Honduras - Second Livestock Development Project

Document of F The World Bank FOR OFFICIAL USE ONLY Report No. 4250 PROJECT COMPLETION REPORT HONDURAS SECOND LIVESTOCK DEVELOPMENT PROJECT (CREDIT 434-HO) December 30, 1982 Project Unit Central Bank of Honduras Projects Department Latin America and Caribbean Regional Office F COP Y 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 Local Currency Lempira (L) US$1.00 L 2.00 WEIGHTS AND MEASURES Metric System ABBREVIATIONS COHBANA Honduran Banana Corporation Corporacion Hondurena del Banana CATIE Center for Research and Teaching in Tropical Agriculture Centro Agronomico Tropical de Investigacion y Ensenanza NDB National Development Bank Banco Nacional de Fomento (BANADESA)  FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT HONDURAS SECOND LIVESTOCK DEVELOPMENT PROJECT (CREDIT 434-HO) TABLE OF CONTENTS Page No. COUNTRY PROJECT REPORT Preface . ........................................................ Basic Data Sheet ................................................ i Highlights ..................................................... iii COUNTRY PROJECT REPORT I Background ............................................... 1 II History of the Project ................................... I III Project Execution ........................................ 7 IV Impact of the Project .................................... 18 V Financial and Economic Rates of Return ................... 21 VI Institutional Output and Development ..................... 22 VII Special Questions ........................................ 27 VIII Role of the World Bank ................................... 28 IX Conclusions .............................................. 28 Tables 1A - 23 LATIN AMERICA AND CARIBBEAN REGIONAL CRITIQUE Tables A - K Map IBRD 10416 Project Areas 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 COMPLETION REPORT HONDURAS: SECOND LIVESTOCK DEVELOPMENT PROJECT (CREDIT 434-HO) PREFACE This is a Completion Report of the Second Livestock Development Project in Honduras for which Credit 434-HO in the amount of US$6.6 million was approved on October 9, 1973. The credit was closed in December 1979 after a delay of one year. The final disbursement was made on January 1980 and the credit was fully disbursed. The Project Completion Report (PCR) comprises a report prepared in October 1981 by the Project Unit of the Central Bank of Honduras following consultations with Bank staff and a LAC Regional Critique of that report (Critique) dated April 1982. A mission from the Projects Department, Latin America and the Caribbean Regional Office (LAC) visited Honduras in December 1981 to discuss the report and to look at project achievements in the field. The results of the mission's findings and of the Regional review of the report are summarized in the Critique. The points discussed in the Critique have been selected because of their relevance for this and other Bank- supported projects and to complement the analysis provided in the Borrower's report. The valuable assistance provided by the staff of the Project Unit of the Central Bank is gratefully acknowledged. A copy of the PCR was sent to the Borrower on September 30, 1982 for comments but none were received. A separate audit by the Operations Evaluation Department was not undertaken.   PROJECT COMPLETION REPORT HONDURAS: SECOND LIVESTOCK DEVELOPMENT PROJECT (CREDIT 434-HO) PREFACE This is a Completion Report of the Second Livestock Development Project in Honduras for which Credit 434-HO in the amount of US$6.6 million was approved on October 9, 1973. The credit was closed in December 1979 after a delay of one year. The final disbursement was made on January 1980 and the credit was fully disbursed. The Project Completion Report (PCR) comprises a report prepared in October 1981 by the Project Unit of the Central Bank of Honduras following consultations with Bank staff and a LAC Regional Critique of that report (Critique) dated April 1982. A mission from the Projects Department, Latin America and the Caribbean Regional Office (LAC) visited Honduras in December 1981 to discuss the report and to look at project achievements in the field. The results of the mission's findings and of the Regional review of the report are summarized in the Critique. The points discussed in the Critique have been selected because of their relevance for this and other Bank- supported projects and to complement the analysis provided in the Borrower's report. The valuable assistance provided by the staff of the Project Unit of the Central Bank is gratefully acknowledged. A copy of the PCR was sent to the Borrower on September 30, 1982 for comments but none were received. A separate audit by the Operations Evaluation Department was not undertaken.   - ii - PROJECT COMPLETION REPORT HONDURAS SECOND LIVESTOCK DEVELOPMENT PROJECT (CREDIT 434-HO) BASIC DATA SHEET KEY PROJECT DATA Appraisal Item Estimate Actual Total Project Cost (US$ million) 11.0 12.6 Overrun (%) - 14 Credit Amount (US$ million) 6.6 6.6 Disbursed 6.6 6.6 Cancelled - - Repaid Outstanding 6.6 6.6 Exchange Adjustment - - Borrower's Obligation 6.6 6.6 Delay (years) - 1 Economic Rate of Return (Y) 18 12 OTHER PROJECT DATA Original Item Plan Revision Actual First Mention in Files 12/30/69 - - Negotiations 08/09/73 - 08/09/73 Board Approval - - 10/09/73 Credit Agreement Date - 10/29/73 Effectiveness Date - - 01/18/74 Closing Date 12/31/78 (06/29/79, 12/31/79) 12/31/79 Borrower : Republic of Honduras Executing Agency Central Bank of Honduras Follow-on Project Name Agricultural Credit Project Credit Number : 628-HO Amount (US$ million) : 14.0 Credit Agreement Date: 07/02/76 MISSION DATA Sent Month/ No. of No. of Date of Item by Year Weeks * Persons Manweeks Report Appraisal IDA 02/73 3.0 5 15 09/12/73 Supervision I IDA 12/74 1.5 1 1.5 01/22/75 Supervision II IDA 08/75 1.0 1 1.0 09/16/75 Supervision III IDA 05/76 2.0 2 4.0 07/01/76 Supervision IV IDA 10/76 1.5 2 3.0 11/05/76 Supervision V IDA 09/77 0.5 3 1.5 10/06/77 Supervision VI IDA 01/78 1.0 1 1.0 02/14/78 Supervision VII IDA 06/78 1.0 2 2.0 08/07/78 Supervision VIII IDA 10/78 0.5 1 0.5 10/10/78 Supervision IX IDA 01/79 0.5 1 0.5 02/28/79 Supervision X IDA 09/79 1.0 1 1.0 10/10/79 Supervision XI IDA 11/79 0.5 1 0.5 11/30/79 Supervision XII IDA 02/80 1.0 1 1.0 03/14/80 Supervision XIII IDA 05/81 0.5 2 1.0 Total 15.5 33.5 Completion IDA 12/81 1.0 3 3.0 12/30/81 * Figures rounded to nearest half week. COUNTRY EXCHANGE RATES Name of Currency (abbreviation) Lempiras L Year: Appraisal Year Average Exchange Rate: US$1 = L 2 Intervening Year's Average US$1 = L 2 Completion Year Average US$1 = L 2   - iii - PROJECT COMPLETION REPORT HONDURAS: SECOND LIVESTOCK DEVELOPMENT PROJECT (CREDIT 434-HO) HIGHLIGHTS The production of beef, dairy products and the outputs of processing facilities associated with these commodities make an important contribution to the production of the agricultural sector which in 1980 accounted for 24% of GDP, provided employment for over 55% of the active population and generated more than 75% of the total value of exports. The Central Bank, on behalf of the Government of Honduras, requested IDA to assist in financing the project which was appraised in early 1973 and approved in October 1973. This project was a continuation and expansion of the First Livestock Development Project (Credit 179-HO), whose progress had been generally satisfactory. The purpose of the project was to provide long-term finance for the development of the livestock industry. The IDA credit was partially to finance subloans to (a) small and medium dairy farms; (b) dairy/beef farms; (c) breeding/fattening farms; (d) beef breeding farms; (e) pig units; and (f) construction of abattoirs and, by an amending agreement of May 25, 1975, also the rehabilitation of about 2,000 ha of the Isleta Banana Cooperative. It is estimated that at full development (year 12) incremental beef production will be close to appraisal estimates and the appraisal goal of 750 additional jobs was reached or exceeded (Critique paras 31 and 32). In addition, other farmers have adopted improved technology through observation and association with project beneficiaries. The lack of clear Bank requirements had been given by the Borrower as the reason for failure fully to meet adequate standards of accounting and auditing. Subsequently, Bank missions, particularly in recent years, sought to improve the accounting and auditing procedures for the project. Improvements were achieved through repeated meetings of Bank staff with the independent auditor and this finally resulted in achieving (a) separate presentation of project accounts; (b) use of uniform classification of project income and expenditures by all financial intermediaries; and (c) supplementary financial information on arrears separately presented for principal and interest including analysis of arrears age as an integral part of audited project accounts of financial intermediaries. These achievements were also implemented in both follow-on projects (Critique paras 45, 47 and 48). \.  - iv- Technical assistance provided by the project was satisfactory, although the lack of applied research data, especially concerning suitable pasture species and mixtures, fertilizer requirements and the different breeds of cattle for the various environments within Honduras, adversely affected the technical assistance results. Lessons and other points of interest are: - Medium size dairy production requires better quality management than small scale operations. The difficulties associated with departure from the widely used dual purpose (dairy/beef) system towards specialization were underestimated at appraisal (Critique para 6). - The new technologies that were adopted by beneficiaries are well suited to conditions in Honduras at present. These are dual- purpose production using cross-bred cattle, with feeding based on rotationally grazed pastures with some fodder grown as stand-by feed for the dry season, and use of hand labor for milking and weed control (Critique paras 13 and 14). - During project execution the basis was laid for a full scale monitoring and evaluation system and, by using data processing equipment, this will also serve all other projects which are managed by the Project Unit (para 6.12). - The wide spread participation of public and private banks in project implementation indicates that the lending terms, such as spread, rediscounting margin, adequate lending rate of interest associated with rigorous promotion, were appropriately designed to attract participation of the whole banking sector in financing long-term agriculture development (paras 6.06 and 6.07 and Critique paras 41 to 45). - The financial rate of return as calculated by the Project Unit of the Central Bank for the typical dual purpose farms in the Atlantic Zone and Central South Zone were found to be 13% and 20% respectively. The Critique, however, states that the financial rate of return was 17% and 14%, respectively (paras 5.01 to 5.04 and Critique Tables I and J).  HONDURAS SECOND LIVESTOCK DEVELOPMENT PROJECT (CREDIT 434-HO) COUNTRY PROJECT REPORT I. BACKGROUND 1.01 The economy of Honduras depends more heavily on the agriculture sector than any other. In 1980, it accounted for 24% of GDP, provided employment for over 55% of the active population and generated more than 75% of export revenues. Nevertheless, the gross value of agricultural production has increased only quite slowly, from L 466 million in 1973 to L 491 million in 1978 (31% and 24% of GDP, respectively), with negative growth indexes in 1974 and 1975 (Table 1-A). 1.02 Although crop-growing activities make by far the largest contribution to the formation of agriculture sector GDP (67% in 1979), stockraising showed larger relative annual increases over the period 1973-79. The major activity in the livestock subsector is beef/dairy cattle farming, with a total herd of over 2 million, concentrated mainly (86%) in the Atlantic and Central regions of the country. There are an estimated 1.5 million hectares of pasture, varying in topography and fertility. With these resources, Honduras supplied 100% of domestic demand for beef and approximately 80% of that for milk products. Beef exports (approximately 60% of all beef produced) accounted for 8% of the value of all Honduras exports in 1980, without including by-products from the subsector. 1.03 Despite livestock improvement programs focused on achieving better yields, there remain certain factors of production in the sector which have not improved to any really significant degree. In general, however, there have been gradual increases in yields per animal unit, and in the number of animals carried per unit of area, especially on farms benefiting under the First and Second Livestock Development Projects partially financed by IDA. 1.04 General conditions still favor successful expansion of the stockraising industry in Honduras, and, in this regard, participation by both governmental and private agencies in the ongoing provision of credit and technical services for the agriculture sector would continue to be an important link in the introduction of appropriate on-farm technology, with accompanying direct benefits for the national economy. II. HISTORY OF THE PROJECT Origin and Preparation 2.01 In July 1972, the Central Bank, on behalf of the Government of Honduras, submitted to IDA a loan application for assistance in financing the Second Livestock Development Project, proposed as a continuation and expansion of the First Livestock Development Project (Credit 179-HO). The latter, at a total cost of L 10.4 million and with partial financing from IDA of L 5.2 million, was designed to provide farmers with long-term funds-- to be channeled to them on appropriate terms and conditions through commercial banks-- for development of their beef and dairy enterprises. Studies for the  -2- slaughterhouses in four different capacity ranges, located mainly in the Atlantic and Central regions of the country. Also included was a technical assistance component to ensure accomplishment of the objectives and targets formulated. The main source of data utilized in designing the Second Project in its original version were the stock of experience gained during the earlier project and the information and statistics division of the various governmental, semi-autonomous and autonomous agencies. Appraisal 2.02 The project as proposed was appraised by a World Bank mission of four persons (three Bank staff members and one consultant), who visited Honduras in February/March 1973. (On October 29 of that year, Development Credit Agreement 434-HO was signed, the total estimated cost of the venture being US$11 million with a US$6.6 million contribution from IDA.) The project in its original form was modified substantially as regards the total sum to be invested, the number and size of the target farms and the percentage shares to be contributed by each of the sources of funds. As finally negotiated, the project called for increased participation by the sub-borrowers, the Central Bank and, of course, IDA, while the participation by commercial banks was cut back considerably. 2.03 The main outlines of action agreed upon for the First Project (179-HO), particularly with regard to project organization and management on the one hand and participation by commercial banks on the other, remained essentially the same for the Second. The only change was the inclusion of NDB (National Development Bank -- Banco Nacional de Fomento), an autonomous government agency, as a participant in the venture; given its main focus of action, it was regarded as creating healthy competition to the commercial banks in making credit services available for the development of stockraising activities. 2.04 Again in contrast to the First Project, modifications were now made with regard to: rediscount rates on subloans by the Central Bank to participating banks; percentage contributions by the sub-borrowers; the maximum subloan amount that could be approved by the Project Director; and, in particular, the margin enjoyed by the Central Bank on the differential between the cost of funds obtained from the Government and the annual interest rate at which those funds could be lent to the participating banks. This margin would enable the Central Bank to cover the local costs and office expenses of the Project Director and reimburse itself for costs incurred in administering project funds; under the First Project, the major part of these costs had been met from the Central Bank's own resources. 2.05 In addition, the terms and conditions to apply to subloans to municipalities for the construction of slaugherhouses were fixed, as were the norms for approval and application of the procedures associated with procurement of those facilities. 2.06 As originally proposed to IDA, the Second Project had not concerned itself with the matters enumerated in paragraphs 2.03, 2.04 and 2.05 above.  -3- Negotiations 2.07 Negotiations for the Second Project took place in Washington during the first week of August 1973 between representatives of the Government, the Central Bank of Honduras and the World Bank. In particular, agreements were reached on the matters referred to in paragraphs 2.03, 2.04 and 2.05. By comparison with the First Livestock Development Project (Credit 197-HO), the major changes introduced reflected the intention of both IDA and the Government of Honduras to ensure that project funds benefited a larger number of small livestock producers, the owners of half the national herd, and at the same time encourage the commercial banks to risk their own funds. It was with these considerations in mind that different rediscount rates and different percentages for sub-borrower contributions were brought in, on sub- loans to medium-and large-scale producers as well as on those to small producers. Likewise, a lower ceiling was set than under the First Project on the size of individual subloans that could be approved by the Project Director. 2.08 During negotiations, assurances were obtained on the following major points: from the Government that it would accept and apply the loan procedures agreed upon; implement policies on prices, marketing, quotas and taxation to favor project objectives; and introduce effective measures to improve the quality of products put out by the slaughterhouse that were to receive project financing; and from the Central Bank that it would follow the norms and procedures agreed on as regards project organization and adminstration; accept and apply the procedures for procurement of municipal abattoirs; contract the services of livestock specialists in order to strengthen the project staff group; and, finally, enter into agreement with each of the participating banks as regards project administration and the contracting of technicians to assume responsibility for activities in the field. 2.09 The Development Credit Agreement and the Project Agreement with the World Bank (IDA) were signed by the Republic of Honduras and the Central Bank of Honduras, respectively, on October 29, 1973, as was the Subsidiary Loan Agreement between the Republic of Honduras and the Central Bank of Honduras. These legal instruments were ratified by the Honduran Head of State acting in the Council of Ministers, through Decree No. 96 of December 17, 1973. Description of the Project 2.10 The new project was to be a continuation and expansion of the First Livestock Development Project (Credit 179-HO), which had given satisfactory results. Its aim was to make further IDA funds available for the overall development of the cattle dairy and pig-farming industries. The proceeds of the Credit were to be made available in the form of long-term subloans (9 to 12 years) with a maximum grace period of five years to assist with the financing of 700 small-and medium-scale beef and/or dairy farms, 30 pig units, five municipal abattoirs and a small technical assistance component. The latter would include provision for four specialist livestock advisors and training for Project Unit staff. The borrower would be the Government of Honduras, which would carry the exchange risk and channel the credit to the Central Bank--which would continue to serve as administering agent for the  -4- Project-- at an interest rate of 2%. Funds for on-farm improvements would be on-lent by the Central Bank to the participating commercial banks and to NDB at a 5% interest rate, and they, in turn, would lend to sub-borrowers at 9%, the ceiling rate on agricultural loans at that time. 2.11 Farmers in all areas of the country were to have access to these credit facilities, although, given its ecological structure, the probability was that most interest in dairying and fattening farms would occur in the Atlantic and Pacific zones and in breeding farms, in the Central zone. The emphasis would be on pasture improvement, fencing, watering facilities, purchase of breeding stock and the building of stock-handling facilities. To a lesser degree, investments would be made in putting up buildings and purchasing farm machinery. With two exceptions, the investments in abattoirs would involve the setting up of small slaughtering units. 2.12 Total project cost was estimated at US$11 million, of which approximately 60% (US$6.6 million) would be contributed by IDA to cover the foreign exchange component (US$4.5 million) and US$2.1 million equivalent of local currency costs. The participating banks would contribute 16% (US$1.8 million), the Central Bank 6% (US$0.5 million) and participating farmers and municipalities the remaining 18% (US$2 million). Local currency financing was justified on country grounds. The project would again be administered by a Project Director, who would be employed by the Central Bank; he would have the services of two assistants and four livestock advisers also employed by the Central Bank and several livestock technicians engaged by the participating private banks and NDB (now known as BANADESA). 2.13 Although not included in the project, an important element in total costs would be short-term working capital subloans, which, during the initial year of a farm improvement plan, would cover major operating expenses and the purchase of stock for fattening (which would consume surplus feed during the period the herd was being expanded to optimum size). Such short-term financing would be provided entirely from the resources of the participating lending institutions, with a 100% rediscount from the Central Bank of Honduras. 2.14 Given their diversity and small-scale, all project goods and services would be procured from existing domestic commercial sources. Invitations to bid on the construction of the largest abattoirs would be issued only within Honduras, since the contracts were not regarded as large enough to attract sufficient international interest; nevertheless, contracts for civil engineering works and equipment for these facilities would be awarded only after at least three proposals had been obtained. Project Benefits and Justification 2.15 Implementation of the Second Project was expected to have a considerable impact on the livestock subsector and increase the momentum of livestock development generated by the First Project. It would lead to adoption of improved husbandry practices, a larger national cattle herd, higher productivity and greater intensification of land use. Moreover, most of these improvements would be implemented by the smaller livestock farmers and could have significant multiplier effects. The abattoir component would provide substantial social benefits in terms of sanitation and better disease  -5- control, though such benefits are difficult to quantify. Indirectly, the project would benefit a much greater number of persons, among them those who supply meat from the abattoirs to the major retail and consumer centers and those who in one manner or another provide services for the direct beneficiaries. The pig component of the project, though small, would serve as a catalyst for further development and could well be the forerunner of a domestic pig industry. 2.16 The economic rates of return on the project were estimated at 18% from on-farm investments and 24% from the abattoirs; the financial rate of return for the typical livestock farmer was projected at between 19% and 25% and for the municipalities at between 14% and 17%. The economic rates of return given included benefits to the country in the form of incremental returns to Government from taxes and fees, which at the full development stage of the project would amount to approximately US$100,000 per annum. Increased job opportunities would also result from the more efficient running of some 700 farms and five abattoirs, although this was not easy to quantify. Average annual net income of the participating farmers would increase from less than US$500 to more than US$3,000. Total employment would probably be the equivalent of 750 new jobs, plus the incremental manpower requirements for the provision of supporting services. Objectives and Targets 2.17 The principal objective of the Second Livestock Development Project was to improve the Honduran livestock industry, with special emphasis on production for export without prejudice to domestic consumption. The methods of action chosen would increase not only domestic consumption of meat and milk per head, but also the country's external trade balance, through import substitution (in the case of milk) and higher foreign exchange revenues on meat exports. 2.18 The incremental annual production of livestock products produced and marketed under the project in the full development stage would include 22,100 m ton of milk, 3,850 m ton of beef (carcass weight equivalent) and 635 m ton of pork (carcass weight equivalent). In addition, the cattle breeding farms would produce about 6,000 heifers, which would either be retained or sold to replace cull cows in other herds. About 3,000 m ton of additional milk would be produced for feeding to calves. The municipal abattoirs would process the incremental production of cull cows and pigs generated by the project, and their total annual processing capacity would be adequate to provide sufficient processed beef and pork for the next 20 years. 2.19 The production figures given in the preceding paragraph would represent the direct result of: (a) capital investments (pasture improvement, subdivision of cattle ranches, provision of watering points, purchase of breeding stock and building of stock-handling facilities); (b) efficient utilization of inputs (fertilizers, concentrated feed, vaccines, anti-parasite products and mineral supplements); (c) improved husbandry methods (rotation of pasturing areas, establishment and maintenance of pastures, registers); and (d) development of improved administrative capacity. Indirectly, those figures would be the result of the technical services provided by the Central Bank and the participating commercial banks.  -6- 2.20 The impact of the project on production would result from the achievement of specific objectives in the area of productive efficiency. Indications were that, once herds had been stabilized on the beneficiary livestock farms, the following annual technical coefficients would apply for all of them: - an annual calving rate of 75%, with a mortality rate below 2%; - annual culling rate of 20% for cows on dairy farms and 15% on breeding and fattening farms; - total culling rate on breeding and fattening farms would remain stable at 22%; - milk production would reach 5.5 liter/cow/day on small dairy farms and 7 liter/cow/day on medium-sized farms; - carrying capacity per unit of area would be one animal unit/ha on breeding farms, 1.7 animal units/ha on dairy farms and two animal units/ha on breeding and fattening farms. On pig farms, the major production coefficients would stabilize at: - birth rate of 80%; - an average of two litters per sow per year and 10 piglets per litter; - culling rate of 40% for sows and boars; - mortality rate no higher than 1% for boars, 2% for sows, 20% for piglets up to six weeks old, 5% for piglets six to 12 weeks old and 3% for animals 12 to 34 weeks old. - feed conversion rate would be 4 kg of feed per kg of meat produced. Importance of the Project to the Sector 2.21 The Second Livestock Development Project was a continuation of the effort begun in 1970 through the First Project to benefit small livestock producers in Honduras by making them medium- and long-term subloans to finance the development of their farms. Small cattle farms were not only numerous, but supported over 50% of the national livestock population, generally in conditions that left much to be desired. The Second Project was important in making a reality of the country's considerable livestock potential. 2.22 The number of livestock farms targeted under the Second Project (730) represented approximately 1% of the total of such enterprises throughout Honduras, while the area involved (123,000 ha) represented 11% of national pasture lands.'/ The project's nature seemed to indicate that the 1/ According to the 1965 Agricultural Census, there were 82,520 livestock farms, occupying a total of 1.1 million ha of pasture land.  - 7 - multiplier effect would be significant. Projected production was to be more than triple that actually being achieved by participating farmers at the time of the appraisal mission, increasing national meat and milk production by 12% and 60% respectively. Role of Other Donor Agencies in Livestock Development 2.23 Prior to 1973, the only international agencies to make loans for the Honduran agriculture sector, with the exception of IDA (Credit 179-HO), had been IDB and USAID. Beginning in 1962, IDB had granted seven loans totaling US$35 million, of which US$15.5 million had been allocated for agro-industries, US$7.7 million for farm settlement schemes, US$2.8 million for upgrading farm extension services and US$4.9 million for agricultural development (US$0.6 million earmarked for the livestock subsector); in all these cases, the funds had been channeled through NDB. USAID had made US$9.5 million available in 1968 to finance the purchase and storage of grains, US$2.7 million in 1970 for a study of land tenure patterns, and US$2 million in 1971 for a grain marketing system. In addition, the United Kingdom had made bilateral technical assistance arrangements for studies on irrigation and land use, and Israel and other countries for farm settlement schemes. 2.24 The above figures justify the view that the IDA loans for the First and Second Livestock Development Projects should be regarded as a more decisive and coordinated effort to make credit and technical assistance available to the livestock subsector. III. PROJECT EXECUTION Entry into Effect and Commencement of Operations 3.01 The Second Livestock Development Project (Credit 434-HO) was declared in effect as of January 18, 1974. The time lapse between signature of the Development Credit and Project Agreements in October 1973 and their actual coming into effect allowed for compliance with the conditions for effectiveness, among them the following: ratification of the loan by the Chief of State acting in the Council of Ministers (December 1973) and drafting and signature of project administration agreements between the Central Bank and each of the participating banks.2/ 3.02 Disbursement of Second Project funds began immediately. Commitment of these funds had begun in the second quarter of 1973, when the proceeds of the First Project Credit 179-HO had been fully disbursed. Project Amendment 3.03 At the request of the Government of the Republic of Honduras, an Amending Agreement to Development Credit Agreement and Project Agreement No. 434-HO was signed with IDA on May 25, 1976, whereby US$1 million of the funds previously allocated for livestock subloans was to be reallocated for the rehabilitation and improvement of the infrastructure of banana farms located in Districts D and E of the Isleta zone, Sonaguera, Colon Department, which 2/ During the first quarter of 1974, six participating banks signed such agreements.  -8- had been devastated by Hurricane Fifi. The beneficiary of this arrangement would be Empresa Asociativa Campesina de Isleta, which had 1,352 members; the funds involved were to be channeled through COHBANA (Corporacion Hondurena del Banano), with NDB acting as intermediary. The Amending Agreement was ratified by the Chief of State acting in the Council of Ministers, through Decree No. 352 of July 5, 1976, and on December 10 the same year IDA declared it to have come into effect. 3.04 The resulting cut in the funds available for livestock development led to a reduction in the number of livestock farms targeted for financing; at the discretion of the Project Director, the original 735 were cut back to 610 (including five municipal abattoirs) and the new loans to Isletas. These new arrangements allowed for the financing of: 10 small (30 ha) dairy farms; 168 medium-size (50 ha) dairy farms; 157 cattle breeding and fattening farms; 149 cattle breeding farms; and 30 pig farms. The channelling of funds (all external) to the Isleta program also made it necessary to reduce total direct on-farm investments from US$10.3 to US$9.7 million in order to offset the reduction in the external funds originally allocated for livestock development. 3.05 The changes resulting from the Amending Agreement also raised the question of re-estimating the production targets and the economic and financial rates of return projected in the original version of the project, but because of the difficulty of the necessary calculations, it was simply assumed that there would be a small variation. Results of Project Execution 3.06 * Three hundred and ten subloans were approved against the proceeds of the Second Livestock Development Project, but only 307 were actually used.3/ The distribution being as follows: 296 subloans for the development of cattle enterprises (including 10 expansions); 6 for pig farms; 4 for municipal abattoirs; and 1 for the Isleta banana program. A total of 297 undertakings were financed, but 1,941 producers benefited since participants included six farm cooperatives with a total of 303 members as well as the Empresa Asociativa de Isleta with its 1,352 members. 4/ Tables 2 to 9 provide details on the distribution of subloans by type of farm enterprise, size of subloan, size of farm and by beneficiary. They also give figures on: type, average size and total area of the livestock farms financed; regional distribution of the number of subloans granted and the total amounts involved; and regional distribution of beneficiaries according to their occupation and place of residence (PRC paras 1 and 2). 3.07 Final results as to the number, type and size of the farms financed differed widely from the projections made at the time of the revised appraisal. Nevertheless, it is important to note that although the final Note: * A paragraph carrying an asterisk is commented on in the PRC (Project Report Critique); at the end of the paragraph, a specific reference is given. 3/ One subloan was withdrawn after signature, and two (one of them for an expansion plan) were not used by the subborrowers. 4/ Direct beneficiaries of municipal abattoirs are excluded, since no estimation was possible.  -9- number of farms financed (297) was only 48% of the projected number (610), the Second Livestock Development Project brought direct benefits to a higher number of producers and covered a 4% larger geographic area than initially projected. 3.08 Although the original appraisal contained no specific projections on the development of dual-purpose and fattening farms, they made up 84% of all beneficiary farms (Table 2) and took up 63% of the total land area affected by project execution (Table 6). In general, dual-purpose operations predominated, reflecting the usual situation among Honduran livestock producers. Development of breeding and fattening operations was much more relevant, in terms of both numbers and land area involved, than that of dairying and breeding farms, which together represented only 3% of the number of farms financed and affected an area equivalent to 1% of the total project area. 3.09 Project experiences are conclusive in reflecting the real structure of the livestock subsector in Honduras, as opposed to the original appraisal, which projected the achievement of a certain degree of specialization in the subsector, particularly as regards milk production. Some of the major reasons explaining this behavior are that: (a) there has never been a clear price policy on milk within the economic context of the country-s livestock industry, so that it has been more susceptible to the constant fluctuations of the market; (b) a farmer engaged exclusively in milk production needs to be highly specialized in both the technical and managerial senses, something not normally true of the typical Honduran cattle farmer; (c) the intensive nature of specialized milk production requires a high initial investment, which has never been within the reach of the typical Honduran cattle farmer; and (d) the genetic character of the Honduran cattle herd fits it basically for meat/milk (dual-purpose) operations, with a greater tendency toward meat production. 3.10 In nominal terms, total loan funds made available exceeded the figure projected at appraisal by 22%, but at constant 1973 prices the difference was not so great. Of that total, 50% went to finance dual-purpose enterprises, which, as pointed out above, were not considered in the original appraisal; they were followed in order of importance by breeding and fattening enterprises and the Isletas subloan which absorbed 16% and 10%, respectively, of the total. In neither case did actual results coincide with the projections (Table 2). 3.11 * The average subloan by type of enterprise financed was generally higher than the average envisaged at appraisal for each case -- except pig farms and medium-sized abattoirs, where the average was fairly close to the projected figure. On the other hand, the average subloan for small abattoirs, at constant 1973 prices, was 57% lower than the projected average for such facilities (Table 2) (PRC para 3). 3.12 Forty percent of subloans granted fell within the range US$12,500 to US$25,000 and account for 23% of the total value of the subloan portfolio. Small subloans of less than US$12,500 made up 23% of the total number, accounting for 6% of the subloan portfolio (Table 3).  - 10 - 3.13 With regard to subloan distribution according to size of farm, there is a more stable situation for holdings in categories below 500 ha, in both the number of subloans granted and the total amount per category. However, the figures on subloans for farms covering more thin 500 ha are quite significant, representing 20% of the total number of subloans granted and 41% of the total financing made available. The subloan for the Isleta program (Table 4) had a strong bearing on these figures. 3.14 As far as concerns subloan distribution according to the size of subloan principal, those in the US$12,500 for US$25,000 per person category were the most frequent. Nevertheless, approximately 82% of direct beneficiaries received an average subloan per person of less than US$9,000, a category that covers all the agricultural cooperatives (including Isleta). At constant 1973 prices, that percentage rises to 88%, given the transfer of beneficiaries from the category immediately above (Table 5). 3.15 * The average size of the farm benefited was 343 ha, compared with a projected average of 165 ha. That, however, indicates very little as to relative size by type of enterprise or its frequency. Breeding and fattening enterprises showed the highest average, at 922 ha, in comparison to a projected average of 150 ha. These were followed in order of actual average size by fattening enterprises (554 ha) and meat/milk (dual-purpose) enterprises (233 ha). Because of the low number of breeding enterprises financed, there is no adequate basis for comparison with initial projections. As was to be expected, farms used more intensively per unit of area (with regard to both capital and manpower) are smaller on average than those on which extensive methods of husbandry are employed. It is also logical that 52% of farms in the latter group are located in grazing areas where the terrain is very irregular, although, by the same token, it is surprising that commercially scaled fattening enterprises, supposedly showing good economic rates of return, are located in districts where the terrain is 71% rough (Table 6) (PRC para 3). 3.16 As predicted in the original appraisal, the majority of subloans (including those for expansion plans) went to beneficiaries in the Atlantic zone, where the Project Unit has two regional offices (San Pedro Sula and La Ceiba), through which 74% of subloans were handled and 68% of total portfolio funds committed. It was followed by the Central zone, with 17% of all subloans and 22% of total funds committed, and finally by the Southern zone, with 9% of all subloans and 10% of fund commitments (Table 7). 3.17 If each participating agricultural cooperatives is taken as a single beneficiary, then 59% of direct beneficiaries has as their main activity stockraising and/or agriculture. Furthermore, 64% of all project beneficiaries lived on their farms (Tables 8 and 9). If all members of the agricultural cooperatives are included as individual beneficiaries, those two figures rise to 94% and 95%, respectively, making it more evident that the project achieved its general objective of benefiting a large number of agricultural and livestock producers.  - 11 - Physical Progress 3.18 The proceeds of the Second Livestock Development Project made the following physical investments possible amongst others: establishment of 23,600 ha of new pastures and the improvement of an additional 19,400 ha; installation of 3,200 km of new fencing and repair of some 2,600 km of existing rences; constrution of 238 corrals for stock-handling purposes; and purchase of 159 purebred females, 10,829 commercial standard females and 940 bulls for improvement of the breeding herd. 5/ In addition, short-term (working capital) loans financed the purchase of approximately 32,000 steers of fattening (Table 10-B). 3.19 The financing assigned to banana growing allowed the rehabilitation and improvement of 2,000 ha located in districts D and E of the Isleta zone in the Northeastern region of the country, which had been devastated by Hurricane Fifi in 1974. This component also included the purchase of heavy agricultural machinery. 3.20 Construction of, and provision of basic equipment for, the municipal abattoirs made it possible to meet the demand for slaughtered animals in four large municipal districts, three of them in the Northwestern region of the country and one in the Central region. The technical specifications called for the building of simple structures equipped to function efficiently and cheaply and to ensure adequate sanitary conditions. In view of the projected demand for meat for human consumption in those municipalities, the total installed capacity of the new plants make it possible to process approximately 125,000 head of cattle and 194,000 pigs annually. 3.21 The measures taken to develop six pig farms (20% of the total projected) consisted of the purchase of improved stock and building of the necessary installations. This program may very well prove to have been the bridgehead for the introduction of more technically-oriented methods of pig farming, as was the initial intention of the project. Procurement 3.22 The various inputs utilized in developing the livestock operations financed under the project were purchased through existing market channels in Honduras. The commercial standard females, animals for fattening and approximately 95% of the purebred animals used to upgrade the national breeding stock were bought from domestic producers. The small percentage of purebreds obtained from abroad, with prior approval from the Project Director, met the current Honduran health requirements. 3.23 * Construction and equipping of the municipal abattoirs -- small, medium or large--went ahead in accordance with the procurement regulations established. Continuous supervision of building contractors and suppliers by the municipalities (for small abbatoirs) and by consulting firms (for medium and large abattoirs) ensured adherence to plans and specifications developed from the original designs. But even so, slow progress with construction of the Tegucigalpa facility resulted in postponement of its final completion, while post-completion inspection of the San Pedro Sula abattoirs revealed certain structural faults in the floor supporting the main items in the 5/ Sixty percent of the animals purchased were beef cattle.  - 12 - slaughtering plant, in the drainage and oxidation system and in the corrals used for reception of livestock. Building materials were purchased on the local market on satisfactory terms, while special slaughtering and processing equipment was obtained through international bidding procedures (PRC para 15). Total Project Cost and Financing 3.24 The total cost of the project and the sources of financing used are shown in Tables 10 and 11. Excluding the financing of working capital needs needs6/ the total recorded cost of the project in nominal terms was 21% higher than estimated. However, in constant 1973 prices, on-farm investments and total project cost were similar to the estimates given in the original appraisal report. If the additional working capital is included, total project costs were 34% higher at 1973 prices, as shown below: PROJECT COST (US$000 at 1973 prices) As estimated at appraisal Actual On-farm investments 9,700 9,726 Additional working capital - 3,591 Technical services 700 700 Total 10,400 14,017 3.25 The most obvious conclusion to be drawn from the above table is that, although total project cost at constant prices (excluding working capital) was similar to the appraisal estimate, total unit costs per farm financed were higher in the majority of cases, given the actual number of such farms (para 3.11). Full details are given in Table 10-A. Unit investment cost was closely related to the average size of the farm financed. 3.26 * Percentage distribution of project components by total investment cost compared against cost as estimated at the time of original appraisal (excluding working capital) is as follows (PRC para 8): 6/ The original appraisal made no allowance for the additional cost of financing working capital needs.  -13 - PROJECT COMPONENTS BY TOTAL INVESTMENT COST (at constant 1973 prices) PERCENTAGE OF TOTAL EXECUTED AS PERCENTAGE INVESTMENT OF ORIGINAL APPRAISAL As estimated a/ at appraisal Actual b/ Pasture devlopment 13 17 131 Fencing 9 9 100 Water supply 12 10 83 Structures 9 15 177 Machinery and equipment 21 13 62 Purchase of animals 26 27 104 Other and technical services 10 9 90 Total 100% 100% 100% a/ For 610 enterprises. bI/ Including working capital and technical services, 1973 prices. 3.27 * The largest variations from the appraisal estimates were the virtual doubling of the percentage for structures (buildings and installations) and, though to a lesser degree, that for pasture development. This result is a consequence of many of the factors enumerated already. Once again, it should be noted that although fewer enterprises received financing than had been projected, those which did occupied a total area slightly larger than that identified in the original appraisal as being distributed among 610 enterprises (para 3.07). In addition, the types of livestock enterprises which absorbed most financing (meat/milk and fattening) did not coincide with the type expected (para 3.08). It can be inferred that the larger the average size of a farm, the larger the investment in pasture development, as the majority of enterprises financed were initially deficient in this regard. In addition, meat/milk, breeding/fattening and fattening enterprises, which together absorbed approximately 68% of the total project investment, required larger investments in pasture development and in buildings and installations; with regard to the latter, the figures on construction of sheds and stables, corrals and spray-races, and housing for managers and workers are significant (Table 10-B) (PRC para 8). 3.28 * The fact that the investment in machinery and equipment was 33% lower than originally estimated is very probably explained by the topographical features of the terrain in the project zone (para 3.15). The investment in tractors was low, and most of the forage equipment financed was of the stationary type (PRC para 8). 3.29 * It is considered important to mention that many of the partial amounts given in the original appraisal report for the various components financed can be regarded as somewhat conservative, and therefore as having been one factor--in addition to the others already discussed --in the degree of variation noted (PRC para 8).  - 14 - 3.30 Regarding the sources of project financing, the IDA contribution fell from the 64% proportion of the total given in the original appraisal to 53%, owing to the increase in the nominal cost of the undertaking. The Central Bank of Honduras increased its participation from 6% to 16% (excluding its loans for working capital), which offset that difference. Contributions from sub-borrowers and participating banks were maintained at the levels projected in the original appraisal (Table 11). The following summary table compares the percentage participations by the various sources of financing: PERCENTAGE DISTRIBUTION: SOURCES OF FINANCING AND TOTAL INVESTMENT IN THE SECOND LIVESTOCK DEVELOPMENT PROJECT (at current prices) Participating Central Sub-borrowers banks Bank IDA Total c/ As estimated at a/ appraisal 16 14 6 64 100% Actual b/ 17 14 16 53 100% a/ 610 enterprises. b/ 297 enterprises. c/ Working capital funds not included. Schedules of Delays 3.31 Disbursement of the proceeds of Credit 434-HO was somewhat slower than projected at the time of the original appraisal, as may be seen from Table 12. Although the individual time differences observed were not of great significance, the final disbursement date had to be postponed for six months, from June 30, 1979 (the date projected at appraisal) to December 31 of the same year. Commitment of Second Project funds, however, had begun in mid 1973 (para 3.02), and the short delays in subsequent disbursement can be ascribed for the most part to: (a) promulgation of the new Agrarian Reform Law in December 1974; (b) the delay in completion of construction works on the Tegucigalpa municipal abattoir; and (c) the major cause, the delay occasioned by the formalities for the transfer of funds to the Isleta program (rehabilitation of banana farms in the Atlantic coastal zone), and their subsequent disbursement. 3.32 Some small part of the delay can also be traced to the procedure by which the Central Bank requested reimbursement from IDA, although direct disbursements to sub-borrowers had been made before the dates listed in Table 12. Furthermore, in late 1974, only six banking institutions were participating in the project; the fact that five other banks joined in later--among them NDB, the Central Bank itself and Banco Sogerin--was decisive for the disbursement process, a subject that is discussed further on. 3.33 * The New Agrarian Reform Law: Promulgation of the new Agrarian Reform Law (Decree Law No.170) in December 1974 led the banks to make a considerable cut-back in the acceptance of new loan business, a reaction that had been expected following the issue of Decree No. 8 sometime earlier. The  - 15 - majority of the participating banks refused to go on granting financing secured on rural mortgages until they were given guarantees (in a form more attractive than agrarian debt bonds) against the risk of loss of their investment should expropriation occur. In order to rectify the problem, the Board of Directors of the Central Bank of Honduras passed a resolution on October 20, 1976, whereby the liquidity of the banks would be assured by the Central Bank acquiring, with the resources of its Securities Fund, all agrarian bonds received by the participating banks in settlement of subloans granted within the context of the IDA Credit Agreement, whenever the bonds had been received in payment of mortgages on land and/or improvements expropriated under the new legislation, on condition that such expropriation could be proved. There is no doubt that this move persuaded the private banks to participate once again in the Second Livestock Development Project, judging by the figures given in Table 12 on the year-by-year distribution of investments (PRC paras 38 and 46). 3.34 * Construction of the Tegucigalpa Municipal Abattoir: By virtue, first, of the procedures stipulated for the construction and equipping of municipal abattoirs, and, second, of the fact that this was the only large-scale facility of its type financed from the proceeds of Credit 434-Ho, this project component did not get under way until late in 1978, after a long process initiated in 1976 with the approval of the financing plan by the Central Bank and followed in 1977 by approval from the World Bank for the feasibility study. The final step in the preliminary train of events was the issue of invitations to bid, in early 1978. Since the necessary construction and equipping works were scheduled to last 10 months, they went beyond the original limit date set for the conclusion of project disbursements, namely, June 30, 1979 (PRC para 15 through 23). 3.35 Disbursements for the Isleta Program: Similarly, funds reallocated for rehabilitations of the banana plantation run by the Empresa Asociativa Campesina de Isleta were not fully disbursed until late in 1979, but solely because the internal organizational problems affecting the Empresa made it necessary to postpone signature of the subloan contract with NDB and COHBANA. Although all the legal requirements stipulated in the Amending Agreement under which funds were assigned to Isleta had been completed as early as mid-1977, signature of the subloan contract did not take place until November 1979. 3.36 As may be seen in Table 12-A, project execution--as evidenced by the number of investment plans launched each year from 1974 onward, and by the investment subtotals for each year--did not follow the pattern expected in the original appraisal. This was undoubtedly a direct result of the negative effect of the new agrarian reform legislation and, to a lesser extent, of the fact that certain important banking institutions were slow to begin their participation. However, it will also be seen from the table that the appraisal estimates were exceeded in all respects in 1974. Special Conditions 3.37 The special conditions embodied in the Development Credit and Project Agreements were in the form of undertakings, assurance and specific procedures affecting project administration and management and the granting  - 16 - of subloans which governed all entities participating in execution of the project (para 2.08). The institutions involved complied satisfactorily, with none failing to abide by the special conditions stipulated. Agreement between the Central Bank of Honduras and CATIE 3.38 Since the Agreements entered into with IDA called for the services of livestock specialists who would strengthen the capability of project personnel to provide both farmers and the livestock technicians engaged by the participating banks with the necessary technical assistance, the Central Bank of Honduras in 1976 signed an agreement with CATIE (Centro Agronomico Tropical de Investigacion y Ensenanza --Center for Research and Teaching in Tropical Agriculture), a body with headquarters in Costa Rica. Under the terms of this agreement, CATIE was to assign three specialists to the project: for a two-year period, one each in the fields of animal production, fodder production and management of agricultural enterprises. The three were to work at the headquarters of the Project Director, who was to,assign Honduran counterparts to each of them and to provide the resulting work team with the means and resources to carry out its appointed function in the proper manner. 3.39 This technical group began its work in March 1977 with the arrival of two of the specialists, the third taking up his duties in October the same year. It set up headquarters at the regional office of the Project Unit in San Pedro Sula, concentrating its efforts in the northwestern and northeastern sections of the country. Of approximately 180 livestock farmers who made use of the project credit facilities irn 1977, the group visited and subsequently monitored the farms run by 54, which together accounted for 5,481 ha of pasture and 6,830 head of livestock. A preliminary reconnaissance study showed the most widespread problems to be improper feeding, herd management, animal health, genetic factors and administration. 3.40 The results achieved by the technical group over the period 1977-1979 were summarized in a final report dated May 1979, from which the following facts were taken: (a) Technical assistance and training on the farms selected was designed to introduce 18 tecniques affecting feeding, herd management and administration; (b) Adoption of these techniques resulted in a significant improvement in reproductive performance, the calving rate rising from 63% to 75% on farms where assistance was provided over an 18-month period and from 64% to 67% where it was provided over six months. Milk production increased from 3.8 to 4.9 liter/cow/day and from 3.7 to 3.9 liter/cow/day, respectively, on the two groups of farms; (c) Special attention was paid to the direct instruction and continuous training of five local counterparts attached to thLe Central Bank of Honduras. Most of the instruction and training for professionals in the livestock and private banking sectors and for the beneficiaries of the project credit facilities was provided through meetings, field days,  - 17 - courses and mini-courses, about 500 persons being reached in this way; and (d) In addition to its teaching and training work in the livestock sector, the technical group put out 21 livestock bulletins, 12 press articles and 13 special documents. 3.41 To date, the results flowing from this technical services compone-. have been satisfactory and of considerable benefit to both the Project Unit and the farmers contacted. The Honduran counterpart personnel have developed sufficient capacity and skill to be able to continue these activities alone, and could well be posted to other regions of the country. In this regard, present consulting personnel should be kept on and training of new counterpart personnel arranged. 3.42 Since the technical assistance component introduced as part of the Second Livestock Development Project has been in effect only a short time, it is not yet practicable to evaluate it from the cost/benefit standpoint as a means of assessing its economic and productive impact on the farms where assistance was provided. Furthermore, since these services were made available exclusively on farms benefiting from project funds, it would be difficult to distinguish the incremental costs and benefits attributable to the investment financed from those attributable to the assistance provided. Investment in Isleta 3.43 As indicated already (para 3.35), disbursement of the US$1 million allocated to the Isleta program took place only a few days prior to the closing date of the Second Livestock Development Program. The investments in question, made in accordance with the technical documentation incorporated into the Amending Agreement dated May 5, 1976, to the Development Credit and Project Agreements (Credit 434-HO), were as follows: ISLETA INVESTMENT PLAN (US$-000) Category Amount Water supply 372.3 Construction and installations 216.0 Machinery and equipment 411.7 Total 1,000.0 3.44 A financial analysis of the Isleta production project conducted a short time ago showed that, although the production targets projected in the original study for the program are being achieved, the financial rate of return for recent fiscal years has been low. Both marketing and operating costs--and specifically, overheads and administration expenses--have increased considerably in the last few years and show a tendency to continue doing so. The Empresa Asociativa has even had serious difficulty servicing its earlier loans.  - 18 - 3.45 Such unexpected financial results suggest the need for a full-scale external audit accompanied by an in-depth socio-economic study of the possible causes are to be ascertained, but the firm opposition of the member farmers has, so far, prevented this. The apparent managerial irregularities in the Empresa, and particularly the recent social and political disturbances at its headquarters attributable to antagonism among the factions into which its members are grouped, have led the Government of the Republic to intervene in its administration until the situation returns to normal and there can be a restructuring of what should have been, from the outset, a campesino organization run fully along the lines of participatory management. Under the circumstances, it is unwise to continue risking the proceeds of agricultural borrowing arrangements such as those destined under the First Agricultural Credit Agreement (628-HO). IV. IMPACT OF THE PROJECT 4.01 * The contents of this chapter are based on a fairly representative! survey of dual-purpose (dairying and breeding) farms conducted by the Project Unit in late 1979. The sample consisted of 72 farms that had taken part in the project, representing approximately 33% of all farms of that type and 252 of all beneficiary livestock enterprises. The questionnaire used covered both production and financial variables for each farm at the time the survey was carried out, while earlier project data were obtained from Project Unit files. The figures used in evaluating the project impact relate, for the most part, to farms associated with the project for periods of three or more years. Although the validity of the indexes obtained in this manner may be questioned on grounds that experience so far in project follow-up and evaluation has been limited owing to the difficulty of gathering more accurate field data, they are the only reliable indication available as things now stand and have, therefore, been used in drawing up the report given here (PRC para 24). 4.02 The analysis and evaluation procedure was geared primarily toward identifying two different representative dual-purpose farms, one in the Atlantic zone to serve as a model for such farms financed in the northeastern and northwestern regions, and another in the Central-South zone to serve as a model dual-purpose farm for the rest of the country. The existence of specific inter-regional differentials with regard to climate and soil types and overall availability of production resources preclude generalization from one model designed to represent the entire country. 4.03 It was not feasible to draw comparisons between project performance and the projections embodied in the original appraisal, since farms of the dual-pupose type were not envisaged at that stage (para 3.08). The report given here is therefore limited to a discussion of the major indicators of on-farm project impact for each of the representative models serving as the basis for the evaluation. The indicators are summarized in Table 13. Production Capacity 4.04 As may be seen from Table 13, the average size of the dual-purpose farm in the Central-South zone is 28% larger than its counterpart in the Atlantic zone. Nevertheless, although the increase in area under pasture was  - 19 - greater in relative terms in the Central-South zone, improved pasture development was greater in relative percentage terms in the Atlantic Zone. Consequently, and since the total initial investment in livestock was apparently similar in the two zones (Tables 14 and 15), the average total initial investment per farm (at current prices) was 23% higher in the Atlantic zone. Furthermore, the better environmental conditions and the greater -vailability of production resources in the Atlantic zone explain, to a large extent, the relatively greater increases in herd size and number of breeding cows. Income-generating Capacity 4.05 On average, relative increases in post-development are 100% for gross income and 240% for net (Table 13). As was to be expected of farms of this type, a high percentage of gross income (an average 60%) comes from the sale of milk (Tables 16 and 17). The emphasis among Honduran livestock farmers on the simultaneous production of milk and meat is not only a result of the type and quality of their animals, which adapt with ease to the prevailing environmental conditions, but also in part to their need to assure themselves of a regular cash flow from which to meet their daily working capital requirements. Coefficients of Productivity 4.06 The majority of post-development productivity coefficients are more than satisfactory (Table 13). Despite the questionable realiability of the data on the pre-development situation of each subproject, such coefficients as the calving and milk-productivity rates per cow appear to show significant increases. Results from the Central-South zone are of greater relevance, especially as regards the increase in the calving rate and the size of the milk-productivity index, both before and after Year 4 of the project. The latter of the two seem to be explained by the nutritive qualities of the pasture there, since, in the Atlantic zone, there is more grazing available, given the more evenly distributed rainfall. Mature animal mortality and extraction rates tend to be stable at 2% and 19%, respectively, for the country as a whole. Incremental Production 4.07 As a group, the dual-purpose farms (218) financed under the Second Livestock Development Project will probably produce an additional 2,900 m ton liveweight a year and 9,800 m ton of milk, as may be seen from the following figures:  - 20 - DUAL-PURPOSE FARMS: INCREMENTAL MEAT AND MILK PRODUCTION (m ton) Atlantic Zone a/ Central-South Zone b/ Total Incremental production liveweight 2,146 746 2,892 Incremental production of milk 6,296 3,508 9,804 a/ 162 farms b/ 56 farms 4.08 Although there is little likelihood of being able to draw comparisons with the original project goals recapitulated in paragraph 2.18, which are projections of different on-farm development plans, it can nevertheless be said that the total anticipated increase in both meat and milk production is highly satisfactory in proportion to the small number and the type of farms focused on in this analysis. These levels come up to approximately 40% of the levels projected in the original appraisal. The additional milk produced for use in feeding calves may in fact reach the appraisal figures, since meat/milk farmer almost invariably reserve a certain proportion of milk to be left in the udders for that purpose. On that assumption, the volume of milk obtained per cow would be higher than indicated in the evaluation being given here. Attribution 4.09 It is impossible to quantify that proportion of incremental meat and milk production which would have occured on the participating farms if there had, in fact, been no project. However, the slow growth in the production of both commodities on a national scale (about 4% annually for both) indicates that the growth achieved on the project farms (approximately 10% annually for both) can be attributed to a great extent to the project. In the absence of reliable information to be used as a basis for comparison, it is reasonable to conclude that the elements of production financed through the project-- pastures, water supply, buildings and facilities for stock handling, improved animals and technical assistance-- placed beneficiary farmers in a position to take advantage of circumstances that favored meat and milk production. Transfer of Assets 4.10 Approximately 26% of on-farm assets consists of commercial-grade animals (Table 10-B), which would undoubtedly have produced and milk without the project, probably at the average productivity level of the country as a whole. But, as pointed out in the preceding paragraph, the absence of reliable figures on national productivity makes it impossible to quantify that proportion of anticipated incremental production (para 4.07) of both meat and milk which would have been obtained without the impact of the project.  -21 - Employment 4.11 * Although no quantitative information is available, it seems probable that at the full development stage the project would easily generate some 200 additional permanent jobs on dual-purpose farms, given the substantial increase in the head of cattle and the greater emphasis on dairying, which is more labor-intensive. It is quite likely that the project would also generate employment on the other types of farms financed and in the activities that would support the expected incremental production--namely, transportation, marketing, processing and distribution (PRC para 32). V. FINANCIAL AND ECONOMIC RATES OF RETURN 5.01 At constant prices, the financial rate of return for the typical dual-purpose farm in the Atlantic zone has been estimated at 13%, and for its counterpart in the Central-South zone at 20% (Tables 18 and 19). Although no sensitivity analyses were made, that rate would be very much subject to changes in productivity levels and therefore to changes in gross income from sales of meat and milk, the only farm products marketed. 5.02 The rate of return on the farmer's own capital investment was estimated at approximately 20% for the typical farmer in the Atlantic region and at 34% for his counterpart in the Central-South region. Those figures cover not only the return on the investment itself, but also the advantage the farmer draws from being able to finance a substantial part of that investment through long-term loans at an extremely low real interest rate of 3% (Tables 18 and 19). 5.03 The economic rate of return on the project as a whole has been assessed at 12% (Table 23). In arriving at that figure, since it was difficult to obtain accurate information, the following assumptions were used: (a) gross incremental income from meat sales was increased by 10% at current prices to adjust it to economic efficiency prices;7! milk was regarded as a non-commercial product; (b) since the major part of production is sold directly by the farmer as non-pasteurized whole milk; the farm-gate price was therefore used in both the financial and economic analyses; (c) the economic cost of technical services was taken as the total cost of operating the Project Unit for purposes of the Second Livestock Development Project; (d) incremental taxation on volume of sales was treated as an economic benefit for the project; and 7/ Given the confidentiality of information, it was impossible to derive farm-gate economic prices from the f.o.b. meat export price with adjustments for processing, marketing and transportation.  - 22 - (e) given the difficulty of establishing national productivity figures, the opportunity cost of the production assets transferred to the project from non-participating farms was not taken into account. 5.04 It should also be noted that the incremental economic benefits obtained from the dual-purpose farms assisted prior to 1976 (82 in the Atlantic zone and 36 in the Central-South zone) were not included, as the production and economic averages obtained from the evaluation survey conducted in late 1979 were only for farms assisted 1976 onward. It is apparent, therefore, given the nature of the assumptions enumerated in the preceding paragraph, that the economic rate of return on the project is very much underestimated. VI. INSTITUTIONAL OUTPUT AND DEVELOPMENT Organization and Management 6.01 The same organization and administrative entities used for the First Livestock Development Project (179-HO) remained in use for the Second. The Central Bank continued to act as the highest authority and administering agency for the project. Coordinating and supervisory authority remained with the Project Commission; this body, initially composed of representative of Government, the participating banks and the farming and livestock entrepreneur sector, was restructured--under Governmental Decree No.494-A of December 16, 1976, shortly after the transfer of funds to the Isleta program-- to include representatives of COHBANA and the existing campesino organizations (FECORAR, ANACH and UNC). Despite its By-Laws, the Commission has not always met with the expected frequency, and in most cases members were not present in adequate numbers and were not of sufficient seniority within the organizations they represented. 6.02 The quality of project management--in the hands of a Project Director appointed by the Central Bank--and on-farm technical assistance was good. In this regard, the experience gained earlier from the First Project was so invaluable, that by late 1974 the obvious success with the process of committing Second Project funds made it feasible to plan on launching preparatory studies for a third project by mid 1975; in September of that year, the Government of Honduras submitted a credit application to IDA for that purpose. 6.03 Second Project funds were committed at all times in accordance with the lending procedures agreed upon, whether as subloans to livestock farmers or for municipal abattoirs or in the transfer of funds to Isleta. Personnel and Training 6.04 At the beginning of 1974, the Project Unit already had three regional offices (Tegucigalpa, San Pedro Sula and La Ceiba) and an integratedl project team with 11 members, six of whom were technicians assigned by the participating banks and five by the Central Bank. By the time the First Agricultural Credit Project (628-HO) came into effect in December 1976,  - 23 - Project Unit staff had grown to 20 individuals, 12 of whom were assigned by the pariticpating banks, while another four acted as assistants to the Project Director. As a result of its increased volume of operations, by late 1977 the Project Unit had a fourth regional office, at Choluteca, and an integrated staff team of 37,20 of them technicians assigned by the participating banks, six technical assistants to the Project Director and six other technical personnel (advisers and their counterparts) brought in under the CATIE/Central Bank Agreement. 6.05 As will be seen from the following table, training of technical personnel was a continuing activity within the Project Unit over the period 1974-77.8/ Priority was given for those courses, whether national or international, which offered the training prospects most likely to directly to benefit the Unit: TRAINING ACTIVITIES UNDER THE SECOND LIVESTOCK DEVELOPMENT PROJECT No. of Parti- Year Type cipants Duration Topic Country Organizer 1974 Seminar 10 2 days Dairy and beef Honduras EXPICA '74 cattle 1974 Seminar 10 11 days Pasture-fodder Honduras IICA 1974 Course 1 2 months Project prepa- U. S. EDI/IBRD ration and appraisal 1975 Seminar 4 2 days Livestock Costa Rica EXPICA 75 1975 Course 2 8 weeks Pasture-fodder Mexico BAMEX 1976 Course 3 10 weeks Project prepa- ration and appraisal 1976 Seminar 2 1 week Pig breeding Costa Rica UCR/CIAT 1976 Seminar 2 1 week Livestock Mexico BAMEX management 1976 Course 1 2 months Project prepa- U. S. EDI/IBRD ration and appraisal 1977 Course 1 6 weeks Animal Productivity Costa Rica CATIE/IICA Role of the Participating Banks 6.06 * A total of eleven banks (two state and nine private) participated in the Second Project. In late 1974, only six banks (all private) had become involved, but they had already committed 29% of total loan funds, the number of subloans then granted representing 36% of the final total. In 1975, two state banks and one more private bank9/ joined in; their participation was of fundamental importance in implementing the project, since together they 8/ Training activities under the CATIE/Central Bank Agreement were detailed in paragraph 3.40. 9/ The Central Bank of Honduras, which made all subloans for municipal abattoirs, National Development Bank (NDB) and Banco Sogerin (initially known as Banco Hipotecario).  - 24 - committed 47% of the portfolio and 36% of the total number of subloans finally granted (PRC para 41). DISTRIBUTION OF SUBLOANS, BY PARTICIPATING BANK Average Amount Subloans Total Amount per Subloan No. % US$ 000 % US$ Atlantida 13 4 353.5 4 27.2 Ahorro Hondureno 44 14 857.0 9 19.5 Bancahsa 55 18 1,367.3 14 24.9 Occidente 34 11 931.7 10 27.4 Financiera 22 7 493.6 5 22.4 Honduras 23 a/ 8 956.7 9 41.6 Fomento (NDB) 68 22 2,198.2 23 17.9 b/ Sogerin 40 13 1,006.0 10 25.2 Comercio 2 1 60.2 1 30.1 Continental 2 1 113.4 1 56.7 Central Bank c/ 4 1 1,397.5 14 - 307 d/ 100 9,735.1 100 a/ Includes 4 subloans sold to Banco de Comercio and 11 to Banco Sogerin. b/ Excluding the Isleta subloan (US$1 million) c/ Granted subloans for municipal abattoirs only. d/ Includes increases made in 10 loans. 6.07 As shown by the foregoing table, NDB was the most active financial intermediary; besides granting a one million dollar loan to Isleta, it concentrated on the granting of small subloans. In order of importance Bancahsa, Banco Sogerin, Banco de Occidente, Banco de Honduras and Banco del Ahorro Hondureno played significant parts in the implementation of the Second Livestock Development Project. 6.08 Nevertheless, the participating banks could have been more active, considering the number of loan applications received and, more especially, the number of studies approved by the Project Unit.10/ In percentage terms, the number of applications examined and for which studies were then approved represented 72% of the total submitted, while 83% of all studies approved by the Project Unit led to formal financing agreements. Inadequate mortgage collateral and problems of land tenure were the major reasons why applications with approved studies were rejected; to a lesser degree, refusals were occasioned by doubtful financial feasibility or the fact that some participating banks failed to recruit sufficient technical field personnel or used slow, cumbersome procedures for handling loan applications (very true of NDB). Many of these difficulties were mitigated considerably during subsequent phases of the Agricultural Credit Project. 6.09 * As is apparent from the accompanying table of subloan repayment figures, arrears of interest are a serious problem for most banks, accounting on average for 58% of total arrears. Except for Banco Continental, Banco del Comercio and Banco de Occidente, all banks have arrears of principal beyond the six-month mark, the most serious cases being Banco de Honduras and 10/ Of a total of 517 applications lodged, 62 were rejected, 63 were withdrawn and 22 remained pending. Of 370 studies approved by the Project Unit, 48 were rejected or held pending by the participating banks (NDB particularly) and 15 were withdrawn by the sub-borrowers.  - 25 - Bancahsa with 73% and 40%, respectively, of installments over one year in arrears and Banco del Ahorro Hondureno with 64% of installments over two years in arrears. Generally speaking, the arrears problem affecting some banks seems to be the result of their inadequate accounting procedures and poor collection methods, while in other cases on-farm technical problems appear to be the underlying cause. However, it was not possible to pinpoint which banks and in which zone specific cases of these types arose (PRC para 44). ARREARS OWING TO BANKS PARTICIPATING IN THE SECOND LIVESTOCK DEVELOPMENT PROJECT a/ (US$ 000 as of December 31, 1979) Arrears Total as % of Principal Arrears Out- Out- Less than 6-12 1-2 Over 2 of Total standing Banks standing 6 months months years years Interest Arrears Balance Atlantida 229.1 5.0 8.8 - - 18.2 32.0 14% Bancahorro 584.9 19.2 10.5 2.9 4.5 20.8 57.9 10% Bancahsa 1,133.8 26.7 5.9 0.9 - 50.9 84.4 7% Occidente 621.3 2.0 - - - 38.5 40.5 7% Financiera 269.6 10.3 15.1 - - 26.5 51.9 19% Honduras 205.2 14.5 0.8 7.1 - 8.1 30.5 15% NDB 1,906.7 9.1 21.3 - - 61.1 91.5 5% Sogerin 1,148.4 24.6 6.0 - - 41.1 71.7 6% Comercio 176.0 2.9 - - - 5.8 8.7 5% Continental 155.1 - - - - 5.1 5.1 3% Source: Audit Reports as of December 31, 1979, Superintendency of Banks, Central Bank of Honduras. a/ Includes working capital. Information, Accounting and Audit 6.10 Project information, accounting and audit mechanisms have proved satisfactory. As stipulated in the Credit Agreement, the Project Director has furnished quarterly and annual reports on progress with the implementation process. Also, the Central Bank and the participating banks have each maintained separate project accounts, which were recently broken down into sub-accounts reflecting specific operations preceding (179-HO) the Second Livestock Development Project and subsequent to it (628-HO, 1005-HO/1833-HO). Over the very short term, that procedure has had a notably favorable effect on Project Unit management, reflected in its control, supervision and evaluation systems. The Superintendency of Banks within the Central Bank, which has an audit function and operates independently, examines the accounts and sub-accounts of the Project Unit and the financial intermediaries annually.  - 26 - Follow-up and Evaluation 6.11 Although one of the major activities of the Project Unit has been the follow-up and evaluation of projects, its limited experience of systems of this type has meant that it was not always in a position to generate the kind of continuous, reliable and sufficiently useful information needed for measurement of the effects and impact of a project precisely when needed. So far, its follow-up procedures have consisted of monitoring execution of the investment process by subloan beneficiaries and in supervising the modifications in farm management that will guarantee achievement of the production goals established in the particular project study documentation. Its evaluation procedures have consisted of the annual verification of performance as revealed by livestock inventory, production rates, sale of products and operating income and expenditure. The periodic evaluations obtained up till now have clearly shown on-farm achievements. For example, a late 1977 evaluation study of farms with an average of two and a half years in the project, which drew comparisons with their pre-development situation, gave the following: a 38% increase in livestock inventory; and 11% increase in calving rates; a 56% increase in revenue from sale of livestock and milk products; and a 10% reduction in the mortality rate. It is the aim of this Project Completion Report to summarize in chronological detail the average production performance on the dual-purpose farms financed from the proceeds of the Second Livestock Development Project, using as reference framework the pre-project Appraisal Report and the 1979 survey taken in year 4 of the development phase. 6.12 Because the World Bank wishes to see its borrowers develop a greater capacity to set up effective systems for the follow-up and evaluation of agricultural projects, the Project Unit has arranged access to experience gained in this field in other Latin American countries, first through a seminar on Project Monitoring and Evaluation held in Costa Rica in late 1979 under the sponsorship of the World Bank and subsequently through a two-week contract with a recognized international expert on the subject, whose contribution has proved most valuable. As a result, the Project Unit Director has decided, not only to include a section specializing in follow-up and evaluation in its operational structure, but also to lay the foundations for a full-scale data collection and analysis system. Financial Return on the Project Unit 6.13 Given the organizational demands made on the Project Unit and its accompanying institutional growth, its administrative expenditures grew year by year under the Second Livestock Development Project. However, the success achieved in mobilizing Credit proceeds have meant that the Unit has been showing a favorable financial return. In time, administration costs will probably stabilize at relatively low levels, and, to the extent the Unit is able to mobilize the proceeds of subloan repayments, its financial position will improve. The following table provides details of the financial record of the Unit under the Second Livestock Development Project over the period 1973-79:  - 27 - FINANCIAL CASH FLOW ON THE AGRICULTURAL CREDIT PROJECT UNIT UNDER THE SECOND LIVESTOCK PROJECT (US$ 000) 1973 1974 1975 1976 1977 1978 1979 Financial Revenue: a/ (a) Direct - 10.5 68.1 123.3 186.6 213.9 251.2 (b) Subloan repayments - - - - 1.4 10.3 12.9 Expenditure (a) Financial b/ - 4.1 27.6 51.7 70.1 89.6 105.8 (b) Administrative c/ 13.2 40.4 71.6 87.7 143.6 90.9 121.5 B A L A N C E (13.2) (34.0) (31.1) (16.1) (25.7) 43.7 36.8 Source: Credit and Securities Department, Central Bank of Honduras. a/ Interest earned. b/ Interest paid to the Government. c| Expenditure on personnel, offices, furniture and fittings, equipment, etc. 6.14 In nominal terms, Project Unit administrative expenses are equivalent to 6% of the Second Livestock Development Project subloan portfolio, an acceptable level in keeping with the nature of the project. VII. SPECIAL QUESTIONS Substitution and Diversion 7.01 Since the funds channeled through the Central Bank's Agricultural Credit Project, which include the proceeds of the Second Livestock Development Project, constitute the only line of long-term credit available in Honduras for the production of meat and milk, it is unlikely that they have substituted other funding available for investment in livestock activities. 7.02 The careful supervision, referred to in paragraph 6.11, of the farms which benefited under the Second Livestock Development Project guaranteed that Credit proceeds were actually put into the material investments envisaged in the project studies and not diverted for other purposes. Project execution arrangements were so organized that any unapproved use of funds at farm level was likely to result in cancellation of the particular subloan contract. Interest Rates 7.03 Sub-borrowers were charged a nominal interest rate of 9%, but since the project was implemented during a period of inflation (5% to 8% between 1973 and 1978), the real rate paid by those who joined in the initial years will prove substantially lower. For instance, on a subloan taken out in 1976, assuming an 8% annual inflation rate, the real interest rate would be  - 28 - approximately 3% (Tables 18 and 19). Given the present upward trend in prices, the real interest rate paid by Second Project sub-borrowers will probably come out at zero or below, with consequent adverse effects on the national economy as a whole in the form of subsidies implying a high social cost. VIII. ROLE OF THE WORLD BANK 8.01 The role played by the World Bank throughout the execution of this project was highly satisfactory. Without doubt, the experience gained and success achieved with the First Livestock Development Project made it possible to refine coordinatory mechanisms by adhering to a supervision schedule which ensured greater frequency of visits, greater time availability, continuity of supervisory personnel and ample opportunity for staff to perform the duties specified in their terms of reference. Relations among Bank, Government and Project Unit personnel were cordial at all times, and the Bank acted supportively and flexibly in solving operational problems as they arose. 8.02 The only criticism, which has already been made in earlier chapters of this report, concerns the design of the project as appraised and approved by the World Bank. The farm models used were not fully representative of the realities of life in Honduras either as to type or size of the farms to be financed, while the number of farms targeted for assistance was too optimistic. The most serious design errors were perhaps: (a) to believe, on the basis of the technical and economic reasoning followed, that livestock farmers could be induced to specialize; and (b) to attempt, without prior analysis of the situation, to benefit the majority group of small- and medium-scale livestock producers. This experience has shown that, given the economic and social environment in which the typical Honduran livestock farmer lives and works, the usual thing is for him to use his production resources to run a mixed meat/milk operation, which exposes him to fewer production and economic risks (para 3.09). IX. CONCLUSIONS 9.01 Although the results, benefits and impact of the project were markedly different from what had been anticipated at the time of the original appraisal, the most reliable evaluation methods available show that the financial and economic impact of the project was satisfactory and that a considerable increment in production was achieved. 9.02 Despite the fact that this Project Report has been drawn up at an early stage, it may be stated that when the project has reached its full-development phase (in 1987, approximately) the largest group of farms financed, namely, those classified as dual purpose, should show an annual production increment of 2,900 m ton of meat on the hoof and 9,800 m ton of milk.  - 29 - 9.03 As regards rates of return and degree of institution building,each and every entity involved in the project, from the identification to the execution stages, performed satisfactorily, while full use was made of previously established administrative mechanisms in channeling the proceeds of the Credit. The Project Unit, in the persons of the Director and his staff, gave proof of considerable technical capacity and ability in the management of Credit proceeds. In fact, the overall success of the Second Project resulted in the approval, in 1976 and 1980, of two new development projects. 9.04 One major achievement was the decisive participation by the Drivate banking system in the channeling of subloan funds to the direct benefijaries of the project, an element of success regarded as attributable to a well-designed incentives package offering acceptable interest margins and a reduced degree of risk and to the flexibility and thoroughness with which subloan applications were processed. 9.05 Finally, this project demonstrated clearly that, although structural design faults may be inevitable in projects of this nature, an essential element in achieving the objectives set is the flexibility used in ensuring the spread and final use of funds. This realization was of value in designing and executing subsequent ventures, namely, the First Agricultural Credit Project (628-HO) and the Second Agricultural Credit Project (1005-HO/1833-HO).   IIONUURAS SECOND LIVESTOCK DEVELOPi'IENT PROJECT ( CR- 434 -1iO) COMPUE'TION REPORT COMPOSITION OF CROSS INUIRNAL PRODUCT AT MARKET PRICES (Millions of 1966 Lempiras) 1973 1974 1975 1976 1977 1978 1979 19801. 1. Agriculture, forestry, fish & gsame 466 417 378 416 448 469 505 491 2. Mining 34 45 33 28 27 28 29 30 3. 1Zatnufacturing 192 190 195 215 236 260 281 297 4. Conbtruction 46 51 52 54 57 63 68 66 5. Electricity, gas and water supply 15 14 17 18 19 20 21 22 6. Tranisport, storage and communication 111 120 125 132 137 151 163 169 7. Cornuerce 147 145 147 155 158 179 194 201 8. banking, Insurance and real state 39 44 46 50 58 60 64 66 9. Properties 96 100 105 111 116 122 127 131 10. 1'ublic administration and defense 51 49 49 57 63 67 71 74 11. Services 157 167 168 171 170 187 193 197 G.I.P. at factor costs 1,354 1,342 1,315 1,407 1,489 1,606 1,716 1,744 Net Indirect Taxes 135 143 145 176 232 236 250 272 C.I.P. at market prices 1,489 1,485 1,460 1,583 1,721 1,842 1,966 2,016 I/ Preliminary. Source; Central Bank of l1onduras October, 1981  - 32 - TABLE 1-B HONDURAS SECOND LIVESTOCK' DE'iETOPMENT PRBOJECT (CR-434-HO) COMPLZTION REPORT VALUE ADDED IN' AGRICULTURE 1973-79 (Millions of 1966 Lempiras) 1973 1974 1975 1976 1977 1978 1979 CROPS Bananas 146 103 56 81 98 95 111 Coffee 56 55 61 59 65 79 87 Corn 44 45 40 44 39 41 44 Beans 13 16 15 13 13 13 13 Other 63 65 67 72 80 84 84 SUB-TOTAL 322 284 239 269 295 312 339 Livestock 64 57 61 66 66 70 75 Poultry 16 16 18 20 20 20 22 . Forestry 58 55 52 54 58 59 60 Beekeeping, Fishing, Huntina 6 5 8 7 9 8 9 T O T A L 466 417 378 416 448 469 505 Source: Central Bank of Honduras October, 1981  SECOND LIVESTOCK DEVELOI'PNIN'r PROJECT (CR- 434 - 110) COMPLETION REPORT LOAN PORTFOLIO. NUM1BER. AV RAC.E SIZE OF SUBLOAN AND TOTAL AMOUNT BY TYPE O1F EXPLOTATION FINANCE'I (US$) I/ Appraisal Estima;tes * A C T U A L Average Total Current prices 1973 Prices 2/ Amount/ Amount Average Total amount Average Total amount TYPE OF EXPLOTATION N