Philippines - National Irrigation Systems Improvement Project

Report No. 1488a-PH FIlE COPY Philippines: Appraisal of the National Irrigation Systems Improvement Project: I April 12, 1977 Projects Department East Asia and Pacific Regional Office FOR OFFICIAL USE ONLY U Document of the World Bank 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 US$1.00 = Pesos (P) 7.50 P 1.00 = US$0.133 WEIGHTS AND MEASURES - METRIC SYSTEM 1 hectare (ha) 2.47 acres 1 kilometer (km) = 0.62 miles 1 square kilometer (sq km) = 0.3886 square miles 1 meter (m) = 39.37 inches 1 square meter (sq m) = 10.76 square feet 1 cubic meter (cu m) = 35.31 cubic feet 1 million cubic meters (M cu m) = 810.7 acre feet 1 millimeter (mm) = 0.039 inches 1 kilogram (kg) = 2.2 pounds 1 cavan (paddy) = 50 kg 20 cavans = 1 metric ton ABBREVIATIONS ADB - Asian Development Bank ADCC - Agricultural Development Coordinating Council AMIADP - Angat-Magat Integrated Agricultural Development Project BAE - Bureau of Agricultural Extension BPI - Bureau of Plant Industry DAR - Department of Agrarian Reform DLGCD - Department of Local Government and Community Development DOH - Department of Health NFAC - National Food and Agriculture Council NGA - National Grains Authority NIA - National Irrigation Administration NISIP: I - National Irrigation Systems Improvement Project: I NISIS - National Irrigation Systems Improvement Study O&M - Operation and Maintenance PVTA - Philippine Virginia Tobacco Association SCC - Schistosomiasis Control Council SPO - Special Projects Organization UPRP - Upper Pampanga River Project WMT - Water Management Technician GOVERNMENT OF THE PHILIPPINES FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY PHILIPPINES APPRAISAL OF THE NATIONAL IRRIGATION SYSTEMS IMPROVEMENT PROJECT: I TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSION .. . . .i-ii 1. INTRODUCTION .... . . . . . . . . . . . . . . . .. 1 2. BACKGROUND .... . . . . . . . . . . . . . . . . . 1 General ..... . . . . . .1.... . . . . . . . . The Agricultural Sector .... . . . . . . . . . . . . 2 The Critical Role of Water Development . . . . . . . . 2 Project Formulation . . . . . . . . . . . . . . . . . . 3 3. THE PROJECT AREA . . . . . ... . . . . . . . . . . . . . 4 General. . 4 Climate.. 4 Topography, Drainage and Soils . . . . . . . . . . . . 5 Land Tenure and Farm Size . . . . . . . . . . . . . . . 6 Existing Irrigation Facilities . . . . . . . . . . . . 7 Agricultural Production .. 7 Transportation . . . . . . . . . . . . . . . . . . . . 8 4. THE PROJECT . . . . . . . . . . . . . . . . . . . . . . . 8 Irrigation Works .. 9 Water Supply, Demand and Quality . . . . . . . . . 10 Status of Engineering ..12 Strengthening of Regional O&M Capability . . . . . . . 13 Land Consolidation Pilot Project . . . . . . . . . . . 13 On-farm Facilities Study . . . . . . . . . . . . . . . 13 Schistosomiasis Control Program . . . . . . . . . . . . 14 Cost Estimates ..14 Financing ..16 Procurement .16 Disbursements . . 17 Accounts and Audit . ..17 Environmental Effects . . . . . . . . . . . . . . . . . 17 This report is based on the findings of an appraisal mission composed of Messrs. E.G. Giglioli, A. N. Khan, J.W. van Holst Pellekaan, V. Talvadkar (Bank), A.L. Gram and A. Yambao (Consultants). I This document has a restricted distribution and may be used by recipients only in the performance of their oMcial duties. Its contents may not otherwise be disclosed without World Bank authorization.  Page No. 5. ORGANIZATION AND MANAGEMENT . . . . . . . . . . . . . . . 17 Project Management. . . . . . . . . . . . . . . . . . . 17 Supporting Agricultural Services . . . . . . . . . . . 19 Cost and Rent Recovery . . . . . . . . . . . . . . . . 20 6. PRODUCTION, MARKET PROSPECTS, PRICES AND FARM INCOMES . . 22 Production . . . . . . . . . . . . . . . . . . . . . . 22 Market Prospects .... . . . . . . . . . . . . . . . 23 Prices .... . . . . . . . . . . . . . . . . . . . . 23 Farm Incomes .... . . . . . . . . . . . . . . . . . 24 7. BENEFITS, JUSTIFICATION AND RISKS . . . . . . . . . . . . 25 8. AGREEMENTS REACHED AND RECOMMENDATION . . . . . . . . . . 26 ANNEXES 1. Development of National Irrigation Systems 2. Climatological Data 3. Land Tenure and Reform 4. Project Irrigation Works 5. Water Supply, Demand and Quality 6. Strengthening Regional O&M Capability 7. Land Consolidation Pilot Project 8. On-farm Facilities Study 9. Schistosomiasis Control Program 10. Cost Estimates 11. Equipment List 12. Estimated Schedule of Expenditures and Disbursements 13. Organization and Management 14. Supporting Agricultural Services 15. Present and Projected Cropping Patterns and Production 16. Market Prospects and Prices 17. Crop and Farm Budgets 18. Farm Labor Analysis 19. Cost and Rent Recovery 20. Economic Analysis 21. Schedule of Early Events  CHARTS Implementation Schedule - Ilocos Subproject No. 17108 Implementation Schedule - Cagayan Subproject No. 16865 Implementation Schedule - Leyte Subproject No. 17109 NIA Organization for Engineering and Operations No. 16866 Proposed Organization for Project Construction No. 16867 Proposed Organization for Operation and Maintenance No. 16868 Proposed Cropping Calendar for Ilocos Subproject No. 16862 Proposed Cropping Calendar for Cagayan Subproject No. 16863 Proposed Cropping Calendar for Leyte Subproject No. 16864 Estimated Marginal Economic Cost of Labor in Three Subproject Areas No. 16861 MAPS Systems Locations No. 12507 Regions 1 and 2 Irrigation Systems - Ilocos and Cagayan Subprojects No. 12508, Region 1 Irrigation Systems - Ilocos Subproject No. 12613 Region 6 Irrigation Systems - Leyte Subproject No. 12509   PHILIPPINES APPRAISAL OF THE NATIONAL IRRIGATION SYSTEMS IMPROVEMENT PROJECT: I SUMMARY AND CONCLUSION i. The Government of the Philippines has requested Bank assistance to carry out the National Irrigation Systems Improvement Project: I, covering a number of irrigation systems spread over Northern Luzon and the island of Leyte in the Eastern Visayas. The project consists of the rehabilitation and upgrading of some 27,600 ha of existing irrigation systems and extension of irrigation to 21,800 ha of rainfed land, lying under the jurisdiction of three of the National Irrigation Administration's (NIA) regional offices. The operation and maintenance (O&M) capabilities of the three offices would be strengthened under the project. In addition, assistance would be provided to NIA for implementation of a land consolidation pilot project and a study of on-farm facilities. The project would also include provision for assis- tance to the Department of Health (DOH) and NIA to carry out a schistosomiasis control program in the area of high endemicity of the disease in the island of Leyte. ii. Major Government objectives in the agricultural sector are to achieve self-sufficiency in basic foods and to correct regional economic and social imbalances. The project would help to meet both objectives by improving and expanding irrigation facilities for the rice crop in the Ilocos area, which suffers from high population densities and small, frag- mented holdings, and in the Cagayan and Leyte areas which are in two of the poorest regions in the nation. iii. The deficit in rice, the main staple crop, has been a persistent problem for the Philippines, and annual rice imports have averaged about 200,000 tons in recent years. With improved water control being a pre- requisite to obtaining optimum results from the new high-yielding rice varieties, an annual total of about 50,000 ha of rice lands would have to be rehabilitated or provided with new irrigation facilities during the next decade to allow the country to achieve rice self-sufficiency. The proposed project would be the eighth Bank-assisted project aimed at helping the Government to achieve this goal. The Pampanga (Loan 637-PH), Aurora-Penaranda (Loan/Credit 984/472-PH) and Tarlac (Loan 1080-PH) projects are in Central Luzon; the Magat (Loan 1154-PH) and Chico (Loan 1227-PH) projects are in the Cagayan Valley of Northern Luzon; the Rural Development Project (Loan 1102-PH) is on the island of Mindoro; and the Jalaur project (Loan 1367-PH) is on the island of Panay in the Western Visayas. The proposed project would be the first Bank- assisted project dealing with the relatively small, widely scattered systems operated by NIA's regional offices, as well as being the first Bank-assisted irrigation project on the west coast of Luzon and in the Eastern Visayas. The total area covered by the seven ongoing projects, plus the present one, amounts to about 283,000 ha or nearly 30% of all irrigated lands. Work on 83,000 ha covered by the first project is nearly completed. The NIA engineering, construction and management standards on all the projects have been uniformly high.  - ii - iv. Total cost of the project is estimated at P 804.0 million (US$107.2 million), of which US$50.0 million, or approximately 47%, would be in foreign exchange. The Bank would finance the foreign exchange component. Civil works costing US$11.5 million and equipment costing US$13.9 million would be procured after international competitive bidding in accordance with Bank Group Guidelines. The remaining civil works would not be suitable for inter- national competitive bidding because of their nature and would be carried out by locally advertised contract (US$22.7 million) or by force account (US$15.1 million). v. The National Irrigation Administration (NIA) would be the executing agency for the project, except for the public health component of the schisto- somiasis control program which would be carried out by the Department of Health (DOH) through the Schistosomiasis Control Council (SSC). The irri- gation components of the project, unlike previous Bank-assisted irrigation projects, would be implemented by NIA's engineering and operations organiza- tions organization. A Project Director located at NIA's headquarters would coordinate the work of the NIA departments involved in the project and super- vise execution of the project at the field level, which would be under the immediate control of the directors of three of NIA's regional offices. The project would strengthen the design, procurement, and O&M capabilities of the engineering and operations organization, both at the center and in the three regions of Ilocos, Cagayan and Leyte. vi. At full development of the project, nine years after commencement of construction, annual paddy production from the project area is expected to reach 325,000 tons compared with a current level of 121,000. The increased production would make a contribution to the national campaign for self- sufficiency by providing enough rice to feed nearly 1.3 million persons per year. vii. Under the Government's program of Agrarian Reform, share-cropping has been abolished and title to land in holdings over 7 ha is being trans- ferred to the cultivators. When transfer is completed, probably by the end of 1978, about 54% of the land in the project area will be farmed by owner operators and the remainder by leasehold tenants of small landlords. Some 37,000 farm families cultivate the project area, working an average unit of 1.3 ha. The project would increase the annual per capita income on a typical Ilocos subproject farm of 0.8 ha from a current range of between US$50 and US$75 to US$135 in 1987. For a 2.5 ha Cagayan subproject farm per capita income would rise from an existing range of between US$70 and US$100 to between US$355 and US$380. On a typical Leyte subproject farm annual per capita income would increase from a present range of between US$45 and US$60 to between US$155 and US$165. By comparison about 97% of the project's farm families are presently at or below the country's estimated absolute per capita poverty level of US$165. These comparisons indicate that the project would narrow the income gap between the project area and other parts of the country. viii. The project would result in about a 40% increase in cropping intensity, which in turn would create an increase in farm labor employment opportunities equivalent to about 10,500 full-time jobs. The economic rate  - iii - of return of the project is expected to be about 20%. The rate of return is only moderately sensitive to a delay or a reduction in benefits. However, even under adverse conditions, the rate of return would not fall below 16%. ix. The proposed project is suitable for a Bank loan of US$50.0 million for a period of 20 years, including a 4.5 year grace period. The borrower would be the Republic of the Philippines.   PHILIPPINES APPRAISAL OF THE NATIONAL IRRIGATION SYSTEMS IMPROVEMENT PROJECT: I 1. INTRODUCTION 1.01 The Government of the Philippines has requested Bank assistance in financing the National Irrigation Systems Improvement Project: I, covering a number of irrigation systems spread over Northern Luzon and the island of Leyte in the Eastern Visayas. The project would provide a dependable water supply to irrigate about 49,400 ha of rice in the wet season and 35,950 ha of crops in the dry season, of which about 1,300 ha of tobacco and the balance of rice. 1.02 A feasibility study for the project was prepared under the provis- ions of Loan 1080-PH by the National Irrigation Administration (NIA) with the assistance of Sanyu Consultants Incorporated of Japan. This report is based on the findings of a Bank appraisal mission which visited the Philippines in October-November 1976, composed of Messrs. E. G. Giglioli, A.N. Khan, J.W. van Holst Pellekaan, V. Talvadkar (Bank), A.L. Gram and A. Yambao (Consultants). 2. BACKGROUND General 2.01 The Philippines covers some 297,000 sq km scattered over more than 7,000 islands between the Pacific Ocean and the China Sea. The 45 largest islands account for 98% of the area. The population is around 43 million (1975), growing at a rate of about 2.8% annually. Real GNP, which had a trend growth rate of 5-6% in the 1960s, grew by 10% in 1973 due to high prices for export commodities, but has grown at about 6% in 1974-76 as some industries have been adversely affected by the recession in the Philippines' trading partners-. Inflation related to high export prices and increased oil and food prices was a major problem in 1974, but abated markedly in 1975-76. Unequal income distribution and underemployment remain major economic problems. 2.02 Out of a total land area of some 30 million ha, more than half is forest and about one third under cultivation or in plantations. About 2.0 to 2.5 million ha of fairly level land is still available for growing crops, although some 1.0 million ha of this is cogon grassland which would be difficult to reclaim. Bringing this additional land under cultivation would be insufficient to meet increasing food needs or to improve rural income significantly. These goals also call for increasing production from currently cultivated areas through yield improvements and increased cropping intensity where water is available.  -2- The Agricultural Sector 2.03 Agriculture accounts for about one quarter of net domestic product, about 55% of total employment and between 50% and 70% of export earnings depending on commodity prices. During the 1960s the rate of growth of agri- cultural output accelerated gradually and averaged 4.7% per year for the 1965-70 period, stimulated by the spread of improved rice varieties. During the next five years, the rate of spread of new varieties decreased; typhoons in 1972 and high fertilizer prices in 1974 further affected agricultural output, which grew by only 3.2% a year on the average from 1970-75. 2.04 The growth rate of rice production from 1970 to 1976 was only 2.8% a year. However, on average the rate of growth of rice production has not kept pace with the rate of growth of demand. As a result, the ratio of food prices to prices in general increased over the 1970-75 period. This, combined with a short period of high world prices for sugar and coconut products, led to a substantial shift in the internal terms of trade in favor of agriculture, which has prevented a widening of the disparity between rural and urban incomes. In the face of sluggish growth of manufacturing employment, much of the growth of the labor force in recent years has therefore taken place in agriculture. Although value added per worker in agriculture has increased in current prices, it has declined in real terms, implying growing rural under- employment. 2.05 Agricultural sector performance will be crucial in determining whether the drive towards a rapid but more equitable income distribution succeeds. The major goals for the sector are self-sufficiency in cereals, particularly rice and corn; development of the livestock and fisheries sector; expansion of agricultural exports; intensification of agrarian reform; better conservation of natural resources; and strengthening of institutional support. Self-sufficiency in cereals is important not only to strengthen the balance of payments, but also to raise incomes for much of the rural population. The Critical Role of Water Development 2.06 After allowance for increases in rainfed rice production, the Philippines cannot reach self-sufficiency in rice without substantial invest- ment in irrigation expansion and improvement. Performance of existing systems falls far short of their potential. The Sector Survey/li estimates that, out of a total of 960,000 ha which could be served by existing systems, only 630,000 ha are served in the wet season and 254,000 ha in the dry season. Almost all the irrigated area is devoted to rice. The NIA's gravity systems are the main component. In addition, NIA has constructed and rehabilitated a substantial part of the small privately operated communal systems, averaging 300 ha. The Irrigation Services Unit, now under NIA's administrative super- vision, is responsible for pump irrigation schemes. The NIA gravity systems built before 1965 are usually run-of-the-river schemes with insufficient con- trol structures in the canals, few terminal facilities, inadequate drainage /1 IBRD Agricultural Sector Survey, Philippines, May 2, 1974 (Report No. 39a-PH).  and little provision for access. The systems were not designed for the level of water control required by the modern high yielding rice varieties. Even when the systems are new, water distribution is uneven during the wet season and limited during the dry season. Maintenance has been minimal due to shortages of staff and funds and the lack of access roads for maintenance machinery. A vicious circle has developed by which lack of maintenance discourages farmers from paying O&M charges, which in turn precludes further maintenance. 2.07 In the late 1960s when the NIA was reorganized, this unsatisfactory situation began to change. More funds and staff were made available and a major program of upgrading and expansion of the national irrigation systems was initiated. More advanced irrigation designs were introduced and much higher levels of water management became a goal. Simultaneously, the need for intensified agricultural supporting services on irrigation projects was accepted. The Bank-assisted Upper Pampanga River Irrigation Project (UPRP) (Loan 637-PH) and the Asian Development Bank (ADB)-assisted Angat-Magat Integrated Agricultural Development Project (AMIADP) typify the new approach. The pattern of rehabilitation, new construction and operation exemplified by these projects is essential for large-scale rice producion. To meet the growing domestic rice demand, a program of rehabilitation and new construc- tion in rice lands for some 50,000 ha per year will be needed over the next decade. The proposed project would thus be entirely compatible with Govern- ment objectives for water resources development. Project Formulation 2.08 The main thrust of NIA's program of rehabilitation and expansion has been directed to the large rice growing irrigation systems in Central Luzon and in the Cagayan Valley of Northern Luzon. The ADB-assisted Angat- Magat project and the Bank-assisted Pampanga, Penaranda, Tarlac, Magat and Chico projects were all components of the NIA program of development of large-scale systems in the principal grain producing areas of Luzon. At the same time, NIA has been carrying out a smaller, but steady irrigation development program of some 55,000 ha in Mindanao with ADB assistance. In addition to rehabilitation of existing canals and structures, the construction of new ones, the provision of better drainage and access and the introduction of water management and rotational irrigation practices, the program also has included the provision of extra water supplies in some areas through the construction of storage or by transbasin diversion. 2.09 NIA has not neglected the need for rehabilitation and upgrading of the badly deteriorated, smaller systems scattered through the Philippines. The National Irrigation Systems Improvement Study (NISIS) was set up in 1975 with Bank assistance (Loan 1080-PH) to inventory the smaller systems and to select a total of about 150,000 ha with the highest priority for improvement, allowing for a balanced regional distribution. All national systems were inventoried. Systems included in ongoing projects were excluded, as were systems earmarked for rehabilitation under already identified ADB-, Bank- or bilaterally-assisted projects. The remaining systems were then evaluated on the basis of the degree of need for improvement, the potential for improve- ment in terms of land and water resources, the technical and economical  - 4 - feasibility of improvement, the human need in the area, in terms of poverty and disease, and the institution building aspects in terms of strengthening the capabilities of NIA's regional offices. The proposed project would be the first one prepared under NISIS. It would include 22 existing irrigation systems spread over three NIA Regions in Ilocos and Cagayan in Luzon and in Leyte in the Eastern Visayas. The selected systems would meet in the highest degree all the priority criteria for rehabilitation set by NIA (Annex 1). 3. THE PROJECT AREA General 3.01 The project would cover three distinct subproject areas which fall into the jurisdiction of NIA's regional offices for Regions 1, 2, and 6. The Region 1 or Ilocos subproject would include 12 existing irrigation systems lying along the Western coast of Northern Luzon, between the Babuyan Channel in the North and Lingayen Gulf in the South. The Region 2 or Cagayan subpro- ject would include three irrigation systems lying at the mouth of the Cagayan Valley along the Northern coast of Luzon island. The Region 6 or Leyte sub- project would include seven existing and three new irrigation systems on the island of Leyte in the Eastern Visayas. (Maps No. 12507, 12509 and 12613). Aside from a small area of dry-season irrigated tobacco in the Ilocos subpro- ject, and some dry-season rainfed corn in the Leyte subproject, transplanted rice, whether irrigated or rainfed, is the only crop in the project area. The Ilocos and the Eastern Visayas regions are rice deficit areas, while the Cagayan region is one of the major rice surplus areas in Luzon. The Ilocos subproject area suffers from high population densities and small, fragmented holdings, while the Cagayan and Leyte subprojects are located in some of the poorest regions in the country. 3.02 There are a number of small towns scattered throughout the project area. In the Ilocos and Leyte subproject areas the irrigation systems are close to major commercial centers providing banking, storage and processing facilities, as well as supplies of inputs to the agricultural areas. There are a number of small towns in the Cagayan subproject area, but major centers are fairly remote. The Ilocos and Leyte systems are served by good road net- works, while the Cagayan systems are more isolated. However, the Government is currently engaged in a program of road improvement and bridge building in the area with assistance from the Government of Japan. Climate 3.03 The climate in the project area is tropical and monsoonal. Warm temperatures throughout the year allow a twelve-month growing season with irrigation. The average annual rainfall in the three subproject areas ranges between about 2,000 and 2,300 mm, but there are marked differences in the rainfall distribution pattern. Each of the three subprojects lies in a different climatic region. In the Ilocos subproject area the winter and spring months (Nov.-Apr.) are dry, while the summer and fall months are wet. In the Cagayan subproject area there is a short dry season of one to three months (Mar-May), while in the Leyte subproject area there is no well-defined  - 5 - dry season, but rainfall is heaviest in the winter months. The rainfall, together with river flows in the wet season, is generally adequate for a single rice crop. Dry-season cropping, however, entails a greater risk and irrigation is essential to ensure a crop. The Ilocos and Cagayan areas of Northern Luzon are likely to be hit by about two typhoons per year, with the highest frequency between the months of July and November. This does not mean that all systems within the two subproject areas would be hit at any one time as there are some 300 km between the Pamplona system in the northeast and the Masalip system in the southwest. The Leyte subproject systems are likely to be subjected to an average of 1.5 typhoons per year, with November as the most probable month of occurrence. The systems obtain a substantial degree of protection by lying to leeward of the island of Samar (Annex 2). Topography, Drainage and Soils 3.04 The systems in the Ilocos subproject are all located on the narrow plain running along the western coast of Northern Luzon. The slope of the land tends to be from east to west. The slope is steeper in the eastern edges of the systems, but it flattens out towards the sea with most of the area fairly level. The Cagayan subproject systems are all situated in the coastal plain at the mouth of the Cagayan Valley. While the land is generally flat, there are occasional ridges and some of the main canals would traverse moderately broken country. Seven of the proposed systems in the Leyte subproject are located in the northeastern quadrant of the island, south of Tacloban City, in the broad flat plain along the east coast. Two of the remaining systems are situated in small coastal plains at the southeastern end of the island and one is on the broad coastal plain on the southwestern side of Leyte. Land is exceptionally flat in all Leyte areas. Surface drainage in the Ilocos subproject area is generally excellent. In the Cagayan subproject area there are some drainage problems in the immediate vicinity of the coast and special provisions would be made to deal with them under the project. Drainage is inadequate throughout the Leyte subproject systems, particularly south of Tacloban City. The area is interspersed by natural and manmade swamps which are associated with high incidences of schistosomiasis.- Special provisions would be made under the project to deal with the drainage problem and the consequent disease situation. 3.05 While soils in the Ilocos subproject area show a considerable degree of variability, clays of the Bantog series and silt and clay loams of the San Manuel series predominate. All are of alluvial origin, the Bantog clay is greyish brown, fine textured, with poor internal drainage and a slightly acidic reaction. The San Manuel soils are pale or grayish brown, loose and friable with excellent drainage, pHs of 6 to 7, good fertility and are suitable for diversified crops. In the Cagayan subproject systems there is little soil variability. The most common soil is a poorly drained, pale brown, granular silty clay of the Toran series. It is a difficult soil to work, being sticky when wet and hard when dry, it has poor internal drainage and is slightly acidic. Soils in the Leyte subproject area are uniform. The most typical soil is a brown, non-calcareous clay loam of the Palo series, developed from recent alluvial deposits, with a fine granular structure, fairly rich in organic matter and a slightly acidic reaction. All the soils are suitable for rice which has been grown in all three subprojects areas for many years without problems.  -6- Land Tenure and Farm Size 3.06 Since 1972 the Government has pursued a program of agrarian reform aimed at the transfer of land ownership to tenant farmers on rice and corn lands. Presidential Decree No. 27 (PD 27), the basic legislation of the new program, provides for the transfer to the tenant, whether sharecropper or leaseholder, of the land he tills up to 3 ha in an irrigated area and 5 ha in a rainfed area. According to PD 27, the landlord may retain up to 7 ha if he tills the land himself. Since there are some 2 million rice and corn farmers on about 4 million ha, of which less than I million ha are irrigated, there is little prospect of achieving the 5 ha rainfed and 3 ha irrigated family farms nationwide. Furthermore, some 85% of the landlords have holdings of less than 7 ha and there are no firm plans at present for transfer of lands in this category. The Department of Agrarian Reform (DAR) completed the issue of land transfer certificates to tenants for all land in holdings over 24 ha in 1975. In November 1974 the Government decided to proceed with the transfer of land in holdings between 24 and 7 ha. In October 1976 the Government extended the provisions of PD 27 to holdings of less than 7 ha, belonging to landowners with more than 7 ha of other agricultural land, or belonging to landowners with residential, commercial or urban land from which they derive adequate incomes to support themselves. At present it is not known how many landlords and tenants would be affected by the new legislation. 3.07 NIA surveys show that some 37,000 farm families, averaging 5.5 mem- bers for a total of about 204,000 people, live in the project area. About 60% of the farmers are in the Ilocos subproject area and the balance are evenly split between the Cagayan and Leyte subprojects. The mean farm size is about 1.3 ha. There are, however, substantial differences between subpro- ject areas. In the Ilocos systems the mean farm size is 0.8 ha, in Cagayan 2.5 ha and in Leyte 1.5 ha. The farm size distribution on 49,400 ha of project lands is as follows: Farm Size No. of Farms Area of Farms (ha)