Afghanistan - Third Agricultural Credit Project

FILE COPY Document of The World Bank FOR OFFICIAL USE ONLY RLTURI TO Report No. P-2084-AF REORS DESKZ REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON PROPOSED DEVELOPMENT CREDITS TO THE REPUBLIC OF AFGHANISTAN FOR A THIRD AGRICULTURAL CREDIT PROJECT May 18, 1977 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit Afghani (af) US$1 Afghanis (Afs) 50.0 Af. 1 US$ 0.02 Af. 1,000 US$ 20.00 Af. 1 million US$ 20,000 Can. $1 US$ o.964 FISCAL YEAR March 21 to March 20 GLOSSARY OF ABBREVIATIONS AFC Afghan Fertilizer Company AgBank Agricultural Development Bank of Afghanistan AMSCO Agricultural Machines and Service Company DAB Da Afghanistan Bank USAID United States Agency for International Development WAPM Water and Power Ministry  FOR OFFICIAL USE ONLY AFGHANISTAN THIRD AGRICULTURAL CREDIT PROJECT CREDIT AND PROJECT SUMMARY Borrower: Republic of Afghanistan Amount: (a) IDA credit of US$12 million (b) IDA administered credit of Can. $5 million (US$4.7 million equivalent) Terms: (a) Standard IDA terms (b) Standard IDA terms Project The project would assist in increasing agricultural production, Description: productivity and farm incomes through credits for investments and modern inputs, and improving the very low levels of farm management and technology. The project would emphasize assis- tance to smallholders, including lending to cooperatives or groups of small farmers and to previously landless persons for settlement. It would continue the process of strengthening and further upgrading of the Agricultural Development Bank of Afghanistan (AgBank). The project would finance a three year lending program of AgBank comprising the following components: (a) farm mechanization - financing of about 600 tractors, with the larger tractors intended mainly for coopera- tives of small farmers, and a considerable number of small farm equipment and implements; (b) irrigation wells - pumping equipment for and drilling of 20 deep wells for farmer groups and about 480 pumps for shallow wells for individual farmers; (c) on-farm development - establishment or improvement of orchards, vineyards, poultry, crop cultivation and other farming activities. Most loans would be between $1,000 and $1,400 equivalent for small and medium size holdings; (d) land settlement - financing the investment and working capital needs of some 4,000 new settlers in selected Government settlement areas; (e) fertilizer and other inputs - more than one-third of the total project cost would be directed towards short-term loans for financing fertilizers, improved seeds and other inputs, thereby benefitting a large number of small holders; This document has a restricted distribution and may be ed by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - (f) produce marketing and processing - short-term loans to finance produce marketing by cooperatives to enhance members' bargaining power, and to processing firms or cooperatives for purchase of produce from small farmers at equitable prices; and (g) AgBank supporting services - staff field allowances, foreign fellowships, vehicles and mobile shops for the Agricultural Machines and Service Company (AMSCO). In addition, the project would finance technical assistance to AgBank for strengthening its management and operations, and a comprehensive study of the national fertilizer program.  iii Project Cost - Af Million-- ----US$ 000-- - Foreign Exchange Investment Item Local Foreign Total Local Foreign Total CoSponent I. Farm Mechanization & Implements: a. Tractors 75.0 225.1 300.1 1,500 4,502 6,002 75 b. Small equipment & implements 10.3 30.9 41.2 206 618 824 75 II. Irrigation Wells: a. Shallow well pumps 34.9 48.1 83.0 698 962 1,660 58 b. Deep wells 10.7 20.0 30.7 214 400 614 65 III. On-Farm Development 107.2 5.6 112.8 2,144 112 2,256 5 IV. Land Settlement 121.6 6.4 128.0 2,432 128 2,560 5 V. Short-Term Lending for fertilizer, seeds & .oher inputs. 308.7 205.8 514.5 6,174 4,116 10,290 40 VI. Short-Term Lending: a. To coops for marketing & processing 61.0 - 61.0 1,220 - 1,220 0 b. To firms for processing 72.0 - 72.0 1,440 - 1,440 C VII. Technical Assistance 4.9 11.3 16.2 98 226 324 7Q VIII. Supporting Services: a. Field allowances 2.0 - 2.0 40 - 40 0 b. Fellowships - 1.9 1.9 - 38 38 100 c. Vehicles, office equipment and mobile workshops - 26.7 26.7 - 534 534 100 IX. Fertilizer Study 3.1 9.4 12.5 62 188 250 75 Base Cost 811.4 591.2 1,402.6 16,22B 1192L.. 7.5.2n 42 Contingency Allowances: a. Physical 1' 1.1 1.6 2.7 22 32 54 59 b. Price 21 87.6 80.8 168.4 1,752 1.616 3,368 48 Total Project Costs 900.1 673.6 1,573.7 18.002 13,472 31,474 43 1/ Only for elements of irrigation wells, at 5% each for drilling and pump house for deep wells and excavation for shallow wells. 2/ For calculation of price contingencies during 1977-81, the following annual inflation rates were applied: improted equipment 7,5%, local items 5%. (the local rate of inflation) civil works for deep wells 9%, fertilizer 5% only for 1978/79 (Government controls price) and technical assistance 7.5%.  - iv - Financing Plan: -------------------US$ '000-------------------- IDA Sub- Admin- Borrower AgBank USAID istered IDA Total Farm Mechanization: Tractors 1,424 356 - 1,510 3,834 7,124 Small equipment 182 72 - 214 546 1,014 Irrigation Wells: Shallow well pumps 618 246 - 336 856 2,056 Deep wells 188 74 - 138 348 748 On-Farm Development 384 654 - 432 1,094 2,564 Land Settlement - 874 - 576 1,462 2,912 Short-term Lending for fertilizer, seeds and pesticides - 3,944 5,000 690 1,756 10,640 Short-Term Lending: a. To cooperatives for marketing and pro- cessing - 416 - 274 694 1,384 b. To firms for pro- cessing 816 246 - 162 408 1,632 Technical Assistance - - - 114 286 400 Supporting Services - - - 200 500 700 Fertilizer Study - - - 84 216 300 Total 3,612 62132 5,000 4,730 12,000 31,474 Percent of Total 11 20 16 15 38 100 Estimated Disbursements: _________ ________----