 Fisheries development 3 -- 3 0.2 -- 0.2 10 Miscellaneous equipment /b 3 27 30 0.1 1.4 1.5 2 90 Engineering and Admin (10%) 82 5 87 4.1 0.2 4.3 3 5 Subtotal 481 475 956 23.7 23.3 47.0 61 50 Part B Rehabilitation 109 89 198 5.2 4.5 9.7 14 45 Mapping 35 4 39 1.7 0.2 1.9 2 10 Miscellaneous equipment lb 1 13 14 -- 0.7 0.7 1 90 Engineering and Admin (10%) 24 1 25 1.1 0.1 1.2 1 5 Subtotal 169 107 276 8.0 5.5 13.5 18 40 Part C Roads 78 64 142 3.8 3.2 7.0 10 45 Mapping 6 1 7 0.3 -- 0.3 1 10 Pilot projects 14 16 30 0.7 0.8 1.5 2 55 Misc. works 3 2 5 0.2 0.1 0.3 -- 40 Misc. equipment /b 5 48 53 0.2 2.4 2.6 3 90 Engineering and Admin (10%) 22 1 23 1.0 0.1 1.1 1 5 Subtotal 128 132 260 6.2 6.6 12.8 17 51 Part D Consultant services - Implementation Parts A & B 4 23 27 0.2 1.1 1.3 2 85 - Chao Phya III studies 1 5 6 -- 0.3 0.3 -- 85 - Mae Klong studies /c 2 8 10 0.1 0.4 0.5 1 85 Training 1 1 2 0.1 -- 0.1 -- 50 Project monitoring 4 -- 4 0.2 -- 0.2 -- 5 Implementation of cost recovery 4 -- 4 0.2 -- 0.2 -- 5 Supporting services and other costs /d 10 -- 10 0.5 _ 0.5 1 5 Subtotal 26 37 63 1.3 1.8 3.1 4 58 Total project cost 804 751 1.555 39.2 37.2 76.4 100 49 Physical contingencies 79 76 155 3.9 3.7 7.6 49 Price contingencies (Table 3.5) 280 295 575 13.9 14.1 28.0 50 Grand total cost 1,163 1,122 2.285 57.0 55.0 112.0 49 /a Early 1977 prices. /b Equipment for project design, supervision and O&M only. The cost of construction equipment for force account works is included in the civil works items. /c Includes implementation Part C. /d Includes project related work and studies by agencies other than RID, Land Development Department, Land Department, Fisheries Department (accounted for above) and Agricultural Extension Department (included under National Extension Project).  THAILAND CHAO PHYA IRRIGATION IMPROVEMENT PROJECT 11 IMPLEMENTATION SCHEDULE Calendar Years Item Quantity 1977 1978 1979 1980 1981 1982 Part A Rehabilitation Canals 3,182,000m3 1900,000m3 1 0,0Gm3 59 00Om3 73,000 Drains 2,535,000Gn3 1,220 Z00m3 961,0003 280 OOOm 7 5pOOm Roads 134km 39 km Ori -farm developrrrrrrt( MaPPing and Supyny 52,00( ha 12,000 ha 140004 000000 11,000 a Constrre:io'r 63,000 Ir 10,000 ha 14,000 a 15,0000 a 12 DOO hr Parrt BI RO)iailiat2irorr B 2i,000 r 000 hr 34,000 ha 34,000 a 3h,GOO 4 0 h3 O4,000 ha pMrrP I ] 300,0'.)0 hm 60 000 .a 65,000 ha i 5 , h000 be 6c0000 50 00h i) Part D Roadfs 32 km 78k Piirrt Proicsa 2,500G, 0 ha 1 LOb har5 Part D Implo mentation Choo Phyd Ill Study Maekicng II StLJdy Deliverav of EiWprmenti asrd Vehiicles WNet Season World Barik 16648  - 31 - The cost of on-farm development is based on detailed evaluation of equipment performance carried out under the Stage I Project, adjusted to allow for the more modern equipment to be used under the present project and also takes into account recent bids on Stage I. Quantities are based on sample surveys of topographic conditions and have been varied between the subproject areas. Unit costs of rehabilitation and road works have also been based on experience from Stage I and other RID projects, with the (preliminary) quantities shown in Tables 3.1, 3.2 and para 3.10. The estimated cost of consultant services is based on recently concluded contracts for similar services in Thailand and averages US$7,100/man-month, including all overheads. For all civil works to be constructed by force account, the cost of equipment to be procured under the project is included in the civil works item. 3.24 Physical contingencies of 15% have been added to the cost of rehabilitation works and also roads under Part C, reflecting the preliminary status of the list of works. A contingency of 10% has been added to the cost of on-farm development, mapping and miscellaneous works. While this may seem low, as no final designs have been completed for on-farm development, it is expected that increased use of contracting will bring about some reduction in unit costs. Moreover, it will be necessary to keep a ceiling on costs, and its most variable element, the amount of land levelling, in view of the cost recovery measures to be employed (Chapter 8). In order to achieve this, it will be necessary for RID to resist the tendency to build each successive project area to slightly higher design standards. Price contin- gencies have been added in accordance with standard Bank practice, as shown in Table 3.5. Price contingencies amount to 33% of baseline costs, as a result of the five-year construction period. Financing 3.25 The proposed Bank Loan of US$55 million would finance the foreign exchange cost of the project. The Government's contribution of US$57 million would be made in the form of annual budgetary allocations to RID and the other agencies responsible for carrying out the project (Chapter 4). The current practice is for the Central Office of Land Consolidation (COLC) to prepare a consolidated budget request for all agencies involved in the project. As the great bulk of project expenditures would be managed by RID, these arrangements would be modified under the project and RID would receive its budget directly from the Budget Bureau and would coordinate the requests of the other agencies. The Government is well advanced in discussions with the Government of Japan on a possible bilateral grant for the construction of the pilot projects in the Mae Klong area and for the feasibility study of further development at Mae Klong. These discussions are expected to be concluded by September 30, 1977. If they are successful, the proportion of the proposed loan now allocated for these activities would be used for other project- related activities. Procurement 3.26 Aside from procurement delays arising out of complicated clearance procedures outside RID, which would be largely eliminated by the creation of a Project Coordination Committee (para. 4.08), RID is also hampered by delays  - 32 - in the preparation, issuing and evaluation of contracts due to internal procedures. These procedures were recently examined in detail by a Bank mission which made a range of recommendations as to how RID could improve its procurement procedures. Some of the mission's recommendations were adopted by RID but most of them would require further study and major changes in the structure of RID's Procurement Division. These changes will be worked out in detail under the proposed organization study (para 4.01). 3.27 Rehabilitation works under Parts A and B of the project (US$18.2 million plus contingencies) include the construction or repair of a large number of small and scattered items and could not be combined into packages large enough to be of interest to international contractors. Some of the larger works requiring skilled labor, such as bridges and other structures, would be constructed by contractors, following locally advertised bidding. Other rehabilitation works, on canals, drains and roads, would be constructed by force account, using equipment already on hand and additional equipment to be procured under the project. 3.28 On-farm works (US$32.5 million plus contingencies) would need to be planned and executed at short notice to coincide with the acceptance of boundary realignment schemes by the landholders in many cases, as well as to avoid the growing season and adverse weather conditions. For these reasons, the on-farm works cannot be grouped into contracts of sufficient size to be of interest to international contractors. While, in principle, the works are suitable for locally advertised contracts (in the range of US$0.5 to 1.5 million), Thai contractors have had little experience with this kind of work and time will be needed to build up the capacity of the contracting industry. For these reasons there will be a continuing role for force account construction, both to demon- strate work methods and to fill in gaps where designs cannot be prepared far enough in advance to permit bidding, especially in the first two years of the project. Experience on the Stage I project indicates that works of this kind can be satisfactorily carried out by contract, although administrative procedures will require streamlining (para 3.26). In order to encourage the growth of the Thai construction industry, an assurance has been obtained that not more than 65% of the on-farm development works under Part A of the project would be con- structed by force account and that bid evaluation procedures for local competitive bidding would follow Chapter III of the Bank Group's Guidelines. Special provisions for mobilization advances would be made in the locally advertised contracts for on-farm works to allow contractors to purchase needed equipment. Foreign firms would be eligible to bid on such contracts and documents would generally be in English. 3.29 Roads in the Mae Klong area (US$7.0 million plus contingencies) would generally consist of the upgrading and laterite surfacing of existing embankments at a large number of work sites. Experience on the Northeast Thailand Irrigation Improvement Project (Credit 461-TH) has shown that contract construction is feasible. It is therefore proposed to construct these works in one or two contracts subject to international competitive bidding in accordance with Bank Group Guidelines.  - 33 - Table 3.5: ESTIMATED SCHEDULE OF EXPENDITURES Total Thai Fiscal Years (Oct 1-Sept 30) Item Cost /a 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 ---------------------- US$ million --------------- Part A Rehabilitation 8.5 0.2 2.5 2.5 2.5 0.8 -- On-farm development 32.5 0.5 5.5 6.9 7.3 7.3 5.0 Other costs 6.0 0.2 1.0 1.4 1.4 1.2 0.8 Subtotal 47.0 0.9 9.0 10.8 11.2 9.3 5.8 Part B Rehabilitation 9.7 0.1 0.8 2.3 2.3 2.2 2.0 Other costs 3.8 0.1 1.2 0.7 0.6 0.6 0.6 Subtotal 13.5 0.2 2.0 3.0 2.9 2.8 2.6 Part C Roads 7.0 -- 1.9 2.6 2.5 Pilot Projects 1.5 -- 0.7 0.8 - Other costs 4.3 0.5 1.2' 1.9 0.7 Subtotal 12.8 0.5 3.8 5.3 3.2 Part D Consultants 2.1 0.2 0.4 0.5 0.5 0.3 0.2 Other costs 1.0 -- 0.2 0.2 0.2 0.2 0.2 Subtotal 3.1 0.2 0.6 0.7 0.7 0.5 0.4 Total project cost 76.4 1.8 15.4 19.8 18.0 12.6 8.8 Physical contingencies 7.6 0.1 1.6 2.0 1.9 1.2 0.8 Price Contingencies Baseline cost - civil works 59.2 0.8 11.4 15.1 14.6 10.3 7.0 Price escalation - annual (%) -- 6 12 12 10 10 10 - compounded (%) (40) 6 19 33 46 61 77 Price contingency 23.9 -- 2.0 4.7 6.5 5.7 5.0 Baseline cost - others 17.2 1.0 4.0 4.7 3.4 2.3 1.8 Price escalation - annual (%) -- 4.5 8 8 7 7 7 - compounded (%) (24) 4.5 13 23 32 41 51 Price contingency 4.1 -- 0.6 1.1 0.9 0.8 0.7 Total price contingencies 28.0 -- 2.6 5.8 7.4 6.5 5.7 Grand Total Cost 112.0 1.9 19.6 27.6 27.3 20.3 15.3 /a In early 1977 prices.  - 34 - 3.30 Ve'iicles and equipment for force account construction and for design and super:iY;L-c3n activities, together with spare parts for equipment now owned, (US$15.7 million) would be procured following international competitive bid- ding in accordance with Bank Group Guidelines. A 15% preference margin, or the prevailing customs duty if lower, would be extended to local manufacturers in the evaluation of bids. Small off-the-shelf items costing less than US$10,000 each and limited to a total of US$300,000, which are not suitable for international tendering, would be purchased through normal government procurement procedures (local competitive bidding or competitive quotations) which ensure adequate competition. Disbursements 3.31 Disbursements would be made at the rate of 100% against the cif cost of directly imported equipment, or the ex-factory price net of taxes for equipment manufactured locally, and at a rate of 65% of total costs for imported equipment procured locally under off-the-shelf procedures. For consultants' services and overseas training, disbursements would equal 100% of total costs. Disbursements for civil works and mapping would be on a percentage basis. Disbursements for force account works (including small local contracts not subject to the Bank's review) would be made against certified statements of completed work, signed by the Project Director. Supporting data for such statements would be retained by the Government but would be available for inspection by supervision missions. Any savings in the loan account would be used to enlarge the area covered by the project or for any other purpose related to the project as may be approved by the Bank. The proposed alloca- tion of the proceeds of the loan and an estimated schedule of disbursements are shown in Tables 3.6 and 3.7. It is expected that disbursements would be completed by June 1983, about one year after the scheduled completion of the project works. Accounts and Audits 3.32 With the exception of RID, the other agencies participating in the project would only have a small supporting role with expenditures equal to a small fraction of the total cost. As these agencies are already subject to normal Government control and auditing procedures, it would not be necessary for the Bank to review their accounts or to insist that they should keep separate accounts for the project. Assurances have been obtained that RID would: (a) maintain separate accounts for the Chao Phya and Mae Klong parts of the project; (b) engage auditors satisfactory to the Bank to audit these accounts annually; and (c) submit the audited project accounts, together with the auditor's comments, to the Bank within four months of the close of each financial year. The auditor's report would include an opinion on the certificates of expend- iture for force account works (including small contracts) (para. 3.31). The applicability of a cost accounting system for RID would be studied under the proposed organization study (para 4.01).  - 35 - Table 3.6: PROPOSED ALLOCATION OF THE PROCEEDS OF THE LOAN Category Cost (including price Amount of loan contingencies) allocated A. Chao Phya (1) Civil Works and Mapping by Contract On-farm development 16.8 8.6 Disbursement would be at 50% of total expenditure. (2) Civil Works and Mapping by Force Account Rehabilitation (Parts A & B) 25.6 On-farm works 30.4 Less: construction equipment 11.2 Subtotal 44.8 17.4 Disbursement would be at 40% of total expenditure (excluding depreciation). (3) Equipment and Vehicles Construction equipment 11.2 Miscellaneous equipment 2.9 Subtotal 14.1 13.3 Disbursement would be at 100% of foreign expenditures or local expenditures exfactory, or 65% of total expenditures for imported items procured locally. (4) Consultants' Services and Overseas Training Implementation (Parts A & B) 1.7 Feasibility Study - Chao Phya III 0.4 Overseas Training 0.1 Subtotal 2.2 2.2 Disbursement would be at 100% of total expenditures. B. Mae Klong (1) Civil Works and Mapping by Contract Roads 9.4 4.8 Disbursement would be at 50% of total expenditure (2) Civil Works and Mapping by Force Account Pilot project 1.7 Miscellaneous 2.3 Subtotal 4.0 1.7 Disbursement would be at 40% of total expenditure (excluding depreciation). (3) Equipment and Vehicles Miscellaneous 2.8 2.7 Disbursement provisions as for Category A(3). (4) Consultants' Services and Overseas Training 0.6 0.6 Disbursement would be at 100% of total expenditures. C. Unallocated Physical contingencies 7.6 3.7 Expenditures Not Financed Engineering, administration and other costs 9.7 Total 112.0 55.0  - 36 - Table 3.7: ESTIMATED SCHEDULE OF DISBURSEMENTS IBRD Fiscal Year and Accumulated Disbursements Semester (US$ Million Equivalent) 1978 1st 0.3 2nd 1.6 1979 1st 5.7 2nd 11.7 1980 1st 20.7 2nd 30.6 1981 Ist 38.4 2nd 44.0 1982 Ist 47.6 2nd 50.7 1983 Ist 53.4 2nd 55.0 Closing Date: June 30, 1983. Environmental Effects 3.33 Since the project areas are at present irrigated in the wet season, the introduction of irrigation improvement and the expansion of dry season production is not expected to produce significant changes in environmental conditions. Drainage improvement would reduce the amount of stagnant water and thus reduce hazards from water-associated diseases. Schistosomiasis is not present in the Central Plain of Thailand. Better control of irrigation water, improved drainage and the increased use of chemical pesticides may be expected to have an adverse effect on fish production. To counteract this tendency, a program of fisheries development, based on private fishponds, has been included in the project (para 3.04).  - 37 - 4. PROJECT ORGANIZATION Project Management 4.01 Direct responsibility for project implementation would rest with the Royal Irrigation Department (RID), which was also the executing agency for all nine previous Bank Group-assisted irrigation projects in Thailand. RID's organi- zational structure and manpower, and recommendations as to how the agency should streamline its activities in order to implement an increasing program of irrigation development in the years ahead are discussed in the Irrigation Program Review (Reference A-5). RID is presently selecting a consulting firm to assist it with developing and subsequently implementing specific programs along the broad lines recommended in the Irrigation Program Review. 4.02 Within RID, responsibility for Parts A and B of the project would rest with the Deputy Director-General (OMI) who would act as Project Director. Responsibility for day-to-day activities in the field for these two project components would rest with a full-time Project Manager, a senior RID engineer, reporting directly to the Project Director. 4.03 The design and construction of on-farm works under Part A of the project would be handlod by the Land Consolidation Section of RID's O&M Division. As was the case under the Stage I Project, the design of rehabilitation works would be handled by the Design Division of RID. Construction of rehabilitation works would be handled by the construction group of the Land Consolidation Section. However, the Project (O&M) Engineers (para. 1.11) would be closely consulted on the scheduling of works and would contribute some equipment for their construction. All equipment purchased for rehabilitation works would revert to the Project (O&M) Engineers after the completion of rehabilitation. Topographic mapping fcr Parts A and B of the Project would be undertaken by a unit within RID's SurN_y Division under the supervision of a chief surveyor for the project. RID is considering replacing the above arrangements with an On-Farm Development Division, under the Project Manager, to be fully responsible for the implementation of Parts A and B of the project, in accordance with the recommendations of the Irrigation Program Review. Implementation of this proposal may, however, be postponed until the proposed management consultants have completed the first phase of their study (end-1977). 4.04 At present, there is a notable lack of coordination between the ongoing act-ivitiLes of iID's divisions in the Mae Klong area, as the Construc- tion Division, Roads l;'vision, Project (O&M) Office, and the Land Consolida- tion Section operate ladependent programs in the area. The Construction Division is operating in accordance with priorities which were set 15 years ago and there is no oro in a position to decide on future priorities for the whole project. In order to overcome this problem, the Deputy Director-General (O&M) has been desigri-ed as Project Director (Mae Klong), to be ultimately responsible for all RT' 's ac-ivities in the Mae Klong, including construction activities outside Par.: C of the project, and to ensure that all the efforts of the several divisions of RID are fully coordinated and oriented towards a common goal. A Project Manager (Mae Klong) has also been designated to be directly in charge of all irrigation, drainage, road construction and on-farm development. A chief surveyor would be appointed to take charge of all surveys and mapping. A condition of disbursement for expenditures under Part C of the project would be that RID had formally appointed a Project Director and a Project Manager, after consultation with the Bank.  - 38 - 4.05 .'veral other Government departments would also have a role in imple- menting Pa:rt A of the project. The main one would be the Central Office of Land consolidation (COLC), which is in charge of planning and coordinating on-farm development works throughout Thailand. The COLC is supervised by the Central Committee for Land Consolidation, a statutory committee established under the Agricultural Land Consolidation Act of 1974 and chaired by the Minister of Agriculture. COLC's functions on the proposed project would be as follows: (a) to prepare and issue Royal Decrees to permit land consolidation in the project area (para 1.24); (b) to promote on-farm development among the project farmers; (c) to act as a liaison between RID and the farmers during the design and construction stages and thereafter to determine the farmers' repayment obligation for completed works; and (d) to assist RID in establishing organizations and procedures for the operation and maintenance of on-farm works. COLC would appoint Provincial Land Consolidation Officers in each of the pro- vinces affected by Part A of the project. These officers, who would work under the administrative jurisdiction of the Provincial Governors, would carry out the field level functions of the COLC. An assurance has been obtained that COLC would, inter alia, issue Royal Decrees in advance of the construction season in areas to be incorporated under the project. 4.06 Responsibility for cadastral surveys and issuance of title deeds in all parts of the project area subject to on-farm development would rest with the Land Department of the Ministry of Interior. The Land Department, which is presently carrying out the same functions under Stage I, has recently increased its staff for this activity and is also considering ways of doing part of the work through contractors. It should thus have no difficulties in meeting the project needs. The Land Development Department of MOAC is another agency that would play a supporting role under the project. The Department would be responsible for detailed land classification surveys in advance of the design work for on-farm development. In addition, the Department's Land Policy Division would have primary responsibility for data collection in conjunction with project monitoring. The Fisheries Department of MOAC would be responsible for the fisheries development program. Project Coordination 4.07 To ensure smooth cooperation between all Departments engaged in the project, the Deputy Under-Secretary of State for Agriculture has been appointed as Project Coordinator under Stage I and will continue to serve in this capacity for Stage II as well. His principal duties would include: coordinating all project activities; ensuring that actions requiring higher approval are quickly brought to the attention of the Under-Secretary and/or Minister; and, to exercise such powers in the implementation of the project and the award of contracts as may be delegated by the Coordination Committee.  - 39- 4.08 Although RID would have direct responsibility for che project, various activities, particularly those involving procurement, budgeting, staffing and the appointment of consultants, require clearan.ce and/or approval by several departments, the Minister of Agriculture or even the Cabinet itself. The process involved in obtaining these clearances is time consuming arid, parti- cularly for procurement, is a serious cause of delays in project execution. In order to overcome these problems under the Pbitsanulok irrigarion Project (Loan 1149-TH), the Cabinet established a Project Executive Committee to which it delegated full powers in respect of all project activities. As this Com- mittee has been effective in executing work under the Phitsanulok Project, a similar Committee would be established for the Chao Phya Project. The Committee would be chaired by the Under-Secretary of Agriculture and would include the Project Coordinator, the Director-General of RID, t-;e Project Director, the Project Manager and representatives of the MiThistrv of Interior, Budget Bureau, Ministry of Finance, Public Prosecutor's Offite and Civil Service Commission. Thus all the agenicies which now approve proposals and documents sequentially would be able to take action simultanec/uslv. The establishment of a Project Coordination Committee, with composltion, powers, functions and procedures satisfactory to the Bank, would be a condition of effectiveness for the proposed loan. The Committee would delegate most of its powers in respect of procurement to a Bidding Subcommittee, chaired by the Project Coordinator and including representatives from the Ministry of Finance and Budget Bureau, as well as the principle project officials frrom RID. Acceleration of Project Implementation 4.09 The Government has pinpointed certain areas where administrative reforms will be required in order to meet the accelerated project implementa- tion schedule which it plans to adopt (para 3.20). Apart from the project coordination measures just discussed and the organizational arrangements for procurement described in para 3.26, these steps include expediting the hiring of consultants and the procurement of the project equipment, the delegation of greater authority to the Project Director and Project Manager, more rapid ap- proval of any required reallocations within the project budget, and the employ- ment of sufficient staff to assist the Project Director. Agricultural Supporting Services 4.10 Seeds - Responsibility for plant breeding and the production of foundation seed for rice rests with the Department of Agricultural Techniques, through its Rice Experiment Stations. Stations serving the Northern Chao Phya area are located at Chai Nat and Suphanburi (which together produce about 50 tons of foundation seed per year), while the Ratchaburi station serves the Mae Klong area. Some foundation seed is sold directly by the stations to farmers, but most is channeled through the Department of Agricultural Exten- sion (DAE), which multiplies the seed through a contract system with private growers. However, supervision of the contract growers is lax and the existing facilities for seed certification are underutilized. While the present system of drying and cleaning seed is adequate, the Zreatment of seed against disease is not. Assistance in upgrading seed processing is being made available under a USAID-financed National Seeds Project but this is  mainly directed towards upland crops. One result of the improved extension program in the project area should be a sharply increased demand for quality seed. Under the project, DAF. would expand its network of contract seed growers within the project area, increase the number of seed inspectors and upgrade its certification program. Additional equipment and vehicles required for this purpose would be procured under the project. An assurance has been obtained that DAE would expand its seed production and distribution program to achieve high quality seed production sufficient to allow farmers under Parts A and B of the project to replace their paddy seed once in every four years. 4.11 Fertilizer - At present, practically no fertilizer is applied to traditional wet season rice varieties, while only 5 to 10 kg/ha of nitrogen is applied to high-yielding varieties. The fertilizer normally used is ammonium phosphate (16-20-0 or 20-20-0) which is manufactured in Thailand and is recommended by DAE for paddy throughout the country, despite the fact that research at Chai Nat has shown that, in the Central Plain, response to phosphate is negligible and it should only be applied as an occasional basic dressing. Use of ammonium phosphate as a source of nitrogen alone is uneconomical. The drawing up of revised fertilizer recommendations has been included in the consultants' terms of reference for the National Extension Project. Under the project, it is expected that urea will become the major source of nitrogen, though the farm budgets (Chapter 7) assume that some ammonium phosphate will continue to be used as a basic application. Application rates should increase to about 65 kgN/ha on high-yielding rice, 40 kgN/ha on local transplanted varieties, 16 kgN/ha for upland crops and would remain negligible for broadcast rice. In the aggregate, the demand for ammonium phosphate is expected to increase from 400 ton/yr to 8,700 ton/yr and the demand for urea to increase from 160 ton/yr to 9,400 ton/yr. Fertilizer is supplied by a large number of private dealers, shopkeepers and, increasingly, by cooperatives. Given the improvements in production credit to be introduced under the project, it is expected that the existing supply network would be able to expand to meet the large increase in demand, as has been the case in the Stage I project area. 4.12 Production Credit - Farmers in the project area obtain production credit either from relatives, private money-lenders or an institutional credit agency, such as the Bank for Agriculture and Agricultural Cooperatives (BAAC) or a cooperative. With the gradual improvement in the service rendered by BAAC, more and more farmers are using its credit facilities either directly or through cooperatives and farmer groups. An Agricultural Credit Project, to be adminis- tered by BAAC and the cooperatives, has been proposed for possible Bank financing. The regulations governing loan operations are reasonable and the farmers in the project area should have no difficulty in obtaining production and development credit. It is estimated that the incremental short-term production loan require- mients for farmers under Part A of the project would rise from B 5.6 million in Year 1 to B 43.5 million in Year 5. The developmental finance needed by the project beneficiaries for purchasing tractors and other equipment would total about B 150 million over the same period. It appears that BAAC would have no insurmountable problems in servicing the credit needs of the farmers in the Part A area, as well as the smaller incremental requirements in the Part B areas. 4.13 Short-term production credit and medium-term development loans would be disbursed partly by BAAC directly and partly through cooperatives.  - 41 - The 17 cooperatives in the project area have been reorganized along district lines, have fairly large memberships, with sufficient share capital and reserves and satisfactory loan operations. The rate of repayment of loans by their members is reasonable and most are showing a profit. Most of the societies have full-time paid managers. They are engaged in the supply and distribution of agricultural inputs and the marketing of members' produce. However, there is a need for the BAAC to exercise closer supervision over the financial opera- tions of the cooperatives, with a view to ensuring that the loan funds are utilized for the purposes approved by BAAC and that the recoveries of loans made by the cooperatives are passed on to BAAC. In this connection, BAAC would secure the services of two experienced senior officers of the Cooperatives Promotion Department to assist it in laying down rules and regulations for deal- ing with cooperatives and for training the branch managers and their staff in the techniques of conducting financial inspections of the books and records of the cooperatives. Further details on production and developmental credit needs are given in Working Paper No. C-17. An assurance has been obtained that BAAC and the cooperatives serving the project area would increase their trained staff and provide sufficient funds to meet the reasonable short-term and long-term credit needs of the farmers in the project area. 4.14 Research - The status of agricultural research in Thailand is described in Reference B-7. Agricultural research related to the Northern Chao Phya area is conducted at the well-equipped Central Region Agricultural Center at Chai Nat which employs about 40 specialists. Research on upland crops grown in the Mae Klong area is carried out at the Uthong station while research on sugarcane is carried out at a station at Tha Muang run by the Sugar Growers' Association. Useful research on water use and management for sugarcane, rice and upland crops is being carried out by RID at Kamphaeng Saen, but the Samchook station for rice irrigation research is largely inactive. Between them, these stations are pro- viding an excellent technological base for the project - improved strains of rice and other major crops are being produced periodically and fertilizer res- ponse and control measures for the tnajor pests are well understood. The link between research and extension will be strengthened under the National Extension Project, through the creation of a National Coordinating Committee for Agricul- tural Extension, as well as Provincial Extension Working Groups and Technical Advisory Panels in all provinces covered by that project. 4 15 Exterunon - The system of agricultural extension in Thailand, its problemns and the improvements to be introduced under the National Extension Project (Loan 1393-TH) are described in detail in the Appraisal Report for that project (Reference B-6). Extension services for crops in the project area are provided at present mainly by the Department of Agricultural Extension (DAE) and to a limited extent by the Cooperatives Promotion Department, the Land Developmer~t Department and RID. Under the National Extension Project, the extension service for most major crops will be expanded and made more effective. This would 4nvolve the appointment of additional staff, especially subject matter specialists and extension agents at the subdistrict level, and the introduction of an extension methodology which stresses regular farm visits, a concentration initially on improvements not requiring cash outlays, continuous in-service training for the extension workers and periodic monitoring of the results of extension. At the subdistrict level, full-time extension agents would be appointed, each covering about 1,000 farm families. The project would be phased in on a province-by-province basis, covering the Chao Phya  - 42 - subproject ireas in 1978 (except for a small part of the Manorom sub- project are? which will be included in 1979). The Mae Klong area will be partl,v overed by the Extension Project in 1979. 4.16 Farmer Organizations - At present, a multiplicity of farmer organizations exist, many of them with overlapping functions but many also inactive because of a lack of felt need from the farmers. Each Department of MOAC is promoting its own type of organization: Farmer Associations and 4-H Clubs by the DAE; Water User Associations by RID; and several kinds of cooperatives by the Department of Cooperative Promotion. In addition, the BAAC lends through informal farmer groups. Under the project, efforts would be focussed on those organizations for which the need is greatest and which are potentially viable. There are three main needs: extension; credit and marketing; and O&M of the on-farm works. Extension advice and responsibility for O&M would be channeled through farmer groups at the service unit level while credit, the sale of inputs and, if required, the sale of produce would mainly flow through strengthened cooperatives at the district level, with informal farmers' groups being used by BAAC for nonmembers of cooperatives. 4.17 Provincial Coordination - Coordination of all agricultural support- ing services with each other and with the construction activities under the project would be effected through Provincial Working Groups in the ten provinces affected by Parts A and C of the project. These Working Groups would be chaired by the Governor of the Province and would include the senior field representatives of RID, COLC, DAE, other agricultural agencies, and BAAC. Such Working Groups would be established in the project areas under the National Extension Project. Operation and Maintenance 4.18 Main System - O&M of the irrigation system down to the farm turnout, some service roads and the main and collector drainage systems is the responsibility of RID's Regional Offices. The standard of O&M at present is inadequate, due primarily to insufficient funding but also reflecting a varying degree of supervisory control, as evidenced by the observed disparities in maintenance standards between areas. The main problems are siltation of canals, operation of canals above their full supply level, erosion of banks, control structures which cannot be operated, scour downstream of structures, deteriorated road surfaces, and blockage of drains by fish traps. In order to correct these deficiencies, funding should be increased so that routine maintenance (desilting, repair of banks, surfacing of roads, etc.) can be performed on a three-year cycle. The present budgetary allocation, which averaged US$6.70/ha in 1976, is well below the level for well-maintained systems in neighboring countries and is sufficient only for a five- to six-year maintenance cycle. The annual cost of adequate O&M has been tentatively estimated at US$12.00/ha in early 1977 prices. An assurance has been obtained that RID would operate and maintain all the irrigation, service roads and drainage systems under its jurisdiction, required for the functioning of all facilities constructed under the project and the Stage I Project, in accordance with  - 43 - sound engineering standards including, except as the Bank shall otherwise agree, the adoption of a three-year cycle for routine maintenance, Consultant assistance would be available for establishing the new standards, Equipment procured under the project for rehabilitation works or directly for O&M would also be available. 4.19 On-Farm Works - O&M of the ditches, drains and roads bol.-w the farm turnout would be the responsibility of the farmers in each service unit. The Water Users' Association Section of RID's O&M Division would establish and staff a small unit to foster the establishment of farmer groups in each service area. While this kind of work has been done under the Stage I Project, it has not yet become an integral part of RlK.' work program. Each farmer group, with typically 20 members, would elect a group leader, a contact farmer (for the extension service), and a common irrigator, who would be responsible for operating the on-farm works and for ensuring that maintenance is carried out. At present, common irrigators are paid by RID but, under the project, this subsidy would be phased out within four years of the construction of on-farm works in any area. Routine mainte- nance would be carried out twice a year, before each crop season. The farmer group would decide whether to carry out the cleaning of the ditches and drains communally, by hired labor or by each farmer cleaning the ditch and drain adjacent to his property. Initially, the latter method is likely to be the most popular. The cost of O&M of the on-farm works is tentatively estimated at US$4.00/ha/yr for intensive development and half that amount for extensive development. These amounts would be assessed, in cash or kind, by the farmer groups on their members. 4.20 A schedule for rotational irrigation within the service unit would be drawn up by the RID zoneman in consultation with the common irrigator before each season and would be approved by a meeting of the farmer group. The common irrigator would ensure that the schedule is adhered to. In addition, RID staff would monitor the performance of the common irrigators and would refuse to supply water to service units which are not being properly maintained, which are not adhering to their rotational schedules or in which there is an excessive waste of water. RID staff and the farmers would require training in the above matters and this would be organized by the Water Users' Association Section, and would be phased with project construction, beginning with the Stage I project areas. Farmer groups at the service unit level would be loosely federated into Water Users' Associations (some of which already exist) in order to discuss larger questions such as cropping patterns and calendars and seasonal water requirements. Consultant assistance would be available for implementing the new methods. The above proposals would be facilitated by strengthening RID's legal powers to establish farmer groups and to enforce water use discipline. To this end, legislation is being drafted by RID and is expected to enacted by the end of 1978. Monitoring and Evaluation 4.21 Project Monitoring - The Land Policy Division of the Land Develop- ment Department of MOAC would be responsible for monitoring the changes in the project area resulting from the project, as it has done for the Stage I  project. The surveys done prior to and during appraisal would form the baseline from which changes could be measured. Socio-economic surveys would be made every crop seasor to measure such basic variable as yields, input use and farm incomes. Special surveys would be made as needed for topics such as the spread of new agricultural techniques, credit or iarketing. For all surveys, areas benefitting from the project woulad be compared with control areas. Sulrveys would be carried out both in areas receiving rehabilitation alone and those receiving on-farm development as well. An attempt would be made to differentiate the benefits from different intensities of on-farm development. Project nmonitor- ng would be coordinated with the monitoring of the National Extension Project in the same provinces. The Land TPolicy Division would tabulate, analyze and publish all data collected, with consultant assistance. 4.22 Project Evaluation - Evaluation of the technical performance of the agencies responsible for construction and supporting services would be carried out by the agencies themselves. Such studies might include analysis of equipment performance, comparison of force account and contract construction, evaluation of O&M performance, the relative effectiveness of alternative credit sources, or tnae farmers' attitudes to the proposed fisheries development program. Assis- tance from the International Rice Research Institute may be available for the evaluation of alternative standards of on-farm development. In addition, evaluations of the extent to which the project is meeting its objectives or the priority of projects of this kind in Thailand's agricultural development would be carried out from time to time by the Division of Agricultural Economics of MOAC. The Division has a core of highly trained staff with access to computing facilities. As a rule, the Division would not collect data itself but would rely on information collected by the Land Development Departraentl. The Division would assist RID to prepare a completion report on the project, in coordination witlh the other departments concerned. 5. CROPPING PATTERNS, YIELDS AND PRODUCTION Future Cropping Pattern 5.01 The present cropping pattern in the Part A project area is described in paras 2.15 to 2.19. The projected future cropping patterns for the same area are presented in Table 5.1. For analytical purposes, the area has been divided into areas of extensive (16,000 ha) and intensive (47,000 ha) on-farm development, whiereas in fact development standards would vary over an entire spectrum from least to most intensive (para. 3.03). Under the project, improved water distri- bution would remove the risk of drought for the wet season crop. With improved drainage, land leveling and access, the area of broadcast, long-stemmed, lodging, local variety rice would decline from about 45% to less than 20% of the project area. "ihe area of transplanted local variety rice would also decrease from about 45% to less than 20%. while the area of HYVs in the wet season would increase from little more than 5% to over 50% of the project area. Separate projections have been made for each of the subareas, reflecting differences in tile present cropping patterns and the agronomic potential. The rates of growth of cropping intensity have been assumed lower than observed rates in the Stage I project, because of the larger areas involved. 5.02 Improved availability of water in the dry season would allow rice cropping on more than half of the project area, while farmers on about 10% of the area, mainly on lighter soils and self-mulching clays, would grow secondary crops, of which soybeans would be the principal.  - 45 - Future Crop Yields 5.03 Projected changes in yields due to timely availability of irriga- tion water, improved drainage, on-farm works such as boundary realignment and land leveling, better access, improved availability of credit and inputs, together with an effective extension service, are presented in Table 5.2. "Future without project" yields assume the continuation of past trends and the implementation of the National Extension Project. Wet season paddy yields, which now average about 2.2 ton/ha, are expected to increase to 3.5 ton/ha with the project at full development, compared to 2.9 ton/ha without the project; dry season yields are expected to increase from 2.7 ton/ha to 4.4 ton ha. Projected yields would be achieved five years after development of each farm, and in year eight for the entire project area. Projections are based on yields presently achieved by progressive farmers in the project area and by researchers under experimental conditions, with adjustments to field conditions. These projections are reinforced by observed yield increases in the completed parts of the Stage I Project, where dry-season paddy yields averaged 4.1 ton/ha over an area of 1,700 ha in 1976. 5.04 In extensively developed areas, rice yields would increase due to improved local varieties and better water regulation. In the more intensively developed areas local varieties, broadcast onto plowed land, would produce increased yields through timely and more thorough land preparation, good quality seed of the best adapted varieties, improved weed and pest control, some use of nitrogen fertilizer, effective rodent control and a more timely harvest. The recently released variety RD5, which is tolerant to semi-deep water, and resistant to some diseases, is expected to become popular with farmers who can expect water levels not deeper than 50-60 cm. Yields as high as 5 ton/ha have already been obtained under field conditions. 5.05 Yields of local transplanted varieties would increase through the use of adapted pest and disease resistant varieties, like RD5, easily acces- sible, well laid out nurseries, improved soil preparation and water manage- ment, the use of nitrogen fertilizer at critical growth stages, preventive and curative agro-chemicals for the control of pests and diseases, and timely harvest and threshing. The extension service would encourage row and block transplanting to allow easier weeding and improved pest control. 5.06 Transplanted HYVs grown in the wet season would in future consist of the newly released RD7, RD9, C4-63 and others still in the pipeline. These varieties have improved disease and insect resistance, particularly to serious yield reducing diseases such as grassy stunt, yellow orange virus, blast and other less serious and more common diseases such as Helminthosporium and Cercospora. Their resistance to plant and leaf hopper damage is also important. Close attention would be paid to nursery preparation and timely transplanting of sturdy seedlings. HYVs have a high yield potential when they are allowed to express this through: (a) obtaining the optimum number of panicles per unit area, which is achieved by correct spacing of seedlings and tiller development without weed competition; and (b) providing adequate nutrients and thus photosynthetic leaf area to fill the formed florets to a full grain size. Nutrients must therefore be applied at the critical stages of tiller development and panicle formation to a weed-free crop. The ability to drain the crop at late milk or soft-dough stage of grain development would allow a uniform ripening and grain quality.  - 46 - Table 5.1: AREA CROPPING PATTERNS Boromdhart Koke Kathiem Sartichook Total Chanasutr Manorom Don Chedi Project: (26,000 ha) (19,000 ha) (17,900 ha) (63,000 hLa) % ha /a % ha /a Z ha /a % ha la Present Extensive area Rice: Broadcast (wet) 23 6,000 26 5,000 17 3,000 22 14,000 Local transplant (wet) 0 0 0 0 11 2,000 3 2,000 Intensive area Rice: Broadcast (wet) 25 6,500 35 6,700 4 700 22 13,900 Local transplant (wet) 41 10,600 28 5,300 58 10,400 42 26,300 HYV (wet) 6 1,500 6 1,100 7 1,200 6 3,800 HYV (dry) 17 4,400 10 1,900 48 8,600 24 14,900 Soybean 6 1,500 3 600 5 900 5 3,000 Cropping intensity: Wet 95 24,600 95 18,100 97 17,300 95 60,000 Dry 22 5,900 13 2,500 53 9,500 29 17,900 Total 117 30,500 108 20,600 150 26,800 124 77,900 Future with project Extensive area Rice: Broadcast (wet) 12 3,000 16 3,000 6 1,000 11 7,000 Local transplant (wet) 12 3,000 10 2,000 22 4,000 14 9,000 Intensive area Rice: Broadcast (wet) 7 1,800 8 1,600 4 700 6 4,100 Local transplant (wet) 19 4,900 16 3,100 16 2,900 17 10,900 HYV (wet) 51 13,312 49 9,400 52 9,300 51 32,000 HYV (dry) 46 12,100 50 9,500 64 11,400 52 33,000 Soybean 15 3,900 10 1,900 7 1,200 11 7,000 Cropping intensity: Wet 100 26,000 100 19,100 100 17,900 100 63,000 Dry 62 16,000 60 11,400 70 12,600 63 40,000 Total 162 42,000 160 30,500 170 30,500 163 103,000 /a Rounded to nearest 100 ha.  - 47 - Table 5.2: CROP YIELDS: PRESENT, FUTURE WITH AND WITHOUT PROJECT Future Yield Increase Present Without With Over Over Without Project Project Present Project ----- (ton/ha)