Sierra Leone - Integrated Agricultural Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 2066 FILE COPY PROJECT PERFORMANCE AUDIT REPORT SIERRA LEONE INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT (CREDIT 323-SL) May 22, 1978 Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  FOR OFFICIAL USE ONLY Project Performance Audit Report SIERRA LEONE INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT (Credit 323-SL) Table of Contents Page Preface Basic Data Sheet Highlights PROJECT PERFORMANCE AUDIT MEMORANDUM I. Project Summary 1 Project Background 1 Implementation 2 II. Main Issues 4 Swamp Rice Development and the Upland Rice Alternative 4 Institution Building 9 Government's Price and Marketing Policies 11 Rate of Return 12 III. Conclusions 14 PROJECT COMPLETION REPORT I. Introduction A.1 II. Project History A.1 III. Project Implementation A.4 IV. Impact of the Project A.18 V. Role of the Borrower and the Bank A.18 VI. Conclusions A.19 Annexes Map 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.  Project Performance Audit Report SIERRA LEONE INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT (Credit 323-SL) PREFACE This report presents the results of an audit of accomplishments under Credit 323-SL, for US$4.3 million, which was signed in June 1972, and closed, fully disbursed, in May 1976. It was followed by Credit/Loan 568/1138-SL, for US$10.0 million, which financed a second integrated agri- cultural development project. The latter covers primarily an area in the Northern Province, but provides also for expanding the first project in the Eastern and Southern Provinces. The report consists of a Project Completion Report (PCR) issued by the Western Africa Regional Office in June 1977 and a Memorandum prepared by the Operations Evaluation Department. The Memorandum is based on the PCR, a cursory review of project files, and discussions with Bank staff involved in the project. The Borrower did not comment on the draft PPAR. An OED mission to Sierra Leone in August 1977 visited the project area and discussed the project performance with Government officials in Freetown. The audit concurs with the PCR's main findings and its candid acknowledgement of project shortcomings. In the Memorandum, comments on some of these shortcomings are made. The valuable assistance provided by the Government of Sierra Leone,the project staff, the UNDP office in Freetown and the numerous farmers visited in the preparation of this report is gratefully acknow- ledged.  Basic Data Sheet SIERRA LEONE INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT (Credit 323-SL) A. Amount (US$ mln) As of 3/1/77 Original Disbursed Cancelled Service Charges Paid Credit 232-SL 4.3 4.3 0.06 B. Project Data Actual or Original Plan Revisions Current Estimate Conception in Bank 1969 Negotiations 5/22/72 Board Approval 6/20/72 Credit Agreement 6/30/77 Credit Effectiveness 9/30/72 11/30/72 12/08/72 Physical Completion 12/31/75 12/31/75 % of Original Project Rice 119% Actually Completed Cocoa 103% Oil Palm 105% Credit Closing 7/31/76 5/15/76 Total Costs (US$ mln) 5.6 /a 5.9 /a /b Economic Rate of Return (x) 15 20 /c C. Mission Data Month/ No. of No. of Date of Year Days Persons Man-weeks Report Identification 11/69 12 2 3 12/69 Preparation 4-5/70 n.a. n.a. n.a. 9/70 Appraisal 2-3/71 25 5 18 6/06/72 Subtotal 21 Supervision I 9/72 7 1 1 10/17/72 Supervision II 11/72 5 1 1 12/19/72 Supervision III 4/73 5 1 1 4/24/73 Supervision IV 7/73 10 1 1-1/2 9/13/73 Supervision V 5/74 6 6 4-1/2 9/23/74 Supervision VI 8/i5 6 2 2 11/05/75 Supervision VII 1/76 6 2 2 3/22/76 Supervision VIII 5/76 1 1 - 6/18/76 Supervision IX 9/76 4 2 1-1/2 -- 14-1/2 D. Follow-on Project Credit/Loan 568/1138-SL of US$10.0 million, which became effective 1/29/76, ensured the continuation for two years of project 323-SL and the development of a similar project in the Northern region of the country. E. Exchange Rates (Le to US$1.00) At Appraisal - 0.767 1973 - Between 0.77 and 0.85 1974 - Between 0.82 and 0.90 1975 - Between 0.82 and 1.08 1976 - Between 0.98 and 1.08 1977 --Between 1.10 and 1.16 /a At the following exchange rates: at appraisal, US$1 = Le 0.767; on average over the three-year investment period, US$1 = Le 0.873. /b Exclusive of US$300,000 of supplementary costs for the mill charged in 1977. /c Audit estimate, calculated on the basis of the PCR basic assumptions (ROR 26.5%), adjustments based on the audit's findings and more up to date information on the 1977 cyop year.  Project Performance Audit Report SIERRA LEONE INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT (Credit 323-SL) HIGHLIGHTS The Integrated Agricultural Development Project was the first agri- cultural project financed by IDA in Sierra Leone. It provided funds for completing a 2,000 acre oil palm plantation and constructing an oil mill and 20 rice mills; as well as for financing a smallholder credit scheme which supported the development of 6,000 acres of swamp rice, 750 acres of cocoa and 1,830 acres of oil palm plantings; the project was also expected to assist in establishing an autonomous project authority and to support several studies. Despite the short three-year development period and its pilot nature, the project was successfully implemented. Cocoa and oil palm plantings exceeded appraisal estimates but inadequate supervision by extension services during planting and development is likely to result in lower than expected yields. Swamp rice development also exceeded appraisal targets, but fluc- tuations in the number of participating farmers are occurring because swamp rice production has not yet been fully incorporated in the traditional farming system. The project could serve as a model on how to achieve quick and remarkable results in the rural sector. However, the project did not succeed in its institution building efforts. It was conceived and implemented by expatriates and when they left weaknesses of the project authority became apparent. The Bank's limited knowledge of socio-economic conditions, particularly in relation to rice cultivation led to labor bottlenecks and varying farmers' interest in swamp rice production. Nevertheless the impact of the project on the economy is favorable. The re-estimated rate of return is 20%, i.e. five percentage points above the 15% estimated at appraisal. The following points may be of special interest: - difficulties encountered in establishing an autonomous project authority (PPAR paras. 3, 28-30; PCR paras. 2.07, 3.01-3.04, 6.03); - failure to establish a viable project institution during the short three year development period (PPAR paras. 28-33; PCR paras. 3.05. 3.49, 5.02, 6.03); - limited knowledge of socio-economic factors leading to labor constraints and abandoning of swamp rice plots (PPAR paras. 18 (d), 19, 24-27, 41, 44; PCR paras. 3.07, 4.01); - inadequate returns to farmers from swamp rice production (PPAR paras. 17, 18 (a), 19, 20, 22-25, 38; PCR para. 3.07); - negative effects of Government pricing policy on palm oil production (PPAR paras. 34, 35, 45; PCR paras. 3.27, 3.31, 5.02); positive effect of price increases on the (already low) rate of return of the swamp rice component (PPAR para. 36).  Project Performance Audit Memorandum SIERRA LEONE INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT (Credit 323-SL) I. PROJECT SUMMARY / Project Background 1. The Integrated Agricultural Development Project (IADP I) in the Eastern and Southern Provinces was the first Bank supported undertaking in the agricultural sector of Sierra Leone. Project design changed substan- tially over the three and a half years (January 1969 - June 1972) of identi- fication, preparation and appraisal. Changes introduced by the appraisal mission included the deletion of cocoa rehabilitation, forestry develop- ment and a road program; the addition of oil palm plantings and oil palm and rice mills; and the reduction of the investment period from six to three years. Annex 1 of the PCR shows changes in design since preparation. The project approved by the Bank provided for assistance to 2,500 near-sub- sistence smallholders; development of 6,000 ha of swamp rice, 750 ha of smallholder cocoa and 2,430 ha of nucleus estate and outgrower oil palm plantings; processing facilities for oil palm and rice; and training and studies. The emphasis had swung to the swamp rice component, other parts were treated more as pilot schemes. Costs amounted to US$5.6 million of which the Bank would contribute US$4.3 million. The rate of return was estimated at 15%. 2. The appraisal mission concluded that the Ministry of Agriculture and Natural Resources (MANR) was unlikely to implement the project effi- ciently and proposed therefore that the project be managed by Project Management Units (PMU) at first and then largely by an autonomous authority to be set up for that purpose. The new authority was to have broad powers and take over commercial activities of MANR-in-the project area. The pro- ject also provided for the closing of the Rice Corporation, which was in charge of rice imports, processing and marketing. Under plans to be sub- mitted to the Bank for approval, the functions of the Corporation were to be taken over by the Sierra Leone Produce Marketing Board (SLPMB), which was in charge of marketing the country's main export crops including palm oil and cocoa. Plans also provided for the closure of the Board's unecono- mic oil mills. 1/ Adapted from the PCR.  -2- Implementation 3. The idea of establishing an autonomous project authority was soon abandoned: Government considered it premature and IDA agreed. The project was continued therefore to be administered by PMU headed by a manager directly responsible to the Permanent Secretary of MANR. A Farmers' Working Committee was created to inform project management of the farmers' views. A Project Advisory Committee was set up to facilitate the relationship between the project and the Ministry; but it subsequently lost its effectiveness. 4. Under the follow-up project, started in 1975, separate organi- zations have been created to take over main project activities. The Daru Oil Palm Company (DOPC) has become responsible for oil palm plantings (estate and outgrower) and the mill, and the Farmer Finance Company (FFC) for the project's revolving credit fund. 5. Expatriates filled several senior staff positions, including that of project manager, whose vigorous and imaginative leadership is largely responsible for the timely completion of physical works. Per- formance of the other expatriates was mixed: the land planning officer was excellent; the financial controller and the rice/cocoa officer were not fully satisfactory. Originally, the project unit had full authority to recruit junior and intermediate staff, but since 1975, intermediate and senior level appointments have to be referred to the Government. 6. Swamp rice planting targets have been exceeded (7,140 ha instead of 6,000 ha) and rice yields are in line with appraisal estimates. About 2,600 project farmers have adopted the low-cost water control measures and there has been some spin-off to non-project farmers. Maintenance of water control structures, however, is generally inadequate and Bank super- vision missions doubt that swampland rice production has as yet become an integral part of the traditional farming system. 7. Cocoa (770 ha) and oil palm plantings (2,465 ha) also exceed appraisal targets. Yields are likely to fall somewhat below them, however, partly because smallholder plantings are too dispersed to permit efficient supervision. Also oil palm outgrowers are discouraged from maintaining their plantations by the low government-controlled producer price. 8. During implementation it became obvious that the feeder road network had to be expanded and improved for efficient crop collection; American donor agencies agreed to carry out a 300-mile feeder road improve- ment program now underway. 9. The land planning section and the field extension services played important roles in the success of the rice development program, by ensuring that work was completed and credit for farm inputs supplied on time. The extension services were less effective in helping farmers improve crop hus- bandry, though the agent-farmer ratio at the end of the project period was about the same as the appraisal estimate (1:75). 10. Formal farmer and staff training was largely successful. About 2,000 farmers and 69 demonstrators attended courses. Training provided to staff also benefits the second-phase project (IADP II), including the Northern areas where staff trained under the IADP I are now employed. 11. The number of farmers receiving project credit is shown by the PCR to have exceeded targets. The appraisal mission's decision to allow farmers to borrow for only one crop, and for a limited acreage, proved difficult to implement and in practice was often circumvented through the intricacies of the extended family system (a point discussed in the PPAM). Management of the credit section started deteriorating in 1974 and accounting procedures are still unsatisfactory. The FFC could become a satisfactory credit institution in the region, provided that it can reduce the high credit servicing costs. 12. The rice milling component was not implemented because existing small-scale private facilities proved adequate. The oil mill was commissioned in 1976 at much higher cost than envisaged at appraisal, largely because at a time of escalating prices MANR unduly delayed the award of contract. The oil mill does not yet operate profitably mainly because of low throughput: official prices for fruit bunches are far below free market prices and inadequate to induce outgrowers to sell to the mill. 13. The design of IADP II,'for the development of the Northern Province and continuation of IADP I in the Eastern and Southern Provinces, was based on a project-financed study. The rice marketing study was also completed under the project, but its recommendations were not implemented by Government. Two more studies were dropped in the course of implementation - one because it was financed by another donor, and the other because it was found to be no longer required. 14. Actual project costs are Le 5.15 million, or 20% above appraisal estimates. Despite the Borrower's liquidity problems during the investment period, project local cost funding was generally satisfactory.  - 4 - II. MAIN ISSUES Swamp Rice Development and the Upland Rice Alternative 15. The PCR mentions a numlber of deviations from the appraisal plan for swamp rice: restrictions 1 on farmers' credit specified in the Credit Agreement were circumvented through "the intricacies of the extended family system" (PCR, para. 3.23), farm labor is no longer freely available (PCR, para. 4.01), and competition from traditional upland rice is limiting progress in swamp rice cultivation (PCR, para. 3.07). These remarks indicate a growing awareness of some of the uncertainties and problems of the project's swamp rice component. More recent figures show a large increase in 1977 in the amount of project swamp land abandoned../ This development seems to be a consequence of changing political considerations and financial constraints leading to less reliable supporting services. It is too early to judge if these "defections" are permanent. 16. In its attempt to provide an explanation of this regression, the audit mission reviewed on-farm developments and found discrepancies between actual development and their presentation in Bank documents: (a) area developed: Early reports imply that the swamps were not cultivated before, and that the project swamp rice area was all additional to the participants' pre-project cropped area. In fact, swamps were culti- vated before the project in varying intensities by farmers in the area. They grew rice in the swamps at various times for several reasons: (i) when erratic rainfall caused upland rice, the major subsistence crop, to fail; (ii) when it was profitable; and (iii) when the Government promoted produc- tion through programs dating as far back as World War II; programs that have been largely abanddned now. Initial supervision missions recognized that some swamps had received varying degrees of development over a number of years. Estimates of the area cultivated before vary between 10% and 30% of the project area. (b) number of beneficiaries: The comparison in the PCR (para. 3.06) of appraisal targets of project beneficiaries with actual figures given by the project's Credit section may be misleading. In the project area, the concept of a "family" can refer either to the extended family or the smaller family consisting of a couple and direct offsprings. Similarly, farms can be cultivated either in common by the extended families or separately by 1/ Farmers could obtain credit only for a limited acreage and for one crop. 2/ From the 7% figure given in the PCR for 1976 to 18% in 1977.  - 5 - couples. Thus the appraisal goal of 2,500 "farmers" was poorly defined to serve as a meaningful target. Furthermore, since many farmers controlled more than the limit of three acres specified in the Credit Agreement, and since it would have been inefficient to leave undeveloped plots in the swamps, the project unit opened several accounts per family to cover an entire swamp at a time. As a result, the number of credit accounts include individual members of the same family, families, and heads of extended families. Project unit staff indicated to the audit mission that without the restrictions of the Credit Agreement, the number of loan accounts could be reduced to one-third of the current number, with no change in actual activity,-suggesting that about 1,000 independent operating units actually participated in the project (down from 2,652 given in the PCR though pre- sumably with more members per unit so that the number of project beneficiaries may exceed appraisal expectations). (c) type of field worker: The appraisal report and the PCR (Annex 11) assume that project farms are cultivated exclusively by family labor once the initial water control works were completed. This, however,is not the case. A 1975 survey ./ showed that about 18% of the labor on swamp rice land in the survey area was hired; project unit staff estimate this figure even as high as 50%. Project farms, which correspond to 10% of the total population of farms in the project area, are not the undifferentiated small family-farms targeted at appraisal. *Project unit staff feel that labor shortages (see the next paragraph), and the rising number of land disputes in the swamps, stem from a prevalent feeling that the project unduly benefitted a minority of farmers 2/. A socio- economic review might be needed to determine whether the project has exacerbated social inequities. 1/ Data and much of the information given in para. 18 are from "Small Farms in West Africa: A Descriptive Analysis of Employment, Incomes and Productivity in Sierra Leone," by Dunstan S. E. Spencer and Derek Byerlee. Chapter 10 of that study deals specifically with the effects of IADP I, 2/ For some farmers interviewed by the audit mission, pdrticularly oil palm outgrowers, farming was not the primary economic activity or could not be classified among subsistence farmers. The sample, how- ever, may not be representative. The land tenure disputes in the swamps may also have a different interpretation: by allocating credit to indivi- duals rather than through the chief of the extended family, it freed these individuals from a semi-serfdom. The land tenure disputes result from chiefs attempting to regain their past authority. This point further demonstrates the Bank's inability to determine whether the project had a beneficial or detrimental impact on equity, in the absence of basic data -on socio-economic factors.  (d) employment: As in others of its smallholder projects, the Bank expected at appraisal that adequate farm labor would be available, and that by increasing employment opportunities the project would have a beneficial impact. Instead, the project has contributed to growing labor shortages. The survey mentioned earlier showed that labor on project farms was initially not in excess supply and that it is now inadequate!/. Farmers interviewed claimed that the shortage of labor and its high costs (sometimes twice the minimum wage) were the main causes for the reduction in swamp rice acreage and delays in planting and cultivation. 17. The above findings put a different perspective on the PCR's assessment of project performance. First, the lack of a clear definition of farmers, families and project beneficiaries, and the lower estimates of the number of decision making units, raises the question whether the number of beneficiaries also exceeded the appraisal target. Second, the findings suggest that swamp rice is less profitable than shown in the PCR. The audit's recalculated rate of return on this component, taking into account higher labor costs, reduced life of swamp development works, and reduced incremental areas, falls below 10% (paras. 34 and 35). The authors of the small farm survey (para. 16 (c) footnote 1/) go even further and conclude that the most important resource in agriculture in Sierra Leone is labor and the swamp rice component of the project is less profitable from a national point of view compared with the previous farming system. 18. This conclusion is somewhat contradicted by observations that new farmers (new couples and other operating units) are requesting project credit to develop their swamps. For newcomers, however, the opportunity of providing against potential shortfalls in upland rice production remains attractive, particularly on smaller farms using family labor in remote villages where labor might still be available in larger supply. More important, credit recovery policies being currently implemented are also favoring swamp improvement works. 19. The audit findings also suggest how project design may have been improved. First, since the unsuccessful restrictions of the Credit Agree- ment contributed 2/ to an unduly large number of accounts, they are partly responsible also for the high credit handling costs (and the threat to the viability of the Farmers Finance Company). The Bank, which introduced the restrictions with the intention of spreading project benefits to a large number of small farmers but with inadequate knowledge of family structure 1/ According to the survey, project farmers work between 1,400 to 2,000 hours per year. This is in line with regular working hours in developed societies, but taking into account the hard physical work involved; the number of rainy days during which work is not possible, particularly in the swamps; the four-month duration of the main cropping season, causing farmers to work more than 200 hours during peak months; and the effects of undernutrition and disease (particularly malaria), it is not surprising if farmers found the 1,400-2,000 range excessive. 2/ The large number of accounts is also due to the difficulty in grouping project beneficiaries (PCR, para. 3.23). and land tenure patterns, has to accept part of the blame for FFC's unsatisfactory financial performance. 20. Second, farmer incentives established or assumed at appraisal appear to have been inadequate. In this respect the audit mission feels the PCR analysis is incomplete. Farmers seem to be withdrawing from the swamp rice development program for other reasons than those given in the PCR. The latter emphasizes inadequate attention by the extension staff to crop husbandry methods, and inadequate integration of swamp rice cul- tivation into the farming system. The mission believes that the main reason is financial: farmers find that swamp rice is no longer as pro- fitable a cash crop as it was in the early project years because returns of cocoa and coffee are more attractive. Then, labor supply was still in excess of demand and the Government's administered rice price was relatively high and was to be further increased (1974). Since 1976, however, labor costs have risen sharply and Government has both reduced the price of rice and raised those of cocoa and coffee, which are grown by all farmers in the area. Farm¶ys appear to be responding correctly to the Government's pricing decisions.- 21. There is no question about the important contribution extension services have made in timely delivery of input supplies and farmers credit appraisal and recovery (PCR para. 3.18). But the farmers' prompt response to price incentives and disincentives, challenges the suggestion that the extension services have played'the dominant role in convincing farmers to follow project recommendations. Without a substantial improvement in the relative price of rice, the extension services accomplishments will remain marginal and will have only a minor impact on project outcome; in the audit mission's view the staff could probably be sharply reduced without major changes in swamp rice production. 22. The PCR's emphasis on the importance of careful planning for the integration of swamp rice cultivation into the traditional farming system based on upland rice production is correct. The differences between the two rice crops are considerable indeed.2/ Upland rice is cultivated for subsistence, intercropped with high value crops. It is controlled by women, both in the field and in the granary and to some extent provides them with marginal cash incomes. Swamp rice, cultivated under the project, on the other hand, is grown as a cash crop mainly by men, with women usually assisting only for seeding and weeding3t and 1/ Government prices do not necessarily reflect actual producer prices, for farmers may receive more attractive prices by selling outside official channels. 2/ The main source of these remarks is a report by the Chief Extension Officer. The report points to several differences in addition to the ones mentioned here. 3/ In one village, men and women cultivate their swamps separately. The crop is unquestionably better in the women's swamp.  - 8 - in their view, without proper compensation, in fact, with a loss of personal incomes. Men control sales proceeds. Rice grown for cash is a relatively new approach and requires substantial changes in the traditional farming system. At the same time, it is more directly influenced by price changes than is the upland subsistence rice crop. Family decisions on the latter fall more under the influence of cul- tural traditions than market prices. 23. Since rice is a less profitable cash crop, the farmers' attention is returning to the uplands, partly because of the inter- cropped high value crops (PCR, para. 3.07, footnote 1/), which bene- fit from upland rice cultivation, and partly because subsistence rice is traditionally grown in the uplands and has continued to be grown there during the project. The analysis has to determine to what extent, under unfavorable marketing conditions, farmers are willing to cultivate swamp rice in addition to - not instead of - upland rice for subsistence. It is premature to determine whether the farmers' withdrawal from the project swamp rice program (para.15) is a temporary phenonmenon, or whether it foreshadows the progressive abandonment of most of the scheme as was the case with the previous government swamp development programs (para. 16 (a)). 24. The above discussion suggests that the Bank's analysis of the on-farm impact of the rice components lacked thoroughness, especially at the appraisal of IADP I, when limited data was available. During the implementation period, the Bank should have checked more carefully the validity of appraisal assumptions about family and farm sizes, use of family labor, and economic and social constraints at the farm level. Supervision reports give figures on number of beneficiaries, areas, yields and labor requirements but do not interpret figures in terms of a rapidly changing society. The importance of socio-economic evaluation was recognized and an effort (albeit unsuccessful) was made to involve the university in the exercise. 25. The audit mission s interviews indicate that Bank staff were aware that changes were occurring and that their knowledge of on-farm development was inadequate. The former project manager, now with the Bank, supports that view. Changes in the design of IADP II show that Bank staff has become much more familiar with some of the on-farm con- straints (such as labor shortages). The PCR also reveals a growing awareness of the importance of tradition, on the one hand, and govern- ment pricing policies, on the other hand, in influencing the success- ful prosecution of the project design. The PCR is correct in emphasizing that the project should have been treated as a pilot scheme (PCR, para. 6.02), implemented as an experiment under which project proposals would have been tested against performance and objectives and design adjusted as the project went along, particularly for the swamp rice development component and the institutional changes recommended (see following section). The former Project Manager furthermore feels that the project could have been even more effective if provisions for evalua- ting its socio-economic impact had been made during the implementation  - 9 - period. The Bank acknowledged the implications of its limited knowledge of on-farm conditions but only after the Credit had been approved. Institution Building 26. The audit accepts the PCR conclusion that the project's insti- tution building efforts have not succeeded. The PCR gives several reasons to support this conclusion (PCR paras. 3.01, 3 02, 3.38 and 3.49). The situation may have deteriorated further. Efficiency of the newly-created organizations for credit (FFC) and oil palm (DOPC) are showing increasing signs of weakness, some of which were anticipated by the PCR. Recruitment of project staff at intermediate and upper levels is subject to Government's approval and criteria other than competence are being introduced, thus lowering recruitment standards. The credit recovery rate of the FFC has con- tinued to decrease: in 1977, it was 60% for rice (down from 100% in 1975 and 80%/ in 1976) and 2% for'oil palm'(first repayments for new-planting credits). Labor productivity of DOPC dropped in 1976 by 20% (from 2.6 man- days per ton harvested in 1975 to 3.1 in 1976p, and figures available so far'for 1977 point toward a further decline. _ Only the project unit's land planning and the oil palm planting'sections have so far retained their past efficiency, as demonstrated by the timely completion of swamp rice developments and oil palm plantings programmed under the second phase project. The deficiencies mentioned above do not threaten project out- come in the immediate future, but unchecked, they will impair it at later stages. 27. The lack of success of the Bank's institution-building efforts may be linked to the creation o'f a new, autonomous unit to implement the project. The Government refused -the Bank proposal of a separate auto- nomous agency, and requested that the project unit be placed within the MANR. The nomination of a'n expatriate manager directly responsible to the Permanent Secretary, MANR was expected to ensure adequate autonomy to the un:it to be able to carry out project proposals. By- the same token, autonomy made project success less dependent upon the improve- ment of existing institutions. Hence the Bank could afford to be more lenient about the deficiencies of existing--institutions. Furthermore, project investments were to remain under-the control of the newly-created agencies, and not to be handed over to-existing institutions. 28. In retrospect, the sweeping institutional changes proposed at appraisal had l'ittle chance'of success-because of inter-ministerial rivalries. This was the Bank's first investment in the agricultural 1/ SLPMB continues to operate its uneconomic palm oil processing plants, while modern-mills at Daru and in Gambia -(outside the project area) are working at only 15.3% and 5%, respectively, of their capacity (assuming three shifts in peak periods).  - 10 - sector in Sierra Leone and a more profound discussion between the Govern- ment and the Bank on institutional deficiencies was probably needed to identify mutually agreeable ways to correct them. The Government's re- jection, at negotiation, of the Bank's recommendation that closing of the Rice Corporation and improving of SLPMB be set as conditions of credit effectiveness, and the refusal of key MANR officials to set up ADA, should have warned the Bank against undue haste in trying to reform the institutional setting. 29. The gradual erosion of administrative efficiency in the project agencies can be seen as being partly the consequence of having set up a unit under expatriate management and then not preventing the premature withdrawal of this team. The expatriate manager, a former ADS 1/member seconded by the Bank, played a major role in protecting project autonomy and in safeguarding appraisal objectives during a period when MANR's developmental emphasis was shifting from the Southeast to the North 2/. Although the manager succeeded, thereby, to complete the project as initially proposed, and could not have done so otherwise, he also left a number of Government officials feeling that they should have had a greater role in guiding the project. Government officials also com- plained to the audit mission about the high costs of the expatriate project manager. 30. By enhancing the image of and enforcing project autonomy, expatriates run the risk of precipitating their early departure. A phased plan of dis- engagement from expatriates to local staff might have been more conducive to the continuation of the expatriate's presence until the project agency had reached an advanced stage of development. At the same time, only an auton- omous agency could have carried out the physical development of this project as planned by the appraisal mission and have achieved the high rate of return (para. 38). The audit mission concurs with the preparation and appraisal mission's assessment of the existing institutions as having insufficient management capabilities to implement the project. The project unit was able to operate efficiently soon after project approval, thus making it possible to complete physical infrastructure on schedule. Furthermore, even taking into account the current deterioration of performance, the rate of return on project investment remains high. This is largely due to the rapid initial project progress, carrying with it those early benefits that count so much in rate of return calculations. Thus, the pros and cons of setting up autonomous units depend on the relative weight given to progress toward more directly measurable physical pro- gress in the early years and economic return targets, with the expec- tation of some institutional growth, versus the deliberate attempt to 1/ Agricultural Development Services, a service by the Bank to assist Eastern African borrowers to recruit expatriate assistants for Bank-financed projects. 2/ With the support of an expatriate Chief Agricultural Officer, whose experience in Sierra Leone had been acquired in the North.  - 11 - create an institutional structure than can hopefully reach an expanding set of physical targets in the future. 31. Time is a critical factor in this discussion. The Bank was over-optimistic in expecting to establish an autonomous unit and bring existing institutions into line with the appraisal design in three years time. The decision by management to halve the proposed investment period may have seemed justified on the grounds that this reduced Bank exposure in what was a risky undertaking. The decision, however, also increased the risk that, at the end of the investment period, the project unit would continue to need external assistance. Even the two-year extension provided under the second-phase project will be inadequate to carry FFC to self-sufficiency! there is legitimate concern about the future of the project agencies once Bank funds are exhausted (by end 1978). The exper- ience reflects the mission's earlier findings about a need to allow for longer gestation periods of newly-established project executing agencies. Government's Price and Marketing Policies 32, Controlled purchase prices of rice and palm fruit are now 507 1% and 62%, respectively, of the free local market prices. Only coffee and cocoa prices have been recently increased to more nearly reflect world market conditions. The PCR stresses the impact of the Borrower's pricing policies on the project oil palm component (PCR, para. 3.31). The mission feels that the point needs to be even more strongly stressed in view of the fact that the Borrower's pricing policies had a determinant impact on the swamp rice component of this project as well. 33. The Borrower's policy of maintaining low cocoa and coffee producer's prices is partly motivated by its precarious fiscal situation. The experience of the Rice Corporation (PCR, para. 3.28), which had to stop purchasing rice in 1975 because of lack of funds, strengthened the Borrower's resolve to resist increases -inproducer's prices. However, this position misses another dimension of the financial considerations: that financial returns to Government may be foregone because of farmers' reaction to adverse price changes. Thus, the palm oil pricing policy is contributing to FFC's poor debt recovery ratio and its uncertain financial viability. Similarly, because the oil palm outgrowers refuse to deliver their bunches to the project mill, this mill is now operating at a loss. The audit mission has calculated that the savings in fixed cost per unit processed that could be obtained if the mill was working at full capacity would amount to the difference between the official and free market palm fruit prices. Thus, an increase in producer's price 1/ When the Borrower reduced the price of rice in 1976, the project con- tinued to pay a quality premium to project participants. Including the premium, the producer price reaches 67% of the free market level.  - 12 - would to a large extent be offset by lower average milling costs. The Borrower's representatives could not explain to the mission the rationale for the low oil palm prices, but they indicated that a study had been initiated to determine the best price level. The PCR is correct in stressing that measures to improve the Borrower's pricing policies are overdue and are critical to the project outcome. Rate of Return 34. The audit mission has recalculated the ROR after making some adjustments in the assumptions underlying the PCR calculations: (1) all labor, including family labor, was valu7d at the minimum wage to reflect its growing short supply; 1 (2) the life of the swamp rice component was reduced to ten years to take into account the economic life to swamp rice develop- ment works financed under the project;_/ (3) the area cropped was reduced at the rates observed by the project unit (para. 15); (4) the annual benefits from swamp rice were postponed by six months to allow for working capital outlays; (5) oil palm yields were reduced by 15% to reflect current DOPC's projections; and (6) administrative expenditures were increased in the post-investment years to account for the continued assistance provided under the second phase project. Benefits of swamp rice were not reduced for a smaller incremental area than assumed in the PCR because yields in that report are too low and adjustments for area and yields would offset each other. 1/ By shadow pricing labor costs more favorable rates of returns can be obtained. Since labor shortages may be significant only in limited areas, an evaluation of the prevailing conditions in other parts of Sierra Leone will be necessary when appraising other projects. 2/ The Region has pointed out that the life of the swamp rice (or any sub- stitute crop of the future) component would be infinite since development works are minimal and are easily resuscitated once base clearing has been carried out. The PCR computes the rate of return over 25 years.  - 13 - 35. On the basis of these assumptions, the audit figures compare as follows with those given in the PCR and the appraisal report. The rice and cocoa components are separately identified to reveal substan- tial differences: Audit PCR Appraisal Rice 6.4 ) 28.2 17 Cocoa 22.6 ) Oil Palm 23.7 29.6 13 20.1 1/ 26.5 -/ 15 36. The low returns of the swamp rice component, the dominant part of IADP I, are immediately obvious. They tend to support the con- clusions of the appraisal report mentioned in the footnote 1/ on page 5 that investments in swamp rice develYment as presently implemented, and given the relatively low yields - may represent a misuse of national resources. All the price calculations are inflated by the extraordinary increase in rice prices. If these were limited for the purpose of analysis to the same rate at which project input prices in the rice sector were increasing - about 20% over the period 1972-75 - the audit estimate would fall further below the 6%. 37. The audit adjustments of the tree crops components have a much smaller impact on the PCR figures. The overall project rate of return of 20% thus combines a low return on food crop activity which is being supported in the analysis by rather high yielding tree crop activities. That dichotomy is arresting, given the fact that the project strategy, and its field resources were concentrated on swamp rice. Pieces of evidence presented in the PCR, for example, the low rate of farmer maintenance of water control devices in the swamp, rein- force the image of disappointing progress to date in the food crop sec- tor of IADP I, a point the mission feels is not adequately reflected in the PCR. 1/ These ROR do not include costs of new roads, even though some of the benefits included in the calculations could not be achieved without the roads. Inadequate data was available to the mission to include the road improvement component. 2/ At 2,170 lb. per ac, close to the 2,200 appraisal target but well below trials of 3,000 lb. also reported at appraisal.  - 14- III. CONCLUSIONS 38. When all the evidence on the IADP I is brought together, the project appears as a mixture of successes and shortcomings. The suc- cesses include a larger area developed than expected at appraisal and physical works completed on time despite the shortness of the investment period; costs kept within reasonable limits of original estimates, despite rapid inflation; a high overall rate of return and favorable spin-off effects to non-projects farmers. Furthermore, staff trained under this project benefit other projects as well. The main causes of the success are an entrepreneurial project management; the adequacy of the Borrower's financial contribution despite its precarious liquidity situation; the autonomy of the project executing agency during the initial years; and the intensive training program. The project could serve as a model on how to achieve quick and remark- able results in the rural sector. 39. The shortcomings are the contribution of the project to local labor shortages; the uncertain integration of swamp rice cultivation into the traditional farming system; the failure of the swamp rice component to achieve a reasonable rate of return; and the lack of significant improvements in existing institutions. The origins of the shortcomings are the Borrower's inappropriate pricing and market- ing policies - inappropriate to this project,however,justified by other cri- teria - which seem to have so far influenced the beneficiaries' farming practices at least as much as the investments provided by the project; and what appears to be a weakness in the case for swamp rice at high wage rates and relatively modest yield. The lack of awareness or misreading of socio- economic conditions by the Bank and Government is evident. The autonomy of the project executing agency was a two-edged device - accelerating the rate of implementation and reducing the rate of acceptance by established agencies. It is as if the project was designed to go too well, too fast, in a cultural environment which was not prepared for this rapid pace of development. 40. That the autonomy of the executing agency is at the same time a source of project success and shortcoming, should not surprise. By setting up an autonomous agency, the project could be implemented, unhindered by an institutional environment which was not conducive to achieve the ambitious development targets set by the project prepara- tion and appraisal missions. By the same token, the project was con- ceived and implemented by expatriates with inadequate knowledge of the socio-economic setting in which the project would have to take life after their departure. The appropriateness of using autonomous agencies headed by an expatriate depends on the relative weights attached to physical development and to institution building in measuring project success.  - 15 - 41. The lack of institution building is also due to the limited time the Bank allowed itself by shortening the investment period to three years. The agencies established under the project depend on continued financial assistance provided under the second phase project for their survival. That was not an assumption of the first phase - at least the institutional design was not presented in a way to indicate follow-on financing would be impera- tive. The Bank was overoptimistic when it assumed that the project agency could become self-sustaining after three, or even five years. 42. At the end of the project investment period, the Bank's knowledge of on-farm conditions remains superficial, particularly in relation to rice cultivation. That appraisal missions lack the time to fully comprehend the complexities of a rural setting is understandable, but it should have acknowl- edged this and provided the project with the means to evaluate the validity of the basic assumptions on which the proposals were based. During implemen- tation, however, the Bank paid inadequate attention to on-farm developments. In particular, the Bank underestimated project farmers' dependence on hired labor, failed to adjust criteria of credit distribution to farmers to take into account a different farm family structure and land tenure pattern than expected at appraisal, and underestimated the impact of the Borroweris pricing policy on farmers' response. An attempt to utilize the university in socio- economic evaluation was not successful. The Bank is aware of shortcomings, some of which have been corrected in the second phase project. In reviewing the IADP I experience, the audit mission felt, however, that a number of aspects of on-farm development which are important in assessing project performance and the appropriateness of project design deserved a more thorough analysis by the supervision teams. 43. The results seem to move the project close to the experience of earlier projects in Sierra Leone, the mistakes of which IADP I had intended to correct. The PCR refers to some weaknesses in the agricultural system which the original FAO/UNDP identification team in 1969 had hoped the Bank supported project could deal with, among which are mentioned (1) a lack of farmer enthusiasm for Government-sponsored agricultural development pro- grams due to the partial or total failure of schemes launched previously by MANR, and (2) lack of incentives in Government's farm pricing policies. IADP I succeeded in rekindling farmers' interest in agricultural development; farmers' response was excellent. Although it is premature to arrive at a final judgement on the future performance of swamp rice development, the proj- ect's accomplishments in providing extension, credit and input supply services in support of rice production are commendable. The project, however, did not succeed in influencing Government to provide the required incentives to farmers by changing its pricing policies on palm oil.  SIERRA LEONE INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT CREDIT 323-SL PROJECT COMPLETION REPORT Table of Contents Page I. Introduction A.1 II. Project History Project Identification and Preparation A.1 Project Appraisal and Approval A.2 Supporting Institutions A.3 The Project A.4 III. Project Implementation A. Review of-Agricultural Development Organization and Management A.4 Agriculture Development.Authority (ADA) A.5 Staffing A.5 Farm and urop Development, Yield and Production A.6 Inland Swamp Rice A.6 Cocoa A.8 Oil Palm A.8 Roads A.8 Agricultural Support Services A.9 Extension A.9 Training A.10 Credit A.10 Marketing and Prices A.11 Rice A.11 Cocoa A.12 Palm Oil/Kernels A.12 Milling and-Processing A.13 Northern Project Study A.13 Forestry Study A.13 Palm Oil Market Study A.14 Rice Milling and Marketing Study A.14 Agricultural Development Authority A.14 B. Financial Review Costs A.14 Procurement A.15 Allocation of Credit Proceeds and Disbursement A.16 Financing A.17 Financial Management A.17  Table of Contents (Cont.) Page IV. Impact of the Project Economic Analysis A.18 V. Role of the Borrower and the Bank A.18 VI. Conclusions A.19 Annexes 1. Evolution of Project Design (1969-1972) 2. Acreage and Marketed Production of Rice, Cocoa and Oil Palm 3. Economic Farmgate Price of Rice 4. Economic Farmgate Price of Cocoa 5. Economic Ex-mill Price of Palm Oil 6. Economic Ex-mill Price of Palm Kernels 7. Total Project Costs 8. Comparative Disbursement Schedules 9. Rice and Cocoa Components - Economic Rate of Return Calculations 10. Oil Palm Component - Economic Rate of Return Calculations 11. Rice - Smallholder Farm Budget (3 Acres) 12. Cocoa - Smallholder Farm Budget (2 Acres) 13. Oil Palm - Smallholder Farm Budget (10 Acres)  SIERRA LEONE INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT CREDIT 323-SL PROJECT COMPLETION REPORT I. INTRODUCTION 1.01 Credit 323-SL of US$4.3 million was the Bank's first agricultural lend- ing operation in Sierra Leone. The project was identified in 1969; the Credit was signed in June 1972 and became effective in December 1972. It was implemented in the Eastern region which has traditionally provided the major output of export crops and has a high potential for swamprice development. The project was the first phase of a program designed to raise the income of about 2,500 farmers' fam- ilies and to produce foreign exchange earnings/savings from increased exports and rice import substitution. The first phase was completed in 1975 and the Credit closed in May 1976 after US$4.3 million had been disbursed. 1.02 In January 1976, Credit/Loan 568/1138-SL of US$10.0 million became effec- tive. The Credit/Loan will finance the consolidation and expansion of project 323-SL for a further 2 years, the development of a new integrated agricultural project in the Northern province and the establishment of central support services for both projects. 1.03 About US$2.3 million of the second Credit/Loan (exc. contingencies) would finance further expansion of inland swamp and upland rice, cocoa and oil palm, 12 new market centers, the establishment of the Farmers Finance Company (FFC), which would operate the Revolving Credit Fund and the establishment of the Daru Oil Palm Company (DOPC) (see para 3.04). II. PROJECT HISTORY (The Evolution of the Various Components of the Project Design is Illustrated in Annex T) Project Identification and-Preparation 2.01 In 1969, FAO/UNDP personnel of the IDAS project (Integrated Development of the Agricultural Sector) identified several cocoa, rice and oil palm projects. The first proposal in Bank documents to integrate some of these into a regional develop- ment project appears in late 1969 following discussions between Bank staff and Government officials. The project was to include large numbers of small-scale swamp- rice and cocoa farmers, credit and training facilities and a feeder road component. Since neither Government nor FAO/UNDP funds were available for further project pre- paration, this was undertaken by the Bank. 2.02 The following considerations were reflected in the project design: - the shortage of well-trained and supported agricultural extension servfce staff - the understaffed and poorly organized Ministry of Agriculture and Natural Resources (MANR)  - A.2 - - a lack of farmer enthusiasm for Government-sponsored agri- cultural development programs due to the partial or total failure of schemes launched by the Sierra Leone Produce Marketing Board (SLPMB) and Rice Corporation; - the collapse of Cooperatives, which left smallholders with little access to credit, except from local traders; - lack of incentives in Government's farm pricing policies; - better stock of information and knowledge of the area together with suitable climatic and social conditions for permanent cash crop cultivation, all favoring the Eastern area as the site for a first agricultural development project in Sierra Leone. 2.03 A preliminary study, prepared by RMWA in 1969, recommended the creation of a Regional Development Authority to take over MANR's project coordinating activities, provide farm credit and to carry out surveys and studies. The prin- cipal project components were the rehabilitation and planting of 19,000 acres of cocoa and developing 7,000 acres of swamprice and 1,000 acres of timber over a 7 year period. Project costs were estimated at US$6.0 million. 2.04 Detailed project preparation was undertaken by the Commonwealth Develop- ment Corporation, under a Bank contract. Although their recommendations followed basically those of RMWA, the cost estimates increased to more than US$13.0 million. This was largely due to the conclusion that the project would need a longer period to develop fully and would require continuous expatriate management. Project Appraisal and Approval 2.05 During project appraisal, a number of changes were made which altered the original design considerably. Most important was the addition at Government's re- quest of an oil palm component, which was not previously considered; and cocoa re- habilitation was abandoned as spraying of old cocoa was impractical and economi- cally not viable. The road component was also deleted as sufficient roads were available in the proposed project area. Establishment of the National Agricultural Credit Bank was included at the request of Government, but subsequently deleted as it was not viable. Although credit was urgently required by the widely scattered Sierra Leone farming community and a national credit institution was very desirable, it would only have been fully effective when coupled with intensive technical assis- tance at farmer level. This was possible under the project but not nationwide. 2.06 From project appraisal (early 1971) to Board approval (mid-1972), further changes were made which considerably reduced the scope of the project (see Annex 1). The factors principally responsible were: introduction of the oil palm component, including the construction of the oil mill which was to become the largest single cost item; limitation of available IDA funds; and the reduction in the project's development period from 6 years to 3 years. Consequently, the Credit was reduced from US$5.7 million to US$4.3 million. The rice and swamp development was substan- tially reduced and cocoa development was restricted to a pilot scheme. The forestry component, although initially reduced, was ultimately dropped when Government decided  - A.3 - that the Tema Forest reserve should have priority over the Kenema area. Supporting Institutions 2.07 In view of the ineffectiveness of MANR (see para 2.02), management and operation of the project was to have been vested in an autonomous development authority (NADA/ADA). The National Agricultural Development Authority, a statu- tory body, would have had broad powers and would have taken over some of the most important MANR functions in the Southern and Eastern regions. It would have provided extension services and agricultural credit, and would have pre- pared and implemented future agricultural projects as well as managing the IDA- financed project. Politically, it proved impossible to introduce NADA/ADA as it was to be restricted initially to the Eastern region.- Moreover, it was in- tended that NADA should strengthen MANR and an alternative was presented when the United Kingdom ODM offered to provide key staff for the Ministry. As a result: NADA was renamed ADA (Agricultural Development Authority) and restricted to commercial activities; it was agreed that the project would be implemented by Project Management Unit, based in Kenema, and responsible to MANR. 2.08 The performance of the Rice Corporation and SLPMB were reviewed at appraisal. Recommendations were made that the Rice Corporation should be closed as overheads were extremely high, its role in stimulating local production incon- clusive, its management inadequate and distribution of imported rice was declin- ing. It was also proposed that SLPMB would carry out the Rice Corporation's functions at substantially lower cost, but Government did not agree. It was then decided to provide funds under the project for a Rice Marketing Study, which could be used as the basis for formulating rice marketing and milling policy. As the Bank was concerned about palm oil marketing and pricing arrangements, funds were also included for a Palm Oil Marketing Study; at negotiations, agreement was reached that SLPMB would submit plans to IDA for (i) palm oil marketing and pric- ing; (ii) closure of SLPMB's uneconomic palm oil mills, as a condition of disburse- ment against the oil palm component. PMU was to be responsible for farm credit on the understanding that the credit fund would subsequently be transferred to ADA. Lastly, although the choice of the Eastern area for the first Bank-assisted inte- grated agriculture project in Sierra Leone was logical, it was politically unaccept- able to Government without including something for the Northern area. Hence, funds were included for the Northern region project feasibility study. 2.09 One of the main reasons for the delay between appraisal (Feb. '71) to Board approval (June ,'7-2) was the Bank's concern about the fiscal and political situation in Sierra-Leone together with the unsatisfactory performance of some of the,ongoing projects.- Government4 'sradverse'fiscal situation casted-serious doubt on its ability to provide=local funds for the agricultural project, particularly since other Bank-assisted projects were already affected. It was also found'that Govern- ment agreement to limit short- and medium-term borrowing to US$2.0 million/year, which was a condition of,the (Oct.'70) road proj;ect Board presentation (710/218-SL) was not-being adhered-to. Consequently, in September 1971, Government-agreed to implement a package of policy measures, on the understanding that the agricultural project would only be presented to the Executive Directors when there was sufficient  - A.4 - evidence that the Government was moving to improve its economic management. The Project 2.10 The project, to be implemented during the 3-year period (1973-1975), was to be the first phase of a program designed to raise the incomes and living stan- dards of about 2,500 near-subsistence smallholders in the Eastern and Southern provinces of Sierra Leone. It consisted of: (a) completing a 2,000 acre oil palm nucleus estate by planting 510 acres and constructing a mill to service the estate and associated smallholders; (b) providing smallholders with credit, extension and training for the development of: - 6,000 acres of inland swamprice, - 750 acres of cocoa, - 1,830 acres of oil palm; (c) construction of 20 small rice mills; (d) carrying out studies (see Annex 1); (e) establishing ADA. 2.11 Although certain credit effectiveness conditions, particularly the appoint- ment of the project manager, proved difficult and delayed effectiveness to December 8, 1972, the other conditions were satisfactorily fulfilled. III. PROJECT IMPLEMENTATION A. Review of Agricultural Development Organization and Management 3.01 The project was administered by a Project Management Unit (PMU) with head- quarters at Kenema, headed by a project manager directly responsible to the Permanent Secretary of MANR. Although not envisaged at appraisal, a Project Advisory Committee was set up composed of representatives of the Ministries of Finance, Development and Agriculture, Bank of Sierra Leone and the Sierra Leone Produce Marketing Board, chaired by the Permanent Secretary of MANR. Initially, this Committee greatly facili- tated project execution, since project policies could be discussed and immediately ratified by the Permanent Secretary. Unfortunately, no terms of reference were pre- pared for this Committee, which may be why later on, with frequent changes in MANR officials, the Committee became less effective. Project management was also handi-  - A.5 - capped by inadequate access to the Permanent Secretary (mainly due to the poor communications between Kenema and Freetown) and the somewhat strained relation- ships with some senior Ministry staff. This may have been avoided if MANR and project responsibilities and relationships had been defined at the outset. Under phase 2, improvements are anticipated with the introduction of a Project Evaluation and Services Unit (PESU) in MANR headquarters. Another additional ele- ment, introduced by PMU, was the establishment of a Project Farmers' Advisory Committee, with representatives of all project chiefdoms, and a Farmers' Working Committee composed of 3 representatives of the Farmers' Advisory Committee. Al- though the Advisory Committee was too large to be fully effective, it created a mutual bond between farmers and the project. The Farmers' Working Committee was, on the other hand, far more effective and ensured that project decisions included farmers' views and did not meet opposition at a later date. Agriculture Development Authority (ADA) 3.02 Under the Credit Agreement, ADA was to have been formed prior to March 31, 1974. The legislation was completed in January 1973, but following MANR Ministerial and Permanent Secretary changes, MANR said that the establishment of ADA at this time would be premature. This was agreed by IDA on the basis of the following: (a) the formation of ADA would remove considerable authority from MANR; (b) it would make further demands on the very limited qualified national manpower available; and (c) ADA could not solve the problems of inefficiency in operation of MANR, which were at the root of its conception. 3.03 It was intended that ADA would own and operate the project's oil palm mill and estate, take over the credit fund and operate the rice mills after the project development period. ADA was furthermore to assist Government and other institutions in identifying, preparing and managing other agricultural projects. .3.04 An alternative to ADA was proposed during appraisal of 568/1138-SL in mid-1974. Under the Credit/Loan Agreement, operation of the oil palm mill, the estate and purchase of fresh fruit bunches from outgrowers, together with the supply of extension and credit services to the oil palm smallholders, would be the responsibility of the newly established Daru Oil Palm Company (DOPC); the Farmers Finance Company (FTC) would operate the project's revolving credit fund; and PESU would be established within MANR in Freetown to assist in project evaluation, management of the two projects and FFC and DOPC. In sumary, most of ADA's proposed functions will be undertaken, but by different organizations. Staffing 3.05 There were staffing difficulties due to a lack of experienced Sierra Leonean  - A.6 - personnel. Furthermore, the conditions offered to local staff were not particu- larly attractive compared with the private sector. Apart from the deputy project manager, training officer and oil palm plantation manager, who were seconded from MANR, all other senior staff positions had to be filled by expatriates. The re- cruitment of expatriates was slow and cumbersome, and the performance of the financial controller and the cocoa/rice officer was not entirely satisfactory. The project manager and land planning staff deserve full credit for the efficient start-up, and achievement of physical targets. However, the present state of seed multiplication, accounting, and credit operations are partly attributable to selection of inexperienced expatriates and the failure to replace the expatriate credit manager who left in 1974. The position of deputy project manager was filled by an experienced senior MANR officer from December 1972 to September 1974. There- after, it was decided that the Provincial Agriculture Officer, Eastern Province, would also be deputy project manager to allow smoother integration of project and non-project operations. Initially, recruitment of junior and intermediate local staff by PMU was satisfactory. However, in 1975, PMU's freedom to recruit inter- mediate level staff was removed; thereafter, intermediate level appointments had tQ be referred to the President and junior staff recruitment to MANR. Farm and Crop Development, Yield and Production 3.06 General: The crop development targets shown in Table 1 for the 3-year period (1973/1975) were in every case exceeded. The proposed programs for construc- tion, training and studies were also satisfactorily completed. For further details, see Annex 2. Table 1 CROP DEVELOPMENT AND NUMBER OF PARTICIPATING FARMERS Swamp Rice Cocoa Oil Palm Oil Palm (Estate) (Outgrowers) Appr1. Act. Appr. Act. Appr. Act. Appr. Act. (Acres) 6000 7137 750 770 510 532 1830 1934 (Farmers) 2000 2652 375 391 - - 183 542 Inland Swamp Rice 3.07 Development of inland swamplands for rice production was the principal component during the 3-year period. Over 7,100 acres of inland swamp were reclaimed, 19% more than appraisal estimates. The low-cost water control measures (Le 70/acre) introduced under the project has been successfully adopted by some 2,600 project farmers. Furthermore, there has been some spin-off to non-project farmers, since other swamps are being opened up using the same technology. On the other hand, main- tenance of water control structures is generally poor and in some areas they have already disintegrated. This, together with late planting, gives rise to concern as  - A.7 - to how these newly developed areas will remain under permanent cultivation. Al- though the swampland reclaimed each year was, and still is, substantial, it is estimated that about 4% of the previously developed area was not cultivated in 1975, and this increased to 7% in 1976. Although these are only tentative figures, Bank supervision missions have reported that swampland rice production has not yet become an integral part of the upland farming operations which are prevalent in Sierra Leone. Unless the yields of inlaznd swamp rice are substan- tially higher and can compare with the benefits derived from the traditional upland rice farms, 1/ the technological changeover from upland to swamp rice production may not be as successful as that achieved so far. At present, it is too early to evaluate the success of this part of the project, as, from a socio- logical point of view, such a radical change in the traditional farm system can- not take place within 3 to 5 years. Provided, however, that Government continues to support the swamp rice farmers, there is no reason why cultivation of swamp rice should not become a permanent feature. PESU should, however, monitor care- fully any retardation in crop husbandry practices and yields and analyze the situation more fully. 3.08 Inadequate provision for seed supplies was made at appraisal and the project was compelled to establish 2 seed multiplication farms, in addition to expanding the seed producing facility at the Farmer's Training Center. Although seed production from master farms was encouraged, this will have to be supple- mented by project seed farms for some time. The technical supervision of both private and project seed farms, however, was below standard. Fertilizer was applied according to the Rokupr Rice Research recommendations, which encouraged the use of straight fertilizer (N: 24 lb/acre - P205 : 20 lb/acre and K 0 : 22 lb/ acre). Although no serious pest and disease outbreaks were reported, management introduced a "spray insurance scheme" whereby each farmer paid a "pest control" insurance premium each year, operated by the Project Crop Protection Unit. Al- though this scheme initially worked well, it is now criticized by farmers who com- plain that they do not receive the service when it is needed. Since pest and disease problpms are bound to occur more frequently over a larger area, farmers may, in the future, be better off owning their own knapsack sprayers. 3.09 The average project paddy yield between 1973 and 1975 was about 2,170 lbs/ acre, similar to appraisal estimates of 2,200 lbs/acre. Although average yields of 10 to 25% above the appraisal estimates could easily be realized under the same technological package, this is unlikely to occur due to two factors: poor main- tenance of water control devices and persistently-late planting. 3.10 Although actual family consumption has been assessed at least 10% higher than appraisal estimates, post project marketed production is still estimated to be 7% higher than appraisal estimates, due to a larger developed acreage (19%). For further production details, see Annex 2. 1/ Upland rice farms in-Sierra Leone are generally intercropped with other food crops (e.g., maize, guinea corn, various vegetables, etc.). These extra benefits minimize risk of hunger, softens labor peak demand and contribute to a more balanced diet.  - A.8 - Cocoa 3.11 Cocoa development commenced one year ahead of schedule as seedlings were available from 1972 seed gardens. Total acreage planted by 390 farmers was 770 acres-3% above appraisal estimates. Although the cocoa component was small, and integration between cocoa and inland swamp rice was difficult due to limited credit availability, (see para 3.13) project management could have given more priority to cocoa development. The area developed is widely scattered and poorly accessible, which will affect supervision, input and marketing arrangements. 3.12 Although nurseries improved in 1975, the F3 Amazon Amelonado cocoa seed- lings issued to farmers were generally poor. Site selection was satisfactory but handling of seedlings during planting in the first two years was inadequate. Ferti- lizers (7 lb. N, 6 lb. P 0 and 20 lb. K20 per acre) have been recommended for application from Year 5 K2 the rationale for these recommendations is not clear as they differ from those generally recommended in West Africa. This will be reviewed under 568/1138-SL. These factors, combined with inadequate extension advice for maintenance, are likely to result in yields at full maturity of 400 to 600 lbs/acre, 20% below appraisal estimates. Estimated production, which should commence during 1976/1977, has therefore been revised (see Annex 2). Oil Palm 3.13 The appraisal planting target of 510 acres, to bring the Nucleus Oil Palm Estate to 2,000 acres, was completed in the second year. However, the pre-1973 planted area, originally estimated at 1,490 acres, was found to be only 1,272 acres after survey and total estate planting is therefore only 1,782 acres. Similarly, smallholder development between 1968 and 1972 was reportedly 1,169 acres, but was only 740 acres. During the project period, outgrowers planted 1,926 acresi, 5% more than appraisal estimates. With the first phase completed, oil palm development totals 4,448 acres, 11% below appraisal estimates. As for cocoa (see para 3.11), the outgrowers oil palm component is widely dispersed, which may affect the effi- ciency and costs of ffb collection unless the proposed feeder road component under 568/1138-SL is concentrated in oil palm growing areas. Nurseries,and planting operations of both the nucleus estate and outgrowers were generally satisfactory. Maintenance is less satisfactory, particularly for outgrowers during the rainy season when much attention is given to food crops. The poor maintenance and lack of fertilizer, prior to 1973, has resulted in retarded outgrower yields. Overall yields are thus likely to be lower than appraisal estimates: ffb production is now estimated to reach 18,400 tons/annum at full maturity, 14% below appraisal estimates (see Annex 2). Roads 3.14 At appraisal, the feeder road component was deleted since sufficient roads were available in the area to support the project. However, during project imple- mentation, it became clear that the existing crop extraction roads needed improve- ment and that a modest expansion of feeder roads was necessary to satisfactorily improve the project's input supply and marketing arrangements. PMU must be given  - A.9 -- credit for the fact that, in 1975, CARE and USAID became involved in a 300-mile feeder road improvement and construction program in the project area. This will be particularly helpful in servicing the widely dispersed cocoa and oil palm outgrowers. Agricultural Support Services 3.15 Research. The National Rice Research Program is the responsibility of the Rokupr Research Station. Upgrading of rice research was required under the Development Credit Agreement (4.03a). After some delay, the Rokupr Research Station was strengthened in 1975 by a UNDP-financed program with IITA as execut- ing agency. This expires in 1977, but it is expected that the IITA contract will be extended. The project engaged in rice research to a limited extent in 1975 through participation in the National Coordinated Variety and Fertilizer Trials (part of a WARDA program). Although the present agronomy package for inland swamps and upland rice farms is satisfactory, much of it can still be improved. Presently, only medium to long duration varieties are available (RH 2, CP , RC ) for the inland swamp package, and full attention should be given to the introduc- tion of short-duration varieties (particularly for late planting (see para 3.07) and double cropping). Another area requiring immediate attention is the screening of varieties against iron-toxicity and disease resistence. 3.16 Although Government continues to develop and intends to rehabilitate cocoa, no research is taking place. Many of the research findings in Ghana, Nigeria and Ivory Coast could be applied to Sierra Leone but some applied research on variety, fertilizer and shade requirements should be carried out under Sierra Leone con- ditions. This could be initiated by the project in Kenema, backed by a visiting agency type agreement with IFFC to provide technical and management supervision similar to the IRHO arrangements for oil palm. 3.17 Although no institution is carrying out oil palm research, the present advisory arrangements with IRHO for technical proposals and agronomic problems are adequate. However, consideration should perhaps be given to establishing a small tree crop research unit for the long-term tree crop development program. Extension 3.18 Field management of cocoa and rice schemes. has been carried out through three main offices in Daru, Kenema and Potoru, under the supervision of an agricul- tural officer. The overall planning and supervision of development was undertaken through a Land Planning Section, which was not envisaged at appraisal. The success of the rice development is, to a large extent, due to the competence of this specia- lized unit. Water control devices for each swamp were designed and supervised by land planning assistants, and as the work proceeded, were handed over to the extension field assistant. Both the Land Planning Section and the field extension aides also played an important role in the credit scheme by ensuring that the Credit Section supplied farm inputs on time. Extension services to farmers in crop husbandry were less satisfactory. This was largely due to poor backup services given by the Rice/ Cocoa Agronomy Section at Headquarters to the field assistants. The overall extension agents ratio to rice and cocoa farmers at the end of the project period was about 1:75 (1:200 acres), about the same as appraisal estimates.  - A.10 - 3.19 Extension for oil palm outgrowers was provided by an agricultural officer and a few extension aides (1:500 acres) who were responsible to the oil palm plan- tation manager. The impact of the extension aides is not entirely satisfactory since maintenance still leaves room for improvement (see para 3.12/3). 3.20 Thus, although certain aspects of the extension services could be improved, the organization is adequate and, subject to continuous technical and financial support, should continue to operate satisfactorily under MANR. However, future extension services should focus on the whole farm and not, as is now the case, on one crop. Training 3.21 Project management was very successful in conducting 10-day training courses for rice, cocoa and oil palm farmers at the Farmers Training Center in Kenema. Farmers' participation was good and included farm leaders, women farmers, and farmers' sons. It has been estimated that the 2,000 participants constituted about 40% of project farmers. Special 3 to 4 months courses were also given for 69 chiefdom demonstrators. These were generally young men with some basic formal education, whom chiefdom authorities wished to be trained in agricultural extension techniques so that they could be employed to benefit agricultural development in that chiefdom. Although the concept was excellent, the demonstrators, after being trained, could unfortunately not be employed since no funds were available in the Native administration budget. 3.22 Two-day training courses were also conducted for field staff at the 3 field stations, but these were only moderately successful since the training objectives were insufficiently spelled out. Conversely, the 14-day in-service training courses for 235 junior extension staff were successful. A number of extension aides destined for the Northern project (568/1138-SL) attended these courses. Credit 3.23 Seasonal and development loans for rice, cocoa and oil palm were made according to Schedule 4 of the Credit Agreement, although both rice and cocoa loans were increased. Although the decision, at appraisal, to allow project farmers to borrow for only one crop and for a limited acreage, in practice, these regulations were often circumvented through the intricacies of the ex- tended family system. Due to the scattered pattern of individual swamp rice, cocoa and oil palm development and the lack of cooperatives, individual agree- ments and supply arrangements were required for each loan and servicing costs were high. Although unavoidable during early project implementation, this, if it continues, could result in a non-viable credit operation. During appraisal of 568/1138-SL, a group approach was adopted for input supply and credit, but to- date, this has not been very successful. Improvements are expected once the 12 market centers are established under the second phase of the project.  - A.ll - 3.24 The PMU credit scheme worked satisfactorily. However, after the first expatriate credit manager left in mid-1974, the Credit Section was managed for the remainder-of the project period by inexperienced staff. Largely due to this, the Credit Section was unable to introduce separate satisfactory accounting and stores management systems. General accounting was the responsibility of the PMU (Hq) and individual loan records were kept by the field Credit Sections. Although the credit operations were originally to be handed over to ADA, under 568/1138-SL, they will become the responsibility of the Farmers Finance Company (see para 3.04), which recently received its certificate to commence business. Provided that the newly appointed FFC general manager can improve and strengthen accounting and stores danagement systems and focus credit operations on farmer groups rather than indivi- duals, FFC should become a satisfactory credit institution in the region. 3.25 No credit repayment has been received from farmers with oil palm and cocoa development loans as these do not begin until 1977. Recovery of oil palm loans may, however, prove to be difficult if ffb collection arrangements by DOPC are not satis- factorily resolved and if producer prices remain at Le 25/ton (see para 3.31). Recovery of rice seasonal loans in the first 2 years was excellent. However, repay- ment in 1975-of seasonal loans, together with the first repayments of the rice develop- ment loans was less satisfactory. In mid-1976, only 70% of seasonal loans due had been recovered, and less than 50% of the rice development loans. The drop in credit recovery seems to be a combination of inefficiency and lack of mobility of the Credit Section; furthermore, some farmers were reluctant to repay their debts since cash inputs to farmers for hired labor was not issued in time during 1975 (see para 3.48). 3.26 Although the decision at appraisal to allow project farmers sub-loans for only one crop was presumably made to benefit a larger number of farmers, this may not be the most effective system. For this reason, after FFC has consolidated its input distribution and lending operations, it would be preferable if credit could be made available to any farmer for all major crops, if required. This would permit lending for both major food crops and tree crops which would facilitate credit recovery. It would also encourage farmers to develop a better balanced farming system; ensure a more regular income; enable extension staff to use time more effec- tively; and may encourage villages or hamlets to form groups or cooperatives to apply for credit where all or most numbers of the group or cooperatives are growing the same crops. Marketing and Prices 3.27 General: With the exception of palm oil, producer prices were substantially increased during the project period and part of the increased world market prices were passed on to producers. Rice 3.28 In 1974, about 45,000 tons of rice-was imported, 30% more than the previous year. The average C.I.F. price was Le 490/ton (as against Le 86/ton at appraisal) while the local retail price was fixed at Le 240/ton. Due to Government's severe budgetary constraints, the retail price was increased to Le 420/ton in May 1974.  - A.12 - This significantly dampened consumer demand and reduced the country's rice deficit to 15,000 tons in 1974. By end 1974, the Rice Corporation, which is responsible for buying and marketing rice, had 30,000 tons unsold one month prior to the 1974/ 1975 harvest. Following the much improved paddy producer prices, Le 183/ton against Le 84/ton at appraisal, rice output was extremely good and no imports were necessary. Carrying large stocks seriously affected the Rice Corporation's cash flow and for the 1975/76 rice harvest and the previous season, the Corporation could not buy signif- icant quantities of rice at guaranteed farmgate price. 3.29 Although project rice was to be purchased by PMU and milled by the 20 rice mills (see para 3.32), existing private channels will continue to be used for rice marketing and milling. PMU bought some 300 tons of paddy during the project period, only a small percentagg of total production. This was either used for rice seed or sold. In 1974, the Rice Corporation bought 178 tons of paddy from PMU at Le 185/ton. In 1975, when the producer price dropped 10% to Le 166/ton, hardly any rice was bought from the project farmers. This is understandable since the retail price in the Southern and Eastern regions was about 50% higher. A new economic farmgate price has been estimated on the basis of the Bank's 1980/85 forecast prices expressed in 1977 constant prices (see Annex 3). These are about 5 times higher than appraisal estimates. Cocoa 3.30 Reliable data on cocoa output in Sierra Leone is not available, but produc- tion is believed to have fallen sharply in 1974, followed by some improvement in 1975. The fluctuations are thought to be attributable to the level of producer prices and buying allowances. Buying allowances nearly doubled in 1975 and are now Le 48/ton and producer prices were substantially increased, to Le 678.45/ton, in the same year. The present estimated economic farmgate prices (see Annex 4) are about 250 percent higher than appraisal estimates. The project has not yet harvested any cocoa, but marketing will be carried out by SLPMB Licensed Buying Agents. Palm Oil/Kernels 3.31 Palm oil is not exported,and from the internal market study for oil palm to 1990 (see para 3.36), all project produced palm oil will be for domestic consumption. The purchase of ffb under the project will be carried out by the Daru Oil Palm Company although, originally, the crop was to be purchased by ADA and, after processing, sold to SLPMB. It has not yet been decided whether DOPC will sell palm oil on the open market. Despite the fact that the setting up of millgate pricing arrangements is required under the Development Credit Agreement (Section 404b), the pricing policy for ffb and palm oil was only gazetted in November 1976 at Le 25/ton and Le 357.50/ton respectively. The mill will only be viable if project outgrowers ffb is sold to DOPC, 1/ but at Le 25/ton, it is expected that few farmers will do so. Presently, farmers can make about Le 70/ton ffb if they process the fruit themselves. Consequently, at the present producer price of Le 25/ton, DOPC may only be able to purchase ffb which farmers are unable to handle with their own labor. Representatives of the project farming community have recently indicated that farmers would only be interested in selling ffb to DOPC at a price of about Le 40/ton. In view of the resulting DOPC 1/ See West Africa Files: Mill Engineer Report of 9/13/76.  - A.13 - financial losses, which create an additional burden on Government budget, this, together with ffb collection arrangements, should be reviewed and resolved under 568/1138-SL. The present palm oil price of Le 357.50/ton is low compared with current world market prices and the average retail trading price at village level is (Le 450/500 ton). The ex-millgate price of palm oil is given in Annex 5. Farm- gate prices for palm kernels increased by about 80% between 1973 and 1975 (Le 146/ton) but fell to Le 100/ton for 1976/77. Economic prices for kernels and palm oil are given in Annex 6. Milling and Processing 3.32 It was originally intended that the project would establish 20 small rice mills with stores and sun-drying facilities, which would mill surplus paddy pro- duced by the project. However, it quickly became clear from ongoing rice process- ing studies and from a survey carried out by project staff in 1975, that sufficient small size (1/4 ton/hr) steel cylinder and rubber-roller mills were already in operation in the project area to process most of the surplus production. It was also estimated that small rice mills in Sierra Leone operated at only 37% capacity (one shift). For this reason, MANR notified IDA that the rice mill component was no longer required. Although this decision was justified, the surplus milling capacity should be closely watched under 568/1138-SL as a number of the mills are old and will have to be replaced. However, the National Development Bank reportedly has plans to finance new rice milling units in the private sector. 3.33 The oil palm mill (5 ton ffb/hr) which originally was to be operational in 1974 was not commissioned until 1976. On a daily 3-shift basis, this mill will be able to process all estate and outgrower production. 1/ Northern Project Study 3.34 An integrated development project for the Northern region was identified by RMWA and prepared in 1973 by MANR's Planning Unit (staffed with ODM personnel) with the assistance of outside consultants. The original terms of reference in- cluded livestock slaughtering and marketing facilities, but because of the African Development Bank's (ADB) interest, this was deleted and a livestock production com- ponent included to complement the proposed ADB project. The Northern project, plus an extension of the Eastern Province project, was appraised by the Bank in June 1974 and as Loan/Credit 568/1138-SL, became effective in January 1976. Forestry Study 3.35 The original forestry study was expanded at Government's request to provide a rationale for forestry development throughout Sierra Leone. However, after evaluating the consultant's bid proposals, Government decided not to proceed. This 1/ See West Africa Files: Mill Engineer Report of 9/13/76.  - A.14 - decision seems to have been based on the fact that, at the same time, forest con- cessions for private foreign companies were being negotiated or awarded which in- volved areas covered by the study; furthermore, ODM had already completed some of the work which formed part of the study proposed. Palm Oil Market Study 3.36 A study of the domestic palm oil market in Sierra Leone was conducted at the request of ADB and completed in January 1973. The outcome, which encouraged ADB to invest in the Gambia Oil Palm Complex, was found satisfactory by the Bank so that additional studies provided for under Credit 323-SL were not required. Rice Milling and Marketing Study 3.37 The rice milling and marketing study was awarded to AGRAR Und-Hydrotechnik in March 1973, and the final report was presented one year later. The study con- tained much data but some of the baseline data was unreliable (e.g., hand-pounding was incorrect at 55 kg/hour instead of 5 kg/hour per person; this would have given undue advantage to hand-pounding compared with other processing techniques). One of the main conclusions of the study, with which the Bank agrees, is that processing investment should be concentrated on small rubber-roller mills. On the other hand, the study recommends the Rice Corporation as an indispensable instrucment in deter- mining rice pricing and marketing policy which the Bank considers would be best carried out by SLPMB with its superior financial, storage and management facilities. 3.38 Although initial consideration was given to the study by Government, no action has been taken. Since increased rice production is still one of the main Government Agricultural Development Policy objectives, this study, together with some other recent studies, 1/ should be re-examined with Government under 568/1138-SL, The role of the Rice Corporation remains undecided and Government's rice price, marketing and milling policies (if any) are obscure. Agricultural Development Authority 3.39 See para 3.02. B. Financial Review Costs 3.40 A summary of actual project costs, amounting to Le 5.15 million compared with appraisal estimates of Le 4.3 million, is in Table 2 and detailed in Annex 7. Actual total costs are therefore 20% higher than appraisal estimates. 1/ By Spencer, May-Parker and Rose (1976). (Employment, efficiency and income in the rice processing industry of Sierra Leone.)  - A.15 - 3.41 Although the project exceeded development targets for each of the three crops, on-farm costs per acre increased fot the rice and cocoa components by about 55%. The main reason was the higher than expected cost in materials (seedlings and tools) and increased payments for labor for swamp rice. 3.42 Major cost overruns also took place for the oil mill (80%), and in local project staff's costs,due to Government salary increases of 21% from mid-1974. On the other hand, there were savings of about Le 0.35 million by not proceeding with ADA, construction of rice mills, and the forestry and oil palm studies. Table 2 SUMMARY OF PROJECT COSTS Le '000 Actual Costs Appr. Est. % Increase On-Farm Costs 1,312.1 831.1 (+) 58% Project Admin. & Services 3,691.5 2,569.8 (+) 44% Agric. Service Authority - 77.8 Studies and Consultants 149.1 238.0 (-) 27% Contingencies - 578.7 Total 5,152.7 4,295.4 20% Procurement 3.43 Except for the oil mill, international competitive bidding procedures for fertilizer, vehicles, tractors, etc., were satisfactory. The ICB procedures followed by Government regarding the oil mill were not correct. After bid evaluation by two reputable consulting firms who both came to the same conclusions, the Government should have immediately requested IDA to approve the lowest bid. Instead, Government requested the two bidders, without the knowledge of the consultants and IDA, to revise their bids, which clearly contravened the Bank's guidelines for procurement which were accepted by Government. The revised bids were evaluated by one of the consultancy firms and again the recommended lowest bid from the same firm was rejected by Government. IDA was not presented with the appraisal bid evaluation by Government until four months later. A detailed review of the bids was made by IDA, which proved that the consultants' recom- mendations to select the lowest bidder were correct. The Government was informed by IDA that the award should be made to the lowest bidder but no action was taken by Government until a further two months had elapsed. The Government finally agreed to  - A.16 - award the contract to the lowest bidder but this time the price escalation clauses in the bids came into effect. This resulted in a cost increase of about 10% more than the original bid offer. 3.44 Local bidding procedures, which were applied for purchase of tools, pest2- cides, motorcycles, etc., were satisfactory and the appointment of a project agent in Freetown greatly contributed to this. The construction of offices and houses was satisfactorily carried out by force account. Allocation of Credit Proceeds and Disbursement 3.45 The actual credit allocation of US$4.3 million as compared with Schedule 1 of the Credit Agreement is shown in Table 3. Table 3 ALLOCATION OF CREDIT 323-SL --- in US$ '000-- % of Expenditures Appraisal Actual to be Financed 1. Credit to Smallholders & 850 960 80% of total expenditure Field Development - Oil Palm Estate 100% of foreign expenditure 2. Palm Oil Mill, Vehicles, 1,650 2,239 732 of total expenditure 1/ etc. 3. Buildings & Furnishing 200 234 80% of total expenditure 4. Services of Local Staff 350 521 80% of total expenditure 5. Expatriate Staff, Consul- 600 345 80% of total expenditure tants and Services ADA 100% of total expenditure 2/ 6. Unallocated 680 - 4.3 4.3 1/ and 2/ Amendments made to Credit Agreement. 2/ Only applied to salary and emoluments of project manager.  - A.17 - 3.46 As sufficient funds were not available under the unallocated category to finance the increased foreign exchange costs of the oil mill (Category (II), it was decided by end 1975 to reduce the percentages of the other categories to 40%. 3.47 A comparison between projected and actual disbursements (Annex 8) shows that, except for a slow start in the beginning due to delayed effectiveness, dis- bursement was satisfactory. By September 1976, 6 months later than appraisal estimates, the credit was fully disbursed. Financing 3.48 IDA's relative share in financing total project costs declined because of changes in foreign exchange rates during the project period (see Basic Data Sheet). All other financing was provided by Government, plus Le 120,000 from SLPMB. The Bank of Sierra Leone, which was to make equity contributions to ADA of Le 180,000, could not do so as ADA was not established. Although Sierra Leone continued to have liquidity problems during the project, project funding, while it deteriorated slightly at the end of the project period, was generally satisfactory. Financial Management 3.49 The project was unable to set up a complete accounting and management control system either for the Project Management Unit or for any of its semi-autonomous oper- ating entities such as the Oil Palm Estate or the Credit Section. The problem stems mostly from the fact that neither the financial controller (expatriate recruited with assistance of the Bank) nor the accountant (Sierra Leonean) were fully qualified accountants with experience in setting up accounting systems. As a result, although accounts were established and kept up-to-date, they were not readily usable or useful as management information tools. This affected the timely preparation of budgets, cash flow statements, etc. Once a year the external auditors prepared financial statements accompanied by long-form reports listing weaknesses in financial manage- ment, most of which could have been easily avoided or corrected by experienced pro- fessionals. 3.50 Because of these deficiencies, Loan/Credit 568/1138-SL included the strength- ening of financial controls. This involves the establishment of a Project Evaluation Services Unit (PESU) in Freetown, headed by a qualified and experienced expatriate financial controller. The PESU is responsible for introducting accounting systems and controls, and close monitoring of project costs and performance. This should ensure the strengthening of the Eastern region's accounting and credit systems, al- though this requires suitably qualified and experienced management and accounting staff for PESU, FFC, DOPC, and the PMUS.  - A.18 - IV. IMPACT OF THE PROJECT Economic Analysis 4.01 The project's economic rate of return was calculated using actual construc- tion and operating costs and benefits based on recorded yields and revised economic prices using IBRD forecasts for 1985. Project life is assumed to be 25 years with- out any residual value of the oil palm mill. All costs and benefits, including those between 1973-1975, were converted to 1977 constant prices, based on the Bank's index of international inflation (April 1977). Hired labor for smallholder develop- ment is shadow priced at 10% below the official wage rate of Le 0.85/day during 1973-1975, to reflect the imperfect labor market resulting from institutional regidi- ties (minimum wage rate) and the immobility of labor. It is felt inappropriate not to cost family labor, as at appraisal, and this has been costed at 65% of the mini- mum wage rate to reflect average opportunity cost and productivity in the project area. Future yields and production assumptions (see Annex 2) are on average slightly below appraisal. The economic farm and millgate prices, which are all much higher than at appraisal, reflect the improved market situation (see Annex 3-6). 4.02 Under the above assumptions, the overall internal rate of return is 26.5%, compared with the appraisal estimate of 15%. The rate of return to the rice and cocoa component is 28% (see Annex 9) and for the oil palm component, 25% (see Annex 10), which compare with appraisal estimates of 17% and 13% respectively. If farm labor is not costed (as at appraisal) the cocoa and rice component has a return of 49%. These differences are mainly due to the far higher prices (see paras 3.27 and 3.31) against a project cost increase of only 20%. The rate of return is not very sensitive to changes in costs and benefits. If benefits drop 10% and cost go up 10%, the project is still viable with a rate of return of 19%. 4.03 The project was very well accepted by farmers and applicants always exceeded the number selected. Project participants were 25% higher than appraisal estimates and some spin-off effect, particularly in inland swamp development (see para 3.07), is also apparent. Returns per manday for both cocoa, rice and oil palm farmers have improved compared with appraisal (see Annexes 11-13), the result of higher producer prices. 4.04 The project was successful in terms of benefits received from foreign ex- change earnings/savings arising from increased exports and rice import substitutes, and the mobilization of labor in the project area. However, it will only be possible to evaluate the project's success in institution building at the end of the second phase of the project (568/1138-SL). V. ROLE OF THE BORROWER AND THE BANK 5.01 In general, the borrower has conformed to most of the conditions of the Credit Agreement directly related to agricultural implementation. Against the back- ground of Sierra Leone's budgetary constraints, the Ministry of Finance must be given  - A.19 - credit for the satisfactory Government funding. 5.02 On the other hand, a number of covenants not directly related to the physical implementation of the project received only partial attention or were not fulfilled at all. The palm oil marketing and pricing arrangements (Section 4.04b (ii)) were only obtained after much effort in November 1976, while plans for the ~.osure of SLPMB's uneconomic oil palm mills were never submitted. Although a study was carried out re- garding the milling and marketing of domestic rice, including the future of the Rice Corporation, no action has been taken and the Government's rice marketing and milling policies remain unclear as at appraisal in 1971. Lastly, although ADA, in agreement with IDA, was not established, some of its functions were to be carried out by DOPC and FFC, which were to be established by end 1975. Granted that these were covenants of 568/1138-SL (Section 3.06/3.08) and not of 323-SL, both the DOPC and FFC are crucial institutions for the success of the second phase of the project, and for the agricultural development of the Southern and Eastern regions. It is therefore most unfortunate that these institutions may only be partly operational in mid-1977. 5.03 Generally, the Bank's performance in preparing and supervising the project can be considered satisfactory. There are, however, two aspects in which the Bank's performance could have been improved. The weak project financial management must be attributed, to a large extent, to the Bank's involvement in the selection of the financial controller (see para 3.49). In retrospect, it may have been better if the expatriate credit manager had been replaced by another fully qualified and experienced person who would have then also been involved in the start-up activities of the FFC. Similarly, the Bank's performance was deficient in its lack in firmness toward Govern- ment in requesting a positive followup on the rice marketing study. This could have been tackled during 568/1138-SL negotiations by requesting Government to clarify its rice price, marketing, and milling policies. VI. CONCLUSIONS 6.01 Generally, the project was successfully implemented, and with the newly calculated economic rate of return of 26.5%, the Credit of US$4.3 million was fully justified. 6.02 As the first Bank-financed agricultural project in Sierra Leone, it must be regarded in some respects as a pilot scheme. Nevertheless, despite the short three- year development period, results to date have demonstrated that the physical recom- mendations and objectives of the project were well founded and have been successfully implemented. Government was fully committed to the project throughout and farmer response was excellent. However, the full impact and continued success of the pro- ject cannot be accurately measured after such a short period and a clearer picture will emerge on completion of phase 2 in mid-1978. It also remains uncertain whether farmers have fully accepted swamp rice development in partial substitution for tradi- tional upland rice development (see para 3.07). 6.03 The strengthening of the institution building to date remains questionable. Although extension is working well, weaknesses remain in credit, marketing and account-  - A.20 - ing. All of these areas must be reviewed and strengthened and can only operate successfully if experienced and qualified staff are available; it is also essen- tial that viable marketing and pricing policies for both rice and oil palm are introduced by Government. Regrettably, the recommendations and proposals for ADA, Rice Corporation, SLPMB, rice mills, forestry study, etc,, were not implemented. Although, after considerable delay, agreement was reached on the formation of FFC and DOPC instead of ADA, this had an adverse effect on both institution building and rice marketing policy. Many of the problems which arose under the project were recognized and Credit/Loan 568/1138-SL introduced measures for improvement. In particular, the establishment of PESU should strengthen both the project and MANR and while improve- ments have taken place, much remains to be done. Both the strengthening of MANR and availability of qualified and experienced staff for PESU and the project is imperative for the continued success of the ongoing projects.  ANNEX I SIERRA LEONE INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT Evolution of Prolect Design (1969 - 1972) Prelminary FuLl First Memo Second Memo Final Prenaration Preparation to Loan to Loan Appraisal R?WA (CDC) Appraisal Committee Committee Report (1969) (1970) Feb. 1971 Nov. 1971 May 1972 June 1972 Management and Esstern Province Regional ADA ADA Organizartonal Rural Development Development NADA NADA PMJ i3cl. ?MU ncl. Concent Authority Authority (incl.= (incl.PMU) inr MANR in MhNR Cocoa (acres) Rehabilitation 15,000 10,000 - - - - New Planting 4,000 4,000 4,000 3,750 750 750 Swamp Rice (acres) 7,000 12,000 13,000 13,500 6,000 6,000 Oil Palm (acres) Outgrovers - - 2,300 2,235 1,830 1,830 Nucleus Estate 500 510 510 510 Mill Mill Mill Mill Mill Forestry (acres) 10,000 9,250 6,000 4,500 Credit Services Yes Yes Yes Yes Yes Yes Training Yes Yes Yes Yes Yes Yes (senior mgmt.) (farmers) (farmers) (farmers) (farmers) (farmers) Rice Mills - 40 20 20 Road Improvement Yes Yes - - - Studies Yes Yea (1)Northern 'l)Northern (1)Northern (l)Northern Province Province Province Province Integrated Project Project Project Agric.Project (2)Forestry (2)Forestry Study Study (3)Domestic (3)Domestic Oil Oil Palm Palm (4)Rice Milling & Marketing Disbursement Period (years) 7 30 6 6 3 3 Total Cost/Credit (US$ million) 6/NA 13.3est. 6/N/A 7.5/5.7 5.6/4.3 5.6/4.3 R.O.R. N/A Calculation 10-12 107 15% 15% suspect (excl.rice)  SIERRA LEONE INrECRATED AGRICtULTUML DEVELOPt9NT PROJECT Acreaee nd M.nrketed Production of Rice, Cocoa and Oil Palm Year 12 1974 .121 122 197 197 12111 1211 12 111 9 1984/971 Before Dev. ----- Actual---- Appraisal Investment Period Planted Acreage 491 2,659 3,787 --- Accumulated Acreage 491 3,350 7,137 7,137 7,137 7,137 7,137 7.137 7,137 7,137 7,137 7,137 6,000 No. of Faraera 175 1,055 1,422 - - - - - - - - (2,652) (2,000) eetrSc Total Production Paddy (tons) 474 2,419 5,139 5,107 5,107 5,107 5,107 5,107 5,107 5,107 5,107 5,107 4,777 Total Production Clean Rice (tons) 284 1,451 3,083 3,064 3,064 3,064 3,064 3,064 3,064 3,064 3,064 3,064 2,866 CocoA planted Acreage 155 314 301 - - - - - - - - - Accumulated Acreage 155 469 770 770 770 770 770 770 770 770 770 770 750 No. of Farowra 80 159 152 - - - - - - - (391) (375) Total Production (tons) oil Palm Planted Acreage: Nucleua Estate 1,272 305 205 - - - - - - - _ 510 510 I/ Outgrowera 740 361 572 993 - - - - - - - _ 1,926 1,830 I/ Accumulated Acreage 2,678 3,455 4,448 4,448 4,448 4,448 4,448 4,448 4,448 4,448 4,4.48 4,448 5,000 No. of Farmers: Outgrowars 60 98 82 - - - - - - - (240) (183) Total FF8 Production (Outgrowre) (tons) - - _ 2,347 3,620 5,650 7,111 8,388 9,369 9,865 9,865 - Total FFh Production (Estate) (tons) - - 3,916 5,205 6,364 7,155 7,745 8,285 8,552 8,552 8,552 Total PF8 Production (tola) - - 3,916 7,552 9,984 12,805 14,856 16,673 17,921 18,417 18,417 21,400 Total Palm oil Production (tons) - - 783 1,510 1,997 2,561 2,971 3,375 3,584 3,683 3,683 4,280 Total Palm Kernel Production (tons) - - 157 302 400 512 594 667 717 737 737 856 1/ Developalnt between 1973 - 1975 only.  ANNEX 3 SIERRA LEONE INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT Economic, Farmgate Price of Rice (per metric ton) 1980 1985 F.O.B. Bangkok - at projected prices 1/ US$390 US$390 (in 1977 dollars) ADD: Insurance, Freight 2/ 50 50 CIF Freetown (in dollars) $440 $440 LESS: Quality Discount Factor (15% of F.O.B.) 2/ 59 59 Adjusted CIF Freetown $381 $381 CIF Freetown (in Leones) 3/ Le 442 Le 442 Port Expenses and Storage, etc. 40 40 Value at Freetown Le 482 Le 482 Transport to Freetown 20 20 Value at Kennema 502 502 Paddy Equivalent (60%) Le 301 Le 301 LESS: Milling Cost 24 24 Transport, Bags 15 15 Value, bran 6 6 Economic Farmgate Price Le 256 Le 256 1/ Assumes that rice is imported and the bare value is given as Thai 5% broken at 100% quality discount as projected by IBRD. In 1977 constant dollars. 2/ IBRD estimate. 3/ Exchange Rate $1.00 = Le 1.16.  ANNEX 4 SIERRA LEONE INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT Economic Farmgate Price of Cocoa (per metric ton) 1980 1985 Spot New York 1/ US$1,916 US$1,204 LESS: Insurance and Freight 2/ 105 101 F.O.B. Freetown (in dollars) $1,811 $1,103 LESS: Quality discount (5% F.O.B.) 96 60 $1,715 $1,043 F.O.B. Freetown 3/ (in Leones) Le 1,989 Le 1,210 LESS: Port Expenses 25 25 SLPMB Admin. cost and storage 179 110 (9%-F.O.B.) SLPMB Inland costs: inspection, sealing 20 12 (1% adjusted F.O.B.) Buying Agent Allowance 48 48 Transport (Kennema, Freetown), bags 30 30 Economic Farmgate Price Le 1,687 Le 985 1/ Assumes that dry cocoa beans are exported and the bare value is given as Spot New York as projected by IBRD. At 1977 constant prices. 2/ Based on freight costs West Africa - US East Coast @ $82.25/long ton and bunker surcharge of $13/long ton. Insurance at 0.54%. One long ton = 1016.06 kg. 3/ Exchange rate (mid-77) $1.00 = Le 1.16.  ANNEX 5 SIERRA LEONE INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT Economic Ex-mill Price of Palm Oil (in metric ton) C.I.F. Freetown - in 1977 Prices 1/ US$ 410 US$ 422 C.I.F. Freetown - Leones 2/ Le 476 Le 490 Add: Port Expenses 20 20 Transport to Market 5 5 Value at Freetown Le 501 Le 515 Less: Transport - Mill to Freetown 25 25 Ex-mill Price Le 476 Le 490 1/ Assumes that palm oil is imported and the base value is given as CIF Freetown which itself is assumed to be equal to CIF West European ports as projected by IBRD. In 1977 constant prices. 2/ Official exchange rate (mid-77) = $1.00 = Le 1.16.  ANNEX 6 SIERRA LEONE INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT Economic Ex-mill Price of Palm Kernels (per metric ton) 1980 1985 C.I.F. Western Europe 1/ US$262 US$304 LESS: Insurance and freight 2/ 50 50 F.O.B. Freetown (in dollars) $212 $254 F.O.B. Freetown (in Leones) 3/ Le 246 Le 295 LESS: Port Expenses 25 25 Transport, bags 20 20 SLPMB Admin., storage costs (6% FOB) 4/ 15 18 Ex-mill Price Le 186 Le 282 1/ Assumes that palm kernels are exported and the base value is given as C.I.F. Western Europe as projected by IRBD. In 1977 constant prices. 2/ IBRD estimate. 3/ Official exchange rate (mid-1977) = $1.00 = Le 1.16. 4/ Agent's buying allowance omitted since the mill is deemed to trade directly with SLPMB.  ANN 7 SIERBA LEONE lNTECRATED AGRICULTURAL DOVELOPNENT PROJECT Total Pro1ect Costs (in Leones) Variation Frou Actual Appraisal Appraisal Variation Costs Esti.etes Baae Costs In S Cocoa and Rice Labor 378,824 251,550 Materials 475,439 210,112 Subtotal 854,263 461,662 +392,601 + 85.02 Oil Palm Development Outgrovers Labor 34,714 43,505 materials 222,647 152,951 257,361 196,456 4+ 60,905 + 31.02 Estate Labor 97,765 86,476 Materials 95,467 76,160 Land 7,289 10,395 200,521 173,031 + 27,490 + 15.9S Pro iect Manageaent Salaries Managemnt unit (ncl. rice 670,441. 407,350 and cocoa) Training 48,647 11.400 Credit 92,673 61,620 oil Palm 88,455 94,510 900,216 574,880 +325,336 + 56.6X Vehicles Management unit 69,545 72,051 Training 21,964 13,200 Credit 12,994 8,844 Oil Palm 26,552 60,984 131,055 155,079 - 24,024 + 15.5Z Vehicle Operation &Maintenance Hmnagement unit 148,867 58,050 Training 32,556 6,600 Credit 38,478 9,000 Oil Palm 23,325 15,000 243,226 88,650 +154,576 +174.42 Equipment 61,247 75,200 - 13,953 - 18.62 Buildiags, furniture & equipsent 184,476 179,920 + 4,556 + 2.52 Rent, maintenance, admin. and other expenses 209,327 82,990 4126,337 +152.27 Seed ualtiplication farm and 27,439 - + 27,439 sp operation expenses Rice Mills - 188,100 -188.100 - Oil Pals Mill 1,934,481 1,225,000 +709,481 + 57.9S Studies 6 Consulting Fees 149,132 238,000 - 88,868 - 37.37 A.D.A. Hq. Adinistration - 77,800 - 77,800 Total Costs 5,152,744 3,716,768 +1,435,976 + 38.6S Contingencies - 578.721 Total Project Casts (current Loones) 5,152,744 4,295.489 +857,255 + 20.0Z  ANNEX 8 SIERRA LEONE INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT Comparative Disbursement Schedules (Cumulative Disbursements at end of Quarter) (Thousands of US Dollars) IDA Financial Actual Appraisal Quarters Disbursement Estimates Schedule 1972/73 Dec. 31, 1972 114 Mar. 31, 1973 342 Jun. 30, 1973 137 798 1973/74 Sep. 30, 1973 318 912 Dec. 31, 1973 467 1701 Mar. 31, 1974 678 2597 Jun. 30, 1974 1002 2809 1974/75 Sep. 30, 1974 1457 3069 Dec. 31, 1974 1741 3329 Mar. 31, 1975 2045 3522 Jun. 30, 1975 2269 3715 1975/76 Sep. 30, 1975 3564 3908 Dec. 31, 1975 3649 4201 Mar. 31, 1976 3820 4300 Jun. 30, 1976 4078 1976/77 Sep. 30, 1976 4300  SIERRA LEONE INTEGRATED At RICULTURAI. DVE0i'OiMET PROJECT Rice and Cocoa Components - Economic Rate of Return Calculations (Leonee) 1973 1974 17 1976 1977 1978 1979 1980 1981 1982-97 Cost LWbor (Hired) fare Development - Rice 25,532 148,668 196,924 - - - - - - - Farm Developmnt - Cocoa 1,550 3,140 3,010 - - - - - - - Total Hired Labor 27,082 151,808 199,934 - - - - - - - Labor Shad.w Rated at La 0.75/Wanday 1973/75 20,312 113,856 149,951 - - - - - - - Family Labor 26,855 160,324 352,619 384,846 386.377 386,987 388,290 389,702 390,680 390,680 Materials Parm Development - Rice 19,247 124,741 234.880 144,135 184,135 184,135 184,135 184,135 |84,135 184,135 Farm Development - Cocoa 17,345 38,470 40,666 7,176 2,132 3.723 4,834 4,081 4,081 4,081 Subtotal 36,592 163,211 275,546 191,311 186,267 186,267 146,267 186,267 186,267 186,267 H.Q. and Credit ianagement Costs V 433,158 550,790 507,133 64,000 64,000 64,000 64,000 64,000 64,000 64,000 Fertillier Subsidy 2/ 8,248 56,280 119,901 119,901 120,430 121,504 122,533 122,533 122,533 122,533 Total Cost (Hired Labor Shedow Priced) 525,165 1,044,461 1,405,150 760,058 757,074 758,758 761,090 762,502 763,480 763,480 Adjustint for Price Level Chanpes to 1977 Price: 792,999 1,287,820 1,534,007 817,062 751,074 758,758 761,090 762,502 763,480 763,480 Benefits Rice 121,344 619,264 1,315,584 1,307,392 1.307,392 1.307,392 1,307,392 1,307,392 1,307,392 1,307,392 Cocoa - - - 10,835 38,415 82,740 128,050 189,120 189,120 Total Returns 121,344 619,264 1,315,584 1,307,392 1,318,227 1,345,807 1,390,132 1,435,442 1,496,512 1,496,512 Het Returna (671,655) (668,556) (218,423) 490,330 561,153 587,049 629,042 672,940 733,032 733,032 Cocoa and Rice cooponent aasnaud to absorb 85% of general H.q. costs end other relevant costa. Also to sesoe 851 of ongoing credit menagement coats from 1976. I1 601 of full purchase price.  A"k:X 10 ~ SI EIIB ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~~5441 l E03iE I OIL P6AL4CONPONENt tcopol.c P4t of let.rn Calculation- (Leonse) W2 IS4 21 l IL7 I12 1979 198 1 911 1 1 0 1984/97 LAbor -Wilrousra 1/ 5,415 10,205 19.094. 7,.043 46469 _ utate j 37,122 34.678 23,965 25,162 26,126 26.819 27,879 28,839 28,594 28.594 28.594 26,594 total Laboares 42,531 64,883 63,059 32.205 30,595 26.819 27.879 28.839 28,594 28,594 28,594 28,594 Labor Shadow rated ats La 0.75/mand y 1975 to 75 31.903 33,662 32,294 - - - - - - - La 0.90/lendsy 1976 - - - 28,985 27,536 24,137 25,091 25.955 25,735 25*735 25,735 25,735 Family Labor (Outsrwers) 5,984 10.379 14,777 6,443 16,312 23,845 24,581 25,262 26,647 27.034 27,034 27,034 Field Deveopent Costs 21,759 12,985 1,615 1.000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 Materials 23,920 23,537 18,940 7,355 6,740 6,740 6,740 6,740 6,740 6,740 6,740 6,740 Harest Tranaportation 1,714 5,196 4,889 7,021 9,327 11,408 12,824 13.905 14,851 15,324 15,324 15,324 Outarow r Seedling. snd Hatertel. 37.544 65,264 117,839 27,356 27,356 22,359 15,488 15,468 15.488 15.488 15,488 15.488 Harvet Tremuportattie Costs - - 4,607 1/ 7,063 11,033 14,179 16.105 17,670 18,663 18,663 Hill Cmstruction 6 Reulacement 250.,26 965,955 718,000 22,656 I/ 29,952 38,415 44,568 50,019 53,763 55,251 55,251 Nucleus Rtate 13,037 30.678 26,381 30,000 30,000 30,000 30,000 30,000 30,000 30.000 30,000 30,000 hill - - - 31o000 60,000 _/ 67,000 3/ 67,000 67,000 67,000 67.000 6*,000 47,000 Outarowre T 12,760 15,599 15,600 15.600 15,600 15,600 15,600 15,600 15,600 15,600 15,600 Vehicle. 26,552 - - - 30,000 - - - 30.000 - - - Vahlcla-Operatioolllintennc 2,353 9,433 11,539 30,000 10.000 10,000 I10000 10,000 10,000 10,000 10.000 10,000 adminltration 6 HsinteDance (Kill) - - - - 13,000 I/ 13.000 13,000 13.000 13,000 13,000 13,000 13,000 Consulting Fees 6 8tudies 5,982 16,226 12,000 12,000 12,000 12,000 12.000 12,000 12.000 12.000 12.000 12,000 Share of Project ".Q. 6 Credit 61,464 91,780 83,d38 11,000 11,000 11,000 11,000 11,000 11,000 11.000 i1,000 11,000 ltgt. Coots Ferttilcer rubsIdy I/ 16,640 23,088 34,016 37,172 38,829 34,338 34,338 34,338 34,138 34,338 34,338 34,318 Total Costs (Labor 250,852 573,514 1,343,282 942,932 337,963 319,442 328.110 340,035 379,525 555,692 358,173 358,173 Shadow Priced) AdlustlIn for rtice Lewel Changes to 1977 Prics Total Coats (Labor 317,787 707,143 1,465,521 1,013,652 337,963 319,442 328,110 340.035 379,525 355,692 358,173 358,173 Sbadev Priced) saoatit5l Palo 0t - - - 383,670 739,900 978,530 1,254,890 1,455,790 1,636,150 1,756,160 1.806.670 1,860,670 Kernels - - - 36,424 70,064 92,800 118.7N4 137,808 154,744 166,54 170,984 170,984 Totel laturne - - - 420.094 809,964 1,071,330 1,373,674 1,593,598 1,788.894 1,922.504 1'975,654 1,975,654 Nit Returns (378,787) (707,143) (1,465,521) (593,558) 472.001 751,88d 1,045,564 1,253,563 1,409,369 1,566,812 1,617,481 1,617,4681 I/ Includes hired laboroaly. InCudes d/ intoooeo end upeep ot 1,272 acres planted irm I98 to 1972 as wel as that for 510 acres planted in 1973-74. Sasad on e frau .n.Ineer ' report, September 1976. 'tate 8lpr*eanta 152 of total relevant 5.Q. costs. Ol pals cponmnt also to sesmae 152 of credit managuent Cost starting in 19761 60 o fxputrvll price. t8purchase /Ixpetriete lull -Blnaer'e costs of $48,000 included for 1976 to 1978. Sie montha for 1976,  SIERRA LEONE INTEGRATED AIGUCULTURAL DEVELWFBNT PRWECT Rice - Smaliholder Farm Dudget (3 Acres) (in 1977 prices--Le) 1 .L2 3 4 5 7 8 9 10 11 - 25 Acreage Planted Yield of Paddy lb. 6,450.00 6,450.00 6,450.00 6,450.00 6,450.00 6,450.00 6,450.00 6,450.00 6,450.00 6,450.00 6,450.00 Less: Family Cons,nption lb. 1,430.00 1,430.00 1,430.00 1,430.00 1,430.00 1,430.00 1,430.00 1,430.00 1,430.00 1,430.00 1,430.00 Harketable Rice lb. 5,020.00 5,020.00 5,020.00 5,020.00 5,020.00 5,020.00 5,020.00 5,020.00 5,020.00 5,020.00 5,020.00 Source of Funde Sale of Paddy Le 504.21 504.21 504.21 504.21 504.21 504.21 504.21 504.21 504.21 504.21 504.21 Development Loan I/ 135.00 - - - - _ - - - - - Seasonal Loan 52.50 52.50 52.50 52.50 52.50 52.50 52.50 52.50 52.50 52.50 52.50 Total 691.71 556.71 556.71 556.71 556.71 556.71 556.71 556.71 556.71 556.71 556.71 Applicatlon of Funds Hired Labor 156.00 - - - - - - - - - Tools 50.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 Fertilizer 33.50 33.50 33.50 33.50 33.50 33.50 33.50 33.50 33.50 33.50 33.50 Seed Rice 14.50 14.50 14.50 14.50 14.50 14.50 14.50 14.50 14.50 14.50 14.50 Spraying Insurance 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 4.50 Transport to Harket 15.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00 Total 273.50 77.50 77.50 77.50 77.50 77.50 77.50 77.50 77,50 77.50 77.50 Return before Debt Service 418.21 479.21 479.21 479.21 479.21 479.21 479.21 479.21 479.21 479.21 479.21 Debt Service: Dev. Loan 2/ 10.80 33.81 33.81 33.81 33.81 33.81 - - - Sees. Loan 3/ 57.75 57.75 57.75 57.75 57.75 57.75 57.75 57.75 57.75 57.75 57.75 Total Debt Service 68.55 91.56 91.56 91.56 91.56 91.56 57.75 57.75 57.75 57.75 57.75 Net Cash Flow 349.66 387.65 387.65 387.65 387.65 387.65 421.46 421.46 421.46 421.46 421.46 Total Farmer Labor (Nandays) 225 282 282 282 282 282 282 282 282 282 282 Total Hired Labor (Hsndays) 156 - - - - - - - - Total Labor 381 282 282 282 282 282 282 282 282 282 282 Returns for Family Labor Le/Handay 1.55 1.37 1.37 1.37 1.37 1.37 1.37 1.37 1.37 1.37 1.37 I/ Actual 1976/77 development loans. 2/ Repaid in 6 years at 81 Interest with first year grace. 3/ Seaonal loans at 101 interest.  SIERRA LEONE INrEGRATED AGRICULTURAL DEVELOPMENT PROJECI' Cocoa Smallbolder Farm Budget (2 Acres) (in 1977 prices--Le) Year 2 3 4 5 6 2 JL 9 101 U 12 13 - 25 Acreage Planted Le - 150.00 250.00 400.00 550.00 550.00 550.00 550.00 550.00 550.00 Yield lb/scre - - (Ibs) 300.00 500.00 800.00 1,100.00 1,100.00 1,100.00 1,100.00 1,100.00 1,100.00 Total Form Production - - - - Source of Funds - - - 132.00 220.00 352.00 484.00 484.00 484,00 484.00 484.00 484.00 Cocoa Sales - - - - Developsent Loans / 233.80 43.00 3.00 3.00 - - - - - - - - 10.57 10.57 10.57 10.57 10.57 10.57 10.57 10.57 10.57 Seasonal Loans 233.80 43.00 3.00 3.00 142.57 230.57 362.57 494.57 494.57 494.57 494.57 494.57 494.57 Total Application of Funda 40.00 - - - - - - - - - Cocoa Seedlings 210.80 - - 3.00 3.00 3.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 Spraying 3.00 - - - - 4.57 4.57 4.57 4.57 4.57 4.57 4.57 4.57 4.57 Fertillser - - 20.00 - _ - - - - _ Labor - 5.00 - - - - - Tools 10.00 43.00 3.00 3.00 15.57 10.57 10.57 10.57 10.57 10.57 10.57 10.57 10.57 Total 243.80 (10.00) - _ - 127.00 220.00 352.00 484.00 484.00 484.00 484.00 484,00 484.00 Return Before Debt Service Debt Service - 54.32 $4.32 54.32 54.32 54.32 54.32 54.32 Developvit Loan 2/ _ _ 11.63 t 11.63 11.63 11.63 11.63 11.63 11.63 11.63 11.63 Seasonal Loan(@ 1O0Intereo* - . _ 11.63 65.95 65.95 65.95 65.95 65.95 65.95 65.95 11.63 Total Debt Service - - 115.37 154.05 286.05 418.05 418.05 418.05 418.05 418.05 472.37 Net Cash Flow (10.00) - 152 74 62 62 66 70 80 80 80 80 80 80 80 Family Labor (Kandayo) - . - llired Labor (Handaya) 20 - . . - . . - - - 1.75 2.20 3.58 5.23 5.23 5.23 5.23 5.23 5.90 Return to Family Labor Le/binday - I/ Actual 1976/77 development loans. 2/ Repaid in 12 yeara with 8% Interast - 5 year grace without Interest.  SJERRA LeRe INrTGRATED AGRICULTURAL DEVELODPIIT PSOJECT Otl PFIN Swaltholder Farm Sudeet (10 acres) (L. 1977 pr$ces) tear -L 2 4 8 9 .Ia 14 16i I18 -L25 Acreage Planted 10.00 - - - - - - _ _ _ Yelld (toas f.f.b./Iere) - _ _ _ 1.10 1.80 2.50 3.20 3.70 3.70 3.70 3.70 3.70 Totel Production (tons f.f.b.) - - - - 11.00 18.00 25.00 32.00 37.00 37.00 37.00 37.00 37.00 Source of Fundc Sales f.f.b. (( La 25/ton) - - - 275.00 450.00 625.00 800.00 925.00 925.00 925.00 925.00 925.00 Development Loan 1043.62 157.30 153.49 78.34 - - - - - - Saeeonel Loan - - - - 63.34 63.34 63.34 63.34 63.34 63.34 63.34 63.34 63.34 Total 1043.62 157.30 153.19 78.34 338.34 513.34 688.34 863.34 988.34 988.34 988.34 988.34 988.34 Annlication of fund. (on-farm coats) Seedlings 570.00 28.50 - - - - - - - - - Covor Crop 25.00 - Wire hettina 180.00 Insecticide 30.00 - - - _ _ - - _ _ _ _ Fertilizer 43.62 58.80 93.49 63.34 63.34 63.34 63.34 63.34 63.34 63.34 63.34 63.34 63.34 Toole 45.00 25.00 15.00 15.00 15.00 15.00 15.00 15.00 15.00 IS.00 15.00 15.00 15.00 Hired Labor 150.00 45.00 45.00 - - - . - - - - total 1043.62 157.30 153.49 78.34 78.34 78.34 78.34 78.34 78.34 78.34 78.34 78.34 78.34 Return before Debt S*ritce _ _ - 260.00 435.00 610.00 785.00 910.00 910.00 910.00 910.00 910.00 Dabt Service On Developnnt Loan .1/ _ _ t 155.53 178.97 201.84 213.51 213.51 58.18 on Seasonal Loan e 1O0 lnterpet - - - - 69.67 69.67 69.67 69.67 69.67 69.67 317.74 69.67 11.87 69.67 - 69.67 %;otal Debt Service _ 225.20 248.64 271.51 283.18 283.18 127.85 107.41 81.54 69.67 Not Cash Flow - - - - 34.80 186.36 338.49 501.82 626.82 782.15 802.59 828.46 840.33 Total Family labor (Mandaya) 300 45 45 128 134 132 150 156 156 156 156 156 156 Total Hired Labor (iendays) . - . - . - - - - - - Total Labor _ _ - 134 132 ISO 156 156 156 156 156 156 Return to Family Labor (per Yanday) - - - - 0.26 1.41 2.26 3.22 4.02 5.01 5.14 5.31 5.39 I/ Repaid in 14 years with 81 Interest with 4 years grace vithout tnterest.  i> | \ 11!s' ?0 I 15 lr5 AANDO>UN | 105103 $NDRH5N _. //A 't ,/' -NMORERI N ( K FALLA KAILAHNLI -815' \\ FALA / * / D E, U85 SU BO~~~~~~~~~BOJR ' GM, E I ec o,\ M SEw ,'oo ZX &ble\ - K EONE~~~~~~olh,nE RW8UN,DU>}9 ~~~~~~~/ N-~~~~ Moo. / ; < > -t / / \ w X [ tu_,_s 2 SIERRA LEONE S / ~~~~~INTEGRATED AGRICULTURAL AND RURAL DEVELOPMENT PROJECT I[ EASTERN AREA PROJECT X>/ (0 5ohn ~~~~~-GORAHUN¢ 0t> . p ,.5 <St \I [ sp2>- C 0I KABALA ~ '~~~~~~l I~ ~ ~~~e 0 PROJECT FIELD AGRICULTURAL OFFICES ( ~ k 7 TO BE IMPROVED -~~~~~~~~~~~~~~~~~~ROADS EXISTINGMOTORABLE ROADS PROJECT BOUNDARY - oA / t I AHERN I M1ENI NORT PROJETCT~O) < $> /a4- Sb \\ >;§ 0 # * ~~~~~~~~~~~DEVELOPED k A SEEDfARMS SWAMPS -- - - - - - ~~~~~~~~~~~~~~~~~~~~~~CH-EFEDOM ROUNJDARIES - PROVINCIAL BOUNIDARIES BOUNL1ARKF EITERNAtCITaAL EW r--> AoV _ / ROECFTADV r oEFALN, EA sy 4~'SOU7HERN o \ \ \ / 2 ie J 8 2 SFrl 2 7he b^e ho rm rhz rap d , o | 5 S S Ir 1 Is~~~~~~~~~~~0 1 20 25 30 ~~~~~~~~KILOMETERS 2070 35 40 50/# ROVNCt o° i i X ,, _ Oc*e n iras C- &0ed, iris W-S0mr Wofi ff*dlh-tltr 1I*OO'~~~~~~~~~~~~~~ s 10 15 2 5 211 Arllni ;.~ ) 1 s .) Ir,4sr5' IriTh45' ,,_1 Iros