Romania - Caracal - Titu Irrigation Project

Document of t X, The World Bank FOR OFFICIAL USE ONLY Repovt No. 3294-RO STAFF APPRAISAL REPORT CARACAL-TITU IRRIGATION PROJECT ROMANIA April 1, 1981 Regional Projects Department Europe, Middle East and North Africa Agriculture III This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENT Currency Unit: Leu (plural lei) 1. Official Rate Lei 4.47 = US$1.00 Leu 1.00 = US$0.22 2. Tourist Rate Lei 12.00 US$1.00 Leu 1.00 US$0.08 3. Conversion Rate for Traded Goods Lei 15.00 = US$1.00 Leu 1.00 = US$0.07 The Official Exchange Rate of lei 4.47 per US$1 is used only for accounting purposes. The rate used for tourist transactions is lei 12 per US$1. Beginning in January 1981, a trading rate of lei 15 per US$1 will be used to convert the prices of all traded goods; this rate is considered repre- sentative of the average cost of convertible foreign exchange. WEIGHTS AND MEASURES 1 millimeter (mm) = 0.0394 inch (in) 1 centimeter (cm) = 0.3937 inch (in) 1 meter (m) = 3.2808 feet (ft) 1 kilometer (km) = 0.6214 mile (mi) 1 square kilometer (km2) = 0.3861 square mile (mi2) 1 liter (1) = 0.2642 gallon (gal) 1 liter per second (1/sec) = 0.0353 cubic foot per second (ft3/sec) 1 cubic meter per second (m3/sec) = 35.3147 cubic feet per second (ft3/sec) 1 atmosphere (at) = 14.2239 pounds per square inch (psi) 1 kilowatt (kw) = 1.3410 horsepower (hp) I kilogram (kg) = 2.2046 pounds (lb) 1 metric ton (ton) = 2,204.6225 pounds (lb) ABBREVIATIONS AND ACRONYMS ABSL Above Baltic Sea Level BAFI Bank for Agriculture and Food Industry CAP Agricultural Production Cooperative DELIF Directorate for Exploitation of Land Reclamation Works DGEIFCA Economic General Directorate for Land Reclamation and Agricultural Construction, also called DIFCA IAS State Agricultural Enterprise ICA Intercooperative Economic Association ICB International Competitive Bidding IELIF Enterprise for Exploitation of Land Reclamation Works ISPIF Institute for Land Reclamation Studies and Design MAFI Ministry of Agriculture and Food Industry SMA Station for Agricultural Machinery TCIF Construction Trust for Land Reclamation Works UAC Unified Agro-industrial Council ROMANIAN FISCAL YEAR January 1 to December 31  FOR OFFICIAL USE ONLY APPRAISAL OF CARACAL-TITU IRRIGATION PROJECT ROMANIA Table of Contents Page No. I. THE AGRICULTURE SECTOR ................................ 1 A. Natural Resources ................................ 1 B. Structure, Role and Performance of Agriculture Sector ......................................... 1 C. Agricultural Development Issues .................. 3 D. Development Policy and Planning Strategy ......... 4 E. Development in the Irrigation Sub-sector ......... 5 F. Bank Strategy and Role in Agriculture .... ........ 6 II. THE PROJECT AREA AND AGRICULTURAL ORGANIZATIONS ....... 7 A. The Project Area ................................. 7 I. Location .................................... 7 2. Topography and Drainage ..................... 8 3. Climate ..................................... 9 4. Soils ....................................... 9 5. Land Classification ......................... 10 6. Water Resources ............................. 10 7. Population .................................. 10 8. Communications, Water Supply and Electricity ............................... 11 B. Agricultural Organizations ....................... 12 9. Agricultural Production Cooperatives and State Agricultural Enterprises .... ........ 12 10. Unified Agro-Industrial Councils and Agricultural Mechanization Stations ....... 12 III. PRESENT AND FUTURE LAND USE AND AGRICULTURAL PRODUCTION .......................................... 13 A. Land Use ......................................... 13 1. Cropping Pattern ............................ 14 2. Crop Yields ................................. 17 3. Livestock ................................... 19 B. Agricultural Inputs .............. .. .............. 19 4. Mechanization ............................... 19 5. Labor ....................................... 20 6. Seeds ....................................... 20 7. Fertilizer .................................. 20 This report is based on the findings of an appraisal mission to Romania in October 1980, consisting of Messrs. Petros Aklilu, Roderic Buller, Jagdish Srivastava and Frederick Wright. 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.  Table of Contents (Continued) Page No. 8. Plant Protection ............................ 21 9. Research .................................... 21 10. Extension and Training ...................... 22 11. Agricultural Credit ......................... 23 C. Marketing and Processing Facilities ...... .. ...... 24 12. Marketing Channel ........................... 24 13. Processing and Storage Facilities .... ....... 25 IV. THE PROJECT ........................................... 27 A. Objectives ....................................... 27 B. Detailed Features ................................ 27 C. Water Requirements, Availability, Quality and Water Rights ................................... 28 1. Water Requirements .......................... 28 2. Water Availability .......................... 29 3. Water Quality ............................... 30 4. Water Rights ................................ 30 D. Status of Engineering ............................ 31 E. Cost Estimates ................................... 31 F. Financing Plan ................................... 32 G. Procurement ...................................... 33 H. Disbursements .................................... 34 I. Implementation Schedule .......................... 34 J. Investment Financing ............................. 35 K. Cost Recovery .................................... 35 L. Role of Women .................................... 36 M. Environment and Health ........................... 37 V. PROJECT IMPLEMENTATION ..............................,.37 A. The Borrower ..................................... 37 B. Implementing Agencies ............................ 38 C. Operation and Maintenance and Supervision of Construction ................................... 38 D. Accounts and Audit ............................... 39 E. Project Monitoring and Completion Report ......... 39 1. Project Monitoring and Key Project Indicators ................................ 39 2. Project Completion Report ................... 40 VI. BENEFITS, JUSTIFICATION AND RISKS ..................... 40 A. Project Benefits ................................. 40 B. Prices and Markets ............................... 42 C. Main Benefits and Beneficiaries .................. 43 D. Economic Analysis ................................ 44 E. Sensitivity Analysis and Risks ................... 46 VII. RECOMMENDATIONS ....................................... 47  - 111 - Table of Contents (Continued) ANNEXES Annex No. Table No. 1 1 Climatological Data-Caracal 2 Climatological Data-Titu 2 - Project Description 3 1 Estimated Water Requirement-Caracal 2 Estimated Water Requirement-Titu 4 1 Cost Estimate-Caracal 2 Cost Estimate-Titu 5 - Financing Plan 6 _ List of Equipment and Material to be Procured Following International Competitive Bidding 7 - Estimated Schedule of Disbursements 8 1 Estimated Schedule of Expenditure-Caracal 2 Estimated Schedule of Expenditure-Titu 9 1 Areas Requiring Improvements of Existing Irrigation and Drainage Works - Without Project-Caracal 2 Areas Requiring Irrigation and Drainage Works - Without Project-Caracal 3 Areas Requiring Irrigation Without Other Works Present and Future - Without Project-Caracal 4 Areas Requiring Irrigation and Sandy Soil Reclamation Works - Without Project-Caracal 5 Areas Requiring Irrigation, Drainage and Other Works - With Project-Caracal 6 Areas Requiring Irrigation and Sandy Soil Reclamation Works - With Project 7 Areas Requiring Improvements of Existing Irrigation and Drainage Works - Without Project-Titu 8 Areas Requiring Irrigation, Open Drainage and Tile Drainage Works - Without Project-Titu 9 Areas Requiring Irrigation and Open Drainage Works - Without Project-Titu 10 Areas Requiring Irrigation Without Other Works - Without Project-Titu 11 Areas Requiring Irrigation, Drainage and ]:mprovement Works - With Project-Titu  - iv - Table of Contents (Continued 10 - Annual Maintenance and Operation Costs and Replacement Costs 11 - Financial and Economic Input Prices 12 - Financial and Economic Output Prices 13 1 Economic Cash Flow-Caracal 2 Economic Cash Flow-Titu 3 Economic Cash Flow-Caracal-Titu 14 - Selected Documents and Data Available in the Project Implementation File CHARTS 1. Implementation Schedule 2. Organization of BAFI 3. Organization of Project Implementation and Related Agencies MAPS Caracal - IBRD 15407 Titu - IBRD 15408  APPRAISAL OF CARACAL-TITU IRRIGATION PROJECT ROMANIA I. THE AGRICULTURE SECTOR A. Natural Resources 1.01 Romania has a total land area of 23.8 million ha of which 14.9 million ha is suitable for agriculture. Of the total agricultural land, 65.8% is arable, 20.1% pastures, 9.4% meadowland and 4.7% vineyards and orchards. Romania can be divided into three agroclimatic zones based on topography, soils, and other natural conditions influencing agricultural development priorities and performance. Percentage distribution of agri- cultural land by zone is shown below. Percent of Total Arable Pasture & Meadowland Zone The Plains 53 18 The Foothills 28 32 The Mountain and Tableland 19 50 Total 100 100 The Plains Zone is endowed with fertile soils, located in the Western, Southern and Eastern parts of Romania. In 1980, about 3.0 million ha of land in Romania is under irrigation, of which 82% is located in the Plains Zone. The Danube river, which forms Romania's southern boundary is the primary source of irrigation water in the southern part of this zone. The Foothills Zone is situated to the north of the Plains Zone and is charac- terized by shallow less productive soils. Only 18% of the total irrigated land in Romania is located in the Foothills Zone and is irrigated by the tributaries of the Danube. The Mountain and Tableland Zone covers the Northern and Central Districts and is predominantly pasture and meadowland. B. Structure, Role and Performance of Agriculture Sector 1.02 Structure: Agricultural production in Romania is organized into State farms (IASs), Agricultural Production Cooperatives (CAPs) and Indi- vidual plots. CAPs hold 60% of agricultural land, while IASs own 30% and individuals 10%. The present land tenure has evolved since the 1950's and 1960's when Government took major steps to nationalize large scale farms and collectivize small individual holdings. Currently about 3,400 CAPs, 400 IASs and numerous individual farm units carry out farming operations  2 with the assistance of about 700 Stations for Agricultural Mechanization (SMAs). In February 1979, Government announced plans for the creation of about 700 umbrella organizations known as Unified Agro-Industrial Councils comprising of IASs, CAPs and SMAs. 1.03 Role; Despite its declining share in the national income (15% in 1979 compared to 33% in 1960), agriculture continues to play an important role in the Romanian economy. In 1979 the share of agriculture in foreign exchange earnings was about 12% compared to 36% in 1960. Agricultural has potential for output growth to generate additional foreign exchange earn- ings, while at the same time meeting the growing demand for increased quantity of better quality agricultural products. The proposed project would enhance these two objectives. 1.04 In the 1980's agriculture would be expected to continue to provide additional labor for the industrial and services sectors if the 1981-85 plan targets for industrial and other non agricultural growth are to be met. In 1960, about 65% of the active labor force was employed in agri- culture compared to 30% in 1980. This transfer of labor force was made possible by gradual mechanization of the agricultural sector. However, the rate of mechanization has been lagging far behind the rate of labor out- flow. Consequently, labor shortage is observed particularly during harvest. 1.05 Performance: Over the last two decades, Government's development priority has been the growth of the industrial sector. This decision meant a restriction on the flow of investible resources, including foreign exchange, to the agricultural sector. Moreover, Government's deliberate policy on the development of agriculture has been to channel capital and human investments primarily into the State sector rather than into the Cooperative sector. The rationale for putting initial emphasis on the IASs was twofold. First, the IASs tend to be located on the more fertile soils, and with the larger share of irrigated land which have shown greater growth potential. Secondly, Government's determination to build a strong State- based socialist economy was a firm political resolution. Consequently, the IASs experienced faster rates of growth and productivity than the CAPs. It should be noted however, that compared to West European and U.S. agricul- tures, even the IASs are far behind in crop yields. Despite the inadequate availability of inputs and other services and erratic climate, Romanian agriculture over the last four, 5-year plans (1960-1980) has attained respectable annual growth rates. In the current Five Year Plan (1976-1980) agriculture has grown at a rate of 5% per annum. Government's step to reorganize the agricultural sector in 1979 (para. 1.2) is part of an effort to streamline agricultural operations and to promote efficient utilization of land, delivery of inputs and allocation of services. Government's new initiative, which is now fully operational, is indicative of its recogni- tion that to achieve higher and faster agricultural growth, it must promote partnership among State, Cooperative and individual production sectors.  - 3 - C. Agricultural Development Issues 1.06 As Romania enters the decade of the eighties, the challenges for agricultural development are more complex compared to those of the last two decades. This is particularly true for the irrigation sector. 1.07 The guidelines for the 1981-85 plan call for a 23% expansion (0.7 million hectares) in the area under irrigation. Large scale irrigation projects have hitherto focused on the Danube Plains, and the Danube River has been the source of virtually all for water irrigation to date. As the full irrigation development potential in the Danube Plains is now being realized, the tributaries of the Danube become the major focus of future irrigation projects. Both the proposed project and the Bucsani-Buzau- Siret-Prut (BBSP) Irrigation Project for which a $75 million Bank loan was approved by the Executive Directors on December 23, 1980, would use tribu- taries as the primary water source for irrigation. Unlike the Danube waters which are adequate to meet the claims for navigation, irrigation water supply, and power, irrigation water from the tributaries have to compete with power generation and domestic water supply and to a lesser extent with navigation, and careful basin planning to generate optimal utilization of the water resources is called for in future investment decisions. 1.08 Low productivity is also a major issue in Romanian agriculture. The rationing of chemical fertilizers between domestic requirements and export targets has resulted in sub-optimal application of fertilizers. Despite the priority given to the irrigated areas, the rates of fertilizer application are well below requirements. While inadequacy of fertilizer is not the only variable input for low crop yields, it is nevertheless the most critical input. With the completion of the new fertilizer plants currently under construction, Government expects to be able to meet export targets and satisfy domestic requirements. 1.09 Low intensity of mechanization and shortage of seasonal labor are other major factors for low productivity. The rate of agricultural mechanization particularly in the cooperative sector has not kept up to compensate for the rate of labor migration into the industrial and service sectors. The rate of agricultural mechanization in the 1980's may be affected by the availability of fuel, but Government strategy currently aims to increase farm mechanization. If agriculture continues to release labor to the expanding industrial and service sectors without concomitant expansion of machinery services, the performance of agriculture is likely to worsen. The proposed project would ensure adequate provision of agri- culture machinery in the project area. 1.10 The present cropping pattern in the different zones of Romania require re-examination. The cropping mix, particularly in the Plains can be improved to generate greater return to the investment particularly in the irrigated areas. The Bank has been emphasizing the value of greater  specialization in crop production. It has recommended, for example, increasing substantially the area under maize in the Danube Plains, while shifting wheat and other rainfed grain production to the foothills and mountain zones. The selection of cropping pattern in any region should take into consideration the following factors: soil suitability, agronomic rotation requirements, water availability, raw material requirements for existing and future processing plants and Government's decision for regional self-sufficiency for selected crops to minimize transport costs. However greater specialization has taken place under Bank financed projects and would continue under the proposed project. D. Development Policy and Planning Strategy 1.11 Romania is now on the threshold of the Sixth Five Year Plan for 1981-1985. The first draft was issued in 1978, however, subsequent devel- opments in the Romanian economy in particular and the world economy at large dictated a more prudent set of output targets. The party Congress reviewed the draft Plan and made significant changes in view of: (a) the increasing costs of energy in the foreseeable future; and (b) non- fulfillment of planned targets during 1976-1980, especially in agriculture, due to inadequate equipment, and construction materials. Nevertheless the planning strategy adheres to the previous Plan's (1975-1980) objectives of: (a) raising land and labor productivity; (b) improving the diet of the population by intensifying production of high value crops, meat, and dairy products; (c) expanding surplus production for export; (d) introduction of capital intensive technologies to release labor for non-farm employment; and (e) expanding irrigation and drainage facilities to minimize the effects of weather failures. Specifically, planned investments for the agricultural sector for the period 1981-1985 include; (a) investment of Lei 150 billion (US$10.0 billion) which represents 12.7% of the total planned investment in the economy; (b) land reclamation in the Danube delta and in the Foothills Zone for an area of about 154,000 ha, bringing the total arable land to about 10 million ha; (c) expansion of irrigation facilities from 3.0 million ha in 1980 to about 3.7 million ha by 1985; (d) provision of drainage facilities for an additional 0.8 million ha and soil erosion control works to protect an additional 1.0 mil- lion ha; (e) adding 140,000 (predominantly 80 H.P.) tractor units, 40,000 self-propelled harvester units, and other farm machinery and equipment;  - 5 - (f) raising the application rate of fertilizer (active substance) from 120 kg per ha in 1980 to about 300 kg per ha in 1985 with full capacity operation of the new fertilizer factories; (g) adoption of high quality seeds and adequate pesticide distribu- tion; and (h) improvement of existing breeds of livestock and development of new ones, for which 25% of planned investments in the agricultural sector would be allocated. 1.12 The investment share of agriculture in total investment for the economy has increased slightly from 11.4% to 12.7% in current prices. The annual growth rate for agriculture which is set at 4% per annum, compared to 5-7.5% per annum for the 1976-1980 plan, is attainable. The fertilizer application rate has been adjusted downwards considerably to about 300 kg per ha by 1985, compared to 280 kg per ha previously planned by 1980. The planned rate of application, though lower than agronomic requirements, is feasible given the desired distribution between exports and domestic use. E. Development in the Irrigation Sub-sector 1.13 One of the principal bottlenecks of Romanian agriculture is the erratic rainfall. Of the total arable land of 9.8 million ha about 5 mil- lion ha are suitables for irrigation. In 1960, Romania had only 200,000 ha of irrigated land. Government's commitment to exploit the land and water resources is demonstrated by the rapid expansion of irrigated agriculture. In 1980 about 3.0 million ha were irrigated including small and inefficient local schemes. No reliable data is available to measure the efficiency of water use on these fragmented small schemes. However on the large schemes up to 80% irrigation efficiency has been attained. Large irrigation schemes have so far been confined to the Danube Plains where average annual rainfall is about 400 mm and varies widely from year to year. This rapid expansion has been possible through pumping schemes from the Danube. Optimum utilization of water from the tributaries requires storage, a series of multipurpose dams are being constructed. These storage dams which are planned for power generation would also serve to meet irrigation requirements. 1.14 The development approach adopted in the irrigation subsector hitherto gave priority to provision of irrigation networks. Drainage works were given secondary priority. Consequently, delays in farming operations due to excess surface water and crop losses due to a high water table have been substantial. The problem becomes vividly evident in spring when high snow accumulation on the land, and snow melts augmented by rainfall, create excess surface water causing considerable loss to autumn crops. Moreover, as a result of water logging, spring crops cannot be sown on time. The  - 6 - Government has, therefore, decided that future development projects would give first priority to removal of excess water through drainage facilities, and irrigation would be extended only when these anti-water logging measures have been adopted. Drainage is also being extended to existing irrigation schemes. All previous Bank financed projects have incorporated adequate drainage facilities. 1.15 The Government of Romania is preparing long term plans for exploiting the multipurpose potential of all its rivers, which will be implemented in successive five year plans. The major rivers included in the 1981-85 irrigation program are the Olt and the Arges in south-central Romania, and the Mostistea, the Ialomita, the Buzau, and the Siret in the south-eastern region. The Olt and the Arges rivers basins are being devel- oped individually, through construction of multipurpose dams; whereas, the remaining rivers are proposed to be interconnected through a carrier canal emanating from the Siret, flowing across the Baragan Plain and terminating at the Mostistea. A series of multipurpose dams are proposed in the head waters of all these rivers, which would generate power and meet the irriga- tion and other needs of the Baragan Plain and its adjoining areas. During periods of short supply in the river flows, generating stations, which would be reversible, would pump water from the Danube to meet irrigation requirements. The identification and preparation of these projects which are a part of a long term multipurpose development program, spread over a number of river basins would require special analytical skills. The Bank has proposed and Government has accepted an Irrigation Subsector Review in the Spring of 1981 to assess the suitability of the program, its priori- ties, cost allocations between various purposes, and, if possible, to devise a new approach to the program through sector lending. F. Bank Strategy and Role in Agriculture 1.16 The Bank's strategy is based on promoting efficient agricultural development while at the same time transferring needed convertible foreign exchange to Romania and assisting with the introduction of improved produc- tion technology. In view of lower productivity in agriculture as compared to other sectors of the economy, the Bank's lending program gives consider- able emphasis to the agricultural sector, while remaining in harmony with Government's plans for agricultural development. The Bank's lending strategy is based on the findings of various reports, including the Agri- cultural Sector Survey of October 1976 (Report No. 953a-RO), the Basic Economic Report dated March 1978 (Report No. 1601-RO), Country Economic Memorandum dated August 1980 (Report No. 2757-RO), a number of recent appraisal reports of 1979 and 1980. 1.17 The proposed loan would bring the Bank's total lending to Romania to US$1,862.6 million for 30 projects. Of the 29 loans already approved, fourteen, totalling US$896.5 million, have been in agriculture. Of these  six are irrigation projects, one irrigation and agricultural development project, one agricultural credit project, one agricultural component of a flood recovery project, two pig production and processing projects, one poultry project, one orchards project and one cattle project. The agricul- tural projects are supervised regularly a year and are progressing satis- factorily with no major problems. The first irrigation project (Giurgiu- Razmiresti, Loan 1082-RO) has been satisfactorily completed with cost underrun and higher yields growing at a faster rate than the appraisal estimates. A Project Completion Report has been issued; and an Audit Report by the Operations Evaluation Department is under preparation. 1.18 The Bank has made substantial contribution to improve the tech- nical quality of agricultural projects in Romania. In irrigation, the Bank has set in motion the concept of preparation of alternative designs and selection of the least cost alternatives. The Bank has also convinced the Romanian designers and planners to postpone projects based on provisional sources of water supply which were not technically the optimum solution, until such time as the waters from the northern tributaries, other than the Danube, have been developed for providing permanent water resources for irrigating these areas. Suggestions given by Bank staff have also improved the design of canals in loess soils, design of drainage works, maintenance, and soil reclamation. The Bank's dialogue with the Romanian authorities has led to an important conceptual change in the projects, i.e. inclusion of private plots allotted to members of Cooperatives, in the irrigated areas. This mutual understanding is also reflected in the design of proj- ects in the livestock and horticulture subsectors, where technical innova- tions and institutional development have become the principal focus of Bank lending. II. THE PROJECT AREA AND AGRICULTURAL ORGANIZATIONS A. The Project Area Location 2.01 Caracal. The subproject area, covering 87,630 ha of gross agri- cultural land, of which 86,236 ha is net and 1,394 ha of existing project works, is located in the Plains zone in the Olt and Dolj Districts. It is crossed by the 450 latitude north. The town of Caracal, which is sit- uated in the heart of the project area, is about 187 km west of Bucharest. The area lies on the west (right) bank of the Olt river, and it is the last remaining tract of land to complete the network of irrigation systems which are planned for the right bank for irrigation from the Olt. The Oltet river, one of the Olt's main tributaries, establishes the project's northern boundary as does the Bucsani-Cioroiu irrigation system (recently financed by the Bank as part of BBSP Irrigation Project). The Olt river  - 8 - is on the eastern border. Existing irrigation schemes form the remaining borders; namely, Iancu Jianu and Craiova systems to the west and Sadova Corabia and Terasa Corabia to the south. A small portion of the Stoenesti Visina irrigation scheme touches on the southeastern corner of the sub- project area. 2.02 Titu. The subproject area, covering 42,108 ha of gross agricul- tural land of which 41,698 ha net and 410 ha of existing project works is located in the Arges river basin of the Plains zone lies on both banks of the Arges river which flows in a southeasterly direction towards the Danube, passing close to the capital of Bucharest. The area lies between 440 and 450 latitude north, within the Districts of Dimbovita and Ilfov. The southern end of the subproject site is about 23 km northwest of Bucharest. It is bordered by the Dimbovita river to the north-east, the Ciorogirla river to the south-east and the Neajlov river to the south-west. Topography and Drainage 2.03 Caracal. Three topographical features characterize the subproject area, namely: (i) a relatively narrow flood plain along the Olt, Oltet and Teslui rivers approximately 80m ABSL 1/; (ii) adjoining terrace formations between lOOm and 120m elevation; and (iii) an extensive flat plain or plateau from between 120m to 130m in elevation, referred to locally as the Rotunda plain. The southwestern portion of this plain is unique in that it consists of sandy dunes and interdunes, which have been partially stabil- ized by wind breaks of tree plantings. This area requires special reclama- tion measures. The subproject area is transversed from west to east by numerous streams and associated valleys leading in the direction of the Olt river and its tributaries. The largest year round flowing stream is the Teslui, located in the northern part of the project area. Numerous flood control and storage dams, mostly of rudimentary construction, are found in the valleys. In three of the larger valleys in the southern portion of the area there are a number of small dams built over a decade ago. Some are antiquated and inadequate to mitigate frequent floods. Reconstruction is required. Ground water flow is from west to east and from north to south. In general, ground water is found within 5m in the flood plains and low terraces and between 5m and lm in the high terraces and plateau. About 9% of the project area displays a persistent high water table requiring tile drainage. Surface drainage is sufficiently poor in approximately 44% of the area, because of an impervious layer in the B horizon of the soil profile, to necessitate either new open drainage works or improvement of existing ones as well as deep-plowing, sub-soiling and soil-chiselling in some instances. 2.04 Titu. The prevailing relief form is the flood plain, formed by the major river beds of the Arges, Ciorogirla and Sabar rivers and their tributaries, exhibiting an almost continuous slope from the north-west to the south-east (171m - 108m, ABSL). To a lesser degree, alluvial terraces 1/ Above Baltic Sea level.  - 9 - and transitional zones from higher plains to the predominant flood plain occur. Another distinguishing topographical feature is the presence of numerous depressions formed by dead river beds and old valleys where water accumulates and require considerable reclamation works. t)urface water runoff is from north-west to south-east. Depth of ground water varies from Om to lm in about 8% of the area, lm to 3m in 69%, from 3m to 5m in 18%, and over 5m in 5% of the project area. Although the soils are deep, surface drainage is deficient in much of the area because of poor soil permeability; and new open drainage works would be required on approx- imately 86% of the area and tile drainage on 8%. 2.05 Climate. The climatological data for the meteorological stations of Caracal, Bucharest-Filaret and Titu, which are in the project area, are given in Annex 1 Tables T-l and T-2. The climate is typically continental with cold winters and hot summers. Average annual temperature is l0.50C. During the cropping period for summer crops, from April through October, the highest and lowest mean monthly temperatures of 22.70C and 10.90C ocur in July and October, respectively. First frost usually occurs in late September, while the last frost may occur up to late April. The mean annual rainfall is 573mm; however, it is highly variable. For example, in the Caracal subproject area, the highest yearly precipitation of 809mm was recorded in 1957 and the lowest, at 335mm in 1958. The rainfall pattern during the cropping season also is highly erratic. During this period, rainfall averages less than 400mm; however, years registering less than 300 mm are not uncommon, and periods of drought extending up to 60 days may occur. These conditions adversely affect rainfed agricultural production. Irrigation can greatly improve yields of summer grown crops. Although winds are not sufficiently strong to be a constraint to sprinkler irriga- tion, the evapotranspiration in summer is high and cannot be satisfied with the prevailing rainfall. 2.06 Soils. Deep mollisols (chernozemic), highly regarded throughout the world for their productivity, of medium to fine texture formed on loess deposits cover approximately 86% of the Caracal subproject area. Alluvial soils formed on alluvial and alluvial-pluvial deposited material consisting of sands, fine sands, silts and clays, cover about 72% of the Titu sub- project area. The remaining soils are reddish-brown podzols and to a lesser extent deep sandy soils laid on an eolian relief and gleyic soils located in marshy, low areas of old river beds and closed depressions. In general, the physical properties of a large proportion of the soils neces- sitate some form of open drainage, mostly of a simple design to avoid excess accumulation of surface water during periods of heavy rainfall. Less than 10% of the soils require tile drainage to lower the water table. The pH of the soil is satisfactory, ranging from a slightly acidic to slightly basic reaction. The chernozems are medium to high in mineral nutrients and although the remainiing soils are less endowed in natural fertility, they too can be expected to respond very favorably to the application of fertilizers. In addition, manuring would be required as a reclamation measure on the sandy soils; whereas, the normal soils have an adequate content of organic matter.  - 10 - 2.07 Land Classification. Approximately 70% of the soils are Class I and II 1/, exhibiting either slight or no limitations for irrigated farm- ing. The remainder are also suitable but with moderate (21%) to severe (6%) limitations under present unimproved conditions. The predominant limitation governing the soil class differentiation in the project area is deficient drainage. The greatest requirement is for simple surface drain- age with only about 9% requiring tile drainage. In some instances sub- soiling, deep plowing and chiselling is necessary to improve aeration and water infiltration. To a much lesser degree, coarse textured soils with high permeability, topography of sandy dunes and interdunes and slope gradient are other characteristics which present limitations to irrigated farming. Regulation of the intensity and frequency of sprinkler irriga- tion, reshaping of sandy dunes and soil erosion control measures are neces- sary to overcome the above restrictions. The soils in all classes can produce satisfactory crop yields on a sustained basis once the ameliorative measures are implemented. 2.08 Water Resources. The Olt and Arges Rivers, which flow south, from the Romanian central mountains, to the Danube constitute the water resources within the project area. The Olt drains 2.14 million hectares while the Arges drains 0.71 million hectares. River flows are contributed by snowmelt and rainfall excess. The flow is recorded at a number of gaug- ing stations and about 40 years discharge observations are available. The dry weather river flow of the two rivers is fully utilized; the Olt mainly for irrigation and Arges mainly for towns and industrial use. Storages have been constructed. Additional storages are under construction and planned for future for optimum multipurpose development, holding the runoff in the wet period for use in dry periods. The available ground water is allocated to the industrial and domestic use, as it does not have large potential to permit other uses. 2.09 Population. The total rural population in the project area is about 212,000 of which about 78,000 (37%) constitute the active labor force. The size of the rural population and distribution of the active labor force is detailed below: 1/ Modified USDA classification.  - 11 - RURAL POPULATION IN THE PROJECT AREA Caracal Titu TOTAL Male Female Total/l1 Male Female Total/l Male Female Total Rural Population 69,904 70,320 140,224 34,622 37,508 72,130 104,526 107,828 212,354 Active in Agriculture 19,634 29,329 48,963 11,570 17,262 28,852 31,204 46,591 77,795 Distribution of Active Agric. Population Agricultural Production Coops (CAP) Permanent (15,708) (23,462) ( 39,170)(9,284) (13,869) (23,153)(24,992)( 37,331) ( 62,323) Seasonal ( 3,080) ( 4,600) ( 7,680)(1,827) ( 2,731) ( 4,558)( 4 907)( 7,331) ( 12,238) Subtotal (18,788) (28,062) ( 46,850)(11,111)(16,600) (27,711)(29,899)( 44,662) ( 74,561) State Agricultural Enterprises (IAS) Permanent (225) (335) (560) (160) (238) (398) (385) (573) (958) Seasonal (906) ( 1,354) ( 2,260) (457) (682) ( 1,139)( 1,363)( 2,036) ( 3,399) Subtotal ( 1,131) ( 1,689) ( 2,820) (617) (920) ( 1,537)( 1,748)( 2,609) ( 4,357) Total (19,919) (29,751) (49,670) (11,728)(17,520)(29,248)(31,647)( 47,271) ( 78,918) /1 No. of families in Caracal is 33,806 and 18,033 in Titu. Source: BAFI, October 1980. The totals of the breakdown of the active labor force by CAPs and IASs and by permanent and seasonal workers exceed the active labor total because some of the seasonal workers are employed both in CAPs and IASs, and there- fore are counted twice. The rural population is traditionally employed in rainfed agriculture and is generally knowledgeable about agricultural practices. Female workers in the project area make up 60% of the total agricultural labor force which is in line with the national average. The existing labor force would be adequate to meet the requirements of the proposed project. Communications, Water Supply and Electricity 2.10 Caracal. The subproject area is well linked with the national road and railway netorks. North-south and east-west national highways criss-cross the area close to the town of Caracal and there are an abund- ance of inter-connecting hard surfaced and all-weather roads. The existing farm road network which is mostly ungravelled, adequately serves the needs of the area. A double-track railway disects the center of the area from east to west and smaller single-track lines are adequate to meet the needs for handling agricultural products. There is adequate supply of year-round ground water. Deep wells provide piped water for the larger towns and shallow wells, from which water is hand drawn, supply the villages and detached holdings. All towns and villages, as well as isolated coopera- tives and State farms, within the subproject area are served with electric power from the national grid. 2.11 Titu. The Bucharest-Pitesti national highway transverses the entire length of the subproject area. The Bucharest-Piteti double electri- fied railway follows the northeastern limit of the subproject site. The area is crossed by numerous district and communal asphalted roads, which provide adequate linkage between the agricultural and industrial production  - 12 - centers and commercial and trading centers. Water for village households is drawn manually from shallow open wells, built along the main village roads or within each private holding. The larger towns are provided with piped water supply. The area is crossed by a dense network of high power lines to supply the agricultural production units and to satisfy the consumption of towns and villages. B. Agriculture Organizations 2.12 Agriculture Production Cooperatives (CAPs) and State Agricultural Enterprises (IASs). The number of agricultural production units (CAPs and IASs) and their share of the net agricultural land in the project area are shown below; AGRICULTURAL PRODUCTION UNITS IN THE PROJECT AREA Caracal Titu Total Area % of Area % of Area % of Number (ha)/l Area Number (ha)/l Area Number (ha)/l Area CAP 41 70,239 82 34 34,738 84 75 104,977 /2 83 IAS 6 15,388 18 4 5,607 13 10 20,995 16 Other /3 - 59 - - 1,142 3 - 1,201 1 Total 47 85,686 100 38 41,487 100 85 127,173 100 /1 Net agricultural land in the project. /2 Includes 9,676 ha of private garden plots of CAP members. /3 Miscellaneous other State enterprises. 2.13 The CAPs hold 83% of the total cropped land in the project area. Included in this figure are the small private plots retained by CAP members for their personal use, which amounts to about 9700 ha or 9% of the total CAP land. 2.14 There are a total of nine Inter-cooperative Associations (ICAs) which are formed by several CAPs to carry out large scale factory type production of livestock products and to a lesser extent vegetables. They have little land and depend almost entirely on purchased feed and other materials. 2.15 Unified Agroindustrial Councils (UACs) and Stations for Agricul- tural Mechanization (SMAs). There are 13 Agroindustrial Councils in the Caracal and 10 in Titu subproject areas. Likewise, the same number of SMAs since the territories of the UACs coincides with those of SMAs. The over- all project total of 23 lACs comprises a total of 81 CAPs and 14 IASs. The land of some CAPs and IASs falls within the jurisdiction of two different  - 13 - UACs; and, therefore, are counted twice. The UACs were created in February 1979 in an effort to eliminate the performance disparities between [ASs and CAPs. These councils are responsible for coordinating the planning of all agricultural activities in the area such as the introduction of new crop- ping patterns and production technology and for dispensing equal levels of services and inputs (mechanization, irrigation, fertilizer, seeds, plant protection, etc.) for the CAPs and IASs in their jurisdiction. Additional information concerning agriculture production organizations in Romania can be found in numerous Bank reports 1/. III. PRESENT AND FUTURE LAND USE AND AGRICULTURAL PRODUCTION A. Land Use 3.01 With the proposed irrigation, drainage and other ancillary works, the present and future land use and agricultural production in the project area are described in the following sections. The project works to support future land use and agricultural production are described in Chapter IV. 3.02 Caracal. The present and future distribution of land in the Caracal subproject area is shown below: Present Future ha T ha Total Land Area 105,740 100 105,740 100 Non-Agricultural Land 18,110 17.1 17,740 16.8 Gross Agricultural Land 87,630 82.9 88,000 83.2 Project Works Land 1,394 1.6 2,314 2.6 Net Agricultural Land 86,236 98.4 85,686 97.4 Irrigated 3,500 4.1 85,686 100 Non-Irrigated 82,736 95.9 0 0 The subproject covers a gross area of 105,740 ha, of which the net agri- cultural land currently is 86,236 (81.6%). Four percent of the net agri- cultural land is irrigated through widely scattered, inefficient and rudimentary local schemes. At full development, the proposed project will irrigate 85,686 ha, which represents 100% of the net agricultural land and 81% of the gross project area. Although the project reduces the non- agricultural land, it increases the area devoted to project works; the net effect would be to reduce the net cultivable land by less than 1%. Under Romanian law, a comparable amount of arable land taken for project works construction is required to be reclaimed elsewhere. 1/ Romania Agricultural Sector Survey, October 29, 1976 Covurlui Irriga- tion Project, SAR; December 17, 1979 Bucsani-Buzau-Siret-Prut I:rriga- tion Project, SAR, November 26, 1980.  - 14 - 3.03 Titu. Land distribution in the Titu subproject area is shown below; Present Future ha % ha Total Land Area 52,392 100 52,392 100 Non-Agricultural Land 8,610 16.4 8,041 15.3 Isolated Areas of Agricultural Land 1,674 3.2 1,674 3.2 Gross Agricultural Land 42,108 80.4 42,677 81.5 Project Works Land 410 1.0 1,190 2.8 Net Agricultural Land 41,698 99.0 41,487 97.2 Irrigated 5,293 12.7 41,487 100 Non-Irrigated 36,405 87.3 0 0 The gross area of this project site is 52,392 ha, of which 41,698 ha net is cultivated. The difference between the two, in addition to non- agricultural land and works, pertains to small, odd-shaped, isolated parcels of land between irregular borders of forests, villages and roads. Approximately 13% of the net agricultural land is presently irrigated through local schemes. The proposed irrigation project would provide water for 41,487 ha, the total area of cultivable land. Cropping Pattern 3.04 General. Over the past five years, with the introduction of large scale, modern irrigation systems in the Plains Zone of southern Romania, the cropping pattern reflects a gradual shift from rainfed traditional autumn-winter cereal farming to greater emphasis on summer crops which are highly responsive to irrigation. An analysis of eight Bank assisted irri- gation projects 1/ reveals that, on the average, the pre-project cropping pattern was composed of about 32% wheat and barley combined and a similar proportion of maize. With the projects, the percentage of winter cereals in the cropping pattern decreased to 19% and maize increased to 44%. National and regional cropping patterns are based on studies and recommen- dations of the Institute for Planning and Land Distribution, which is subordinated to the Ministry of Agriculture and Food Industry (MAFI). The Institute collaborates with ISPIF in the revision of cropping patterns for irrigation projects. Final decisions in any given area are reached collec- tively by the General Director of Agriculture of the concerned District, the newly established UACs and the management of the concerned State and cooperative farms. The projected cropping pattern comprises a range of crops with varying growing seasons which together cover the entire summer 1/ Based on seven Staff Appraisal Reports plus the Caracal-Titu Irrigation Project. Refer to the Project Implementation File for details.  - 15 - period ensuring an almost continuous use of labor and farm machinery. The projected size of civil works would permit sufficient flexibility to meet the demand for irrigation water in accordance with the future cropping patterns. 3.05 Caracal. The cropping pattern for the Caracal area at present and with the project are given below: CROPPING PATTERN BASED ON CROPS IN THE ROTATION Present With project Change of Area Percent of Area Percent of Commodities Crop ha Arable ha Arable ha % Wheat 17,271 21.2 15,735 19.1 (1,536) (9) Barley 5,751 7.0 - - (5,751.) (100) Maize 24,628 30.2 44,498 54.0 19,870 81 Soybean 3,680 4.5 4,984 6.0 1,304 35 Sunflower 6,584 8.1 6,592 8.0 8 0 Sugarbeet 3,787 4.6 4,826 5.9 1,039 27 Potatoes 1,572 1.9 276 0.3 (1,296) (82) Vegetables /1 - - 2,354 2.9 2,354 100 Alfalfa (hay) 18,370 22.5 3,138 3.8 (15,232) (83) Maize (silage, s.c.) /2 (414) (0.5) (15,735) (19.1) 15,321 3,700 Subtotal, Arable 81,643 100 82,403 100 Natural pastures 2,620 - (2,620) (100) Natural hayfields 30 - (30) (100) Sown pastures - 1,340 1,340 100 Grapes 1,520 1,520 0 0 Fruit /3 423 423 0 0 Subtotal, Other Agriculture 4,593 3,283 Total Agricultural 86,236 85,686 /1 Consists mainly of tomatoes and peppers. /2 Second crop maize for silage. /3 Consists mainly of apples and pears. In the Romanian context, the cropping pattern excludes pastures, vineyards and orchards, which are of a permanent nature and are not rotated with annual crops. Government's recommended cropping pattern with the project allocated 50% of the arable land to maize and 23% to wheat. With the objective of reducing the winter wheat in favor of additional summer maize, it was mutually agreed to fix maize at 54% and wheat at 19%. This pro- portion of maize represents the highest level attained to date in Bank- supported irrigation projects in Romania. The future area to be planted to  - 16 - maize with the project exceeds the current area by 81%; whereas, wheat is decreased by 9% and barley by 100%. Vegetables are introduced as a new crop with the project and substantial increases of 35% and 27% are noted for soybean and sugarbeet, respectively. Alfalfa area registers a marked decrease of 83%; thereby achieving a better balanced overall cropping pattern for the with-project situation. Sunflower, grapes and fruit remain unchanged while natural pastures are eliminated and improved sown pastures are introduced. Potatoes are reduced, being confined exclusively to the sandy area. With the inclusion of second crop maize silage, following wheat harvest, the cropping intensity reaches 119%. 3.06 Titu. The dynamics of the cropping pattern in the Titu subproject is presented below; CROPPING PATTERN BASED ON CROPS IN THE ROTATION Present With project Change of Area Percent of Area Percent of Commodities CrTop ha Arable ha Arable ha % Wheat 13,720 34.3 6,123 15.0 (7,597) (55) Barley 3,648 9.1 - - (3,648) (100) Maize 13,677 34.2 20,412 50.0 6,735 49 Soybean - - 3,266 8.0 3,266 100 Sunflower 2,188 5.5 2,450 6.0 262 12 Sugarbeet 2,313 5.8 2,859 7.0 546 24 Vegetables /1 720 1.8 2,041 5.0 1,321 183 Alfalfa (hay) 2,483 6.2 3,674 9.0 1,191 48 Vetch (green forage) 1,224 3.0 - - (1,224) (100) Maize (silage, f.c.) /2 62 0.1 - - (62) (100) Maize (silage, s.c.) /3 - (6,123) (15.0) 6,123 100 Subtotal, Arable 40,035 100 40,825 100 Natural pastures 979 - (979) (100) Natural hayfields 45 - (45) (100) Sown pastures - 23 23 100 Grapes 363 363 0 0 Fruit / 276 276 0 0 Subtotal, Other Agriculture 1,663 662 Total Agricultural 41,698 41,487 /1 Consists mainly of tomatoes and peppers. /2 First crop maize for silage. /3 Second crop maize for silage. /4 Consists mainly of apples and pears.  The present cropping pattern contains about 10% more wheat and barley than maize, no soybean and an insignificant amount of vegetables. With the project, the situation changes. The new cropping pattern eliminates barley and vetch; establishes 15% and 50% for wheat and maize, respectively; and introduces soybean (8%) as a new crop. The new cropping pattern results in significant changes in land utilization compared to pre-project. The wheat area decreases 55% and maize increases 49%. Barley, vetch and natural pastures are deleted entirely. Vegetables, alfalfa, sugarbeet and sun- flower areas increase 183%, 48%, 24%, and 12%, respectively. With the addition of second crop maize silage as a new crop the cropping intensity increases to 115%. Crop Yields 3.07 General. The project implementation schedule provides for the first irrigation to begin in 1984 for Titu and 1985 for Caracal sub-- projects. Hence, full development of crop yields and production will not be realized until the late 1980s. Yield targets have been established against this time frame bearing in mind the present yield levels; the outlook for fertilizer availability, continuing inputs from the agricul- tural research institutions in improvement of crop varieties and agronomic practices and greater mechanization of farming operations, particularly harvesting. Present yields are assumed to remain constant in the future without the project since irrigation and drainage are the primary con- straints to higher yields. With the elimination of these constraints under the project, significant crop yield responses are expected. In this regard, attention was focused on maize since over 50% of the arable land in the project area is to be planted to this crop each year at full develop- ment. Government's preparation report made yield projections of lOt/ha for maize at full development. While it is conceivable that some agricul- tural production units may attain yields of lOt/ha, appraisal, based on available information, concluded that 8t/ha was a more realistic average yield to be expected from the 62,000 ha of maize (excluding 4,000 ha of sandy soil treated separately) to be planted annually on soils ranging from Class I to Class IV. Similarly, the yield projections for wheat, soybean, sunflower and sugarbeet, which account for about 38% of the total cropped area, were based on results from existing irrigation schemes with similar growing conditions. In all instances, maximum yield would be attained over a period of four years based on a yearly gain of 30%, 70%, 90% and 100% of the incremental yield. 3.08 Caracal. Currently crop yields are low considering the generally good soils prevalent in the area. The yield of selected crops under varying conditions is presented below:  - 18 - CROP YIELDS IN THE CARACAL PROJECT AREA Future Caracal Research Under Present Conditions With Project Station Unirrigated Irrigated /1 Irrigated Irrigated Exp. Plots