Turkey - Drainage and On-farm Development Project

Document of The World Bank FOR OFFICIAL USE ONLY n <;7G ( 3- 75 Report No. 5869-TU STAFF APPRAISAL REPORT TURKEY DRAINAGE AND ON-FARN DEVELOPMENT PROJECT February 6, 1986 Regional Projects Department Europe, Middle East and North Africa Agriculture III This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENT US$1 furkish Lira (TL) 540 'a TL 1 US$ 0.001852 TL 1,000,000 = US$ 1,851.85 WEIGHTS AND MEASURES 1 kilogram (kg) 2.20 pounds 1 metric ton 1,000 kilograms I metric ton 0.98 long ton 1 meter (m) 1.09 yards 1 kilometer (km) 0.62 mile 1 hectare (ha) 2.47 acres 1 decare = 0.1 ha 0.25 acre 1 square kilometer (km2) = 110 ha = 0.386 square mile 1 liter (1) 0.264 gallon ABBREVIATIONS DSI - General Directorate of State Hydraulic Works of MENR GDPI - General Directorate of Projects and Implementation within MAFRA GDRS - General Directorate of Rural Services within MAFRA IBRD - International Bank for Reconstruction and Development (World Bank) ICB - International Competitive Bidding MAFRA - Ministry of Agriculture, Forestry and Rural Affairs MENR - Ministry of Energy and Natural Resources 0&M - Operation and Maintenance PPAR - Project Performance Audit Report SPO - State Planning Organization within the Prime Ministry TL - Turkish Lira FISCAL YEAR Government of Turkey - January 1 - December 31 /a Average exchange rate for 1985.  FOR OFMCUIL USE ONLY TURKEY APPRAISAL OF DRAINAGE AND ON-FARM DEVELOPMENT PROJECT Table of Contents Page No. I. INTRODUCTION ............................................ 1 II. THE AGRICULTURAL SECTOR ................................. 2 A. Sectoral Adjustment Program ......................... 2 B. The Irrigation and Drainage Subsector . .............. 5 C. Performance Under Previous Irrigation Projects ...... 10 III. THE PROPOSED PROJECT .................................... 11 A. Objectives and Strategy ............................ . 11 B. Main Features - First Time Slice ......... .. ......... 13 C. Project Description ............... .. ................ 14 D. Riparian Rights ................... .................. 16 E. Status of Engineering .............. .. ............... 17 F. Cost Estimate .................... ................... 19 G. Financing ........................................... 21 H. Procurement ..................... .................... 24 I. Implementation Schedule ...... ....................... 25 J. Disbursements .................... ................... 25 K. Environmental Impact ................. ............... 27 IV. ORGANIZATION AND IMPLEMENTATION ......................... 27 A. Implementing A;encies and Responsibilities .... ...... 27 B. Operation and Maintenance ........................... 30 C. Accounts and Audits ................................. 31 D. Project Monitoring and Completion Report .... ........ 32 V. PRODUCTION, MARKET ARRANGEMENTS, PROSPECTS AND PRICES ... 32 A. Production .......................................... 32 B. Market Prospects and Inputs Availability .... ........ 34 C. Prices .............................................. 36 VI. FARM INCOMES, FINANCIAL ANALYSIS AND COST RECOVERY ...... 37 A. Farm Incomes ......................................... 37 B. Project Charges and Cost Recovery ................... 39 This document has a restrictd disutibution and may be used by recipients onl in the perform of their ofrii duties. Its contents may not otherwise be dic_sed wthout Wodd Bank authriatn  Table of Contents (Con'd) -ii- Page No. VII. BENEFIT AND JUSTIFICATION .............................. 43 A. Benefits .43 B. Economic Analysis .44 C. Risks .45 VIII. ASSURANCES AND AGREEMENTS .47 ANNEXES 1. Public Investment Allocations 1979-1985 .49 2. Description of the Subsector Area .50 3. The Proposed Project ......................... Pages 1-2 58 Tables 1-12 60 4. Project Organization and Implementation ...... Chart 1 77 Map 1 78 Chart 2 79 Map 3 PO Tables 1-2 81 5. Production, Market Prospects and Prices ...... Table 1-4 83 6. Cost Recovery and Farmers' Income Analysis ... Table 1-7 87 7. Benefits and Justification ................... Table 1-14 94 8. Selected Documents and Data Available in the Project Implementation File ........ 108 CHARTS 1. Implementation Schedule ...................... 109 MAPS 1. IBRD 19280 and 19281 - Maps Showing Completed and Ongoing Irrigation and Drainage Projects  TURKEY APPRAISAL OF DRAINAGE AND ON-FARM DEVELOPMENT PROJECT Loan Summary Borrower: Republic of Turkey. Beneficiaries: (a) The General Directorate of Rural Services within the Ministry of Agriculture, Forestry and Rural Affairs (GDRS); (b) The General Directorate of State Hydraulic Works (DSI) within the Ministry of Energy & Natural Resources (MENR); and (c) About 97,000 private farmers benefitting from the project. Amount: US$255 million Terms: SevenLeen years including four years of grace, with standard variable interest rate. Description: The Drainage and On-farm Development Project (1986-1991). consists of the following works: (a) rehabilitation of surface drains to restore them to their planned performance; (b) excavation of additional, main, secondary and tertiary drains to supplement the existing drainage system; (c) installation of subsurface drainage network in medium and light clayey soils; (d) addition of subsurface collector pipe drains within the existing subsurface drainage installations; (e) reclamation of selected tracts of saline land to avoid serious deterioration; (f) construction of access roads along the irrigation and drainage networks to facilitate operation and maintenance; (g) construction of minor buildings, field workshops and other structures for operation and maintenance of the system; (h) installation of piezometers and other devices to monitor the waterlogged areas; (i) strengthening of existing drainage and reclamation research stations in the irrigation areas; (j) employment of engineering consulting firms by DSI and GDRS to provide additional design and implementation capacity; (k) employment of consulting firms by DSI and GDRS for review of the work by the engineering consulting firms; and (1) training of GDRS and DSI headquarters and regional staff in selected fields and in appropriate countries. Benefits and Risks The proposed project would support the rationalization of the public investment program for drainage and on-farm development, as part of the Government's sectoral adjustment program for agriculture begun with Bank assistance under the Agricultural Sector Adjustment Loan (ASAL, Loan 2585-TU). The proposed investments would eliminate waterlogging and salinity, restore the existing irrigated areas to full production, and would prevent further deterioration of soils and reduction in crop production. The approximately 97,000 farmers who own and operate land in the 220,000 ha to be improved, and  neighboring farmers operating land which without the proposed investments would eventually become waterlogged, would benefit. At full development, annual on-farm employment in the improved areas would increase by about 7 million mandays per year above the current levels, an increase of about 20S of current on-farm employment within the DSI irrigation perimeters. Adkditional exports of cotton and pulses and fewer wheat imports nt fuLl development would generate potential incremental foreign exchange earnings/savings amounting to about US$177 million equivalent per year. The main risks to achieving subsector objectives are institutional: (a) Availability of funding for the Irrigation and Drainage Project, and within the subsector priority allocation of resources to drainage and on-farm development; (b) Government's capacity to prepare, appraise and select priority investments; (c) Ability of the implementing agencies to coordinate overlapping implementation plans and schedules; and (d) Availability of adequate funding for O&M. Measures are included to minimize these risks. To reduce the risk of funding shortfalls, the Government will give the Bank an opportunity to comment on the proposed budget allocations for the project prior to finalization of the budget. If a shortfall in annual program funding or delays should occur, selected program elements could be deferred and the project period extended without jeopardizing individual project benefits or subsector objectives. Further provisions to minimize these risks include application of criteria for selection of priority subprojects, improvement of design and implementation capacities and training of DSI and GDRS staff. In addition, the ASAL includes financing for procuring essential equipment and the project provides the associated costs needed to remove the constraint or. O&M arising from accumulated rehabilitation requirements. Estimated Cost: The costs of the project, net of taxes but including contingealcies, are: Estimated Allocation of Z to be Items Cost Loan Proceeds financed ---US$ Million--- Civil Works for DSI 166.29 74.00 45 Civil Works for GDRS 305.72 169.00 57 Consulting Engineering Services 6.99 6.99 100 Reviewing Consultants 0.61 0.61 100 Training for DSI & GDRS 0.70 0.70 100 Equipment, Books & Periodicals 0.20 0.20 100 Unallocated - 3.50 Total 480.51 255.00 Annual Estimated Disbursements ----- ----$ Million ----------- Estimated Bank FY 1986 1987 1988 1989 1990 1991 1992 Disbursements: Annual - 11.0 40.0 47.0 51.0 51.0 55.0 Cumulative - 11.0 51.0 98.0 149.0 200.0 255.0 Economic Rate of Return: 22Z  TURKEY DRAINAGE ANDi ON-FARM DEVELOPMENT PROJECT I. INTRODUCTION 1.01 The Government of Turkey has requested a Bank loan of $255 million to assist in financing a Core Program of priority drainage and on-farm development works. This program was agreed under the Agricultural Sector Adjustment Loan (ASAL) (Loan No. 2585-TU) approved in June 1985 to support implementation of the Government's policy and institutional reforms for the agricultural sector, amongst which rationalization of public investment is key. 1.02 The proposed project is in line with the objectives of the Bank's assistance strategy for Turkey. With Bank support, a five-year program of economic stabilization and adjustment has been successfully completed. A series of five Structural Adjustment Loans (SALs), of which the last was fully disbursed in November 1985, has assisted Government efforts to restore the external balance and market orientation of the economy. The adjustment process has not been without flaws and major challenges ahead include the further dampening of inflationary expectations, removal of financial market distortions, reduction of unemployment, rationalization of the public investment program and improved public resources mobilization, needed to foster sustained growth. The ASAL responded to the need to broaden and deepen the adjustment process at the 'cectoral and subsectoral levels, linking the process to, and complementing the assistance provided through ongoing and proposed Bank-financed agricultural projects. The ASAL was designed to support Government initiatives to (a) phase out retail subsidies on fertilizers and encourage private sector participation in the distribution of fertilizers and other inputs, (b) strengthen sector planning and policy formation, (c) systematize the application of trade and producer price incentives, (d) rationalize public investment programming and financing of the sector, and (e) strengthen implementing institutions and supporting services by providing part of the foreign exchange needed for channel maintenance equipment, consulting services and training needed to implement a first time-slice of the Government's Core Program. The proposed project would support initiatives to improve and strengthen the investment strategy, institutions and public resource mobilization in the irrigation and drainage subsector. 1.03 Several Bank missions during 1984 and early 1985 assisted the Government in the design of the project. An appraisal team consisting of Messrs. Mahmud Tirmazi, Javier Tellez and Edgar Hunting (IBRD) and Messrs. Naceur Bakhtri and Barkat Ali (FAO/CP) visited Turkey in June 1985. This report is based on their findings.  -2- II. THE AGRICULTURAL SECTOR A. Sectoral Adjustment Program 2.01 Backtround. The Turkish economy has shown impressive response to the structural adjustment program begun in 1980 and supported by the Bank. Since the introduction of the adjustment program, the economy has demonstrated a major shift in structure towards an outward oriented economy, operating witb a markedly increased reliance on market forces. The transformation of Turkish agriculture from heavily subsidized and protected production to financially independent, diverse commercial and export activity is a key component of the adjustment program. 2.02 Wile the relative importance of the agricultural sector in the economy is declining, it still represents about 18% of GDP, about a third of export earnings and about half of civilian employment. The growth rates of agricultural GDP and exports are projected to remain below those for the rest of the economy. Nevertheless, the agricultural sector will continue to play a significant role in meeting domestic food needs, supplying industrial raw materials, and providing foreign exchange earnings and employment. 2.03 Turkish agriculture is diverse. Intensive crop cultivation is prevalent in the coastal regions which receive plentiful rainfall or are equipped with irrigation facilities. Mixed (crop and livestock) farming predominates in the eastern and central parts of the country where pastures and meadows form more than half of the agricultural land and crop production is dependent upon rainfall. In these areas much of the land is kept fallow in alternating years. While the livestock production system is largely traditional, dependent on grazing lands and low productivity systems of animal husbandry, it produces about one-third of agricultural GDP. Cereal crops occupy about 66Z of the cultivated area, fruits and vegetables about 20%, industrial crops about 6%, and oil seeds, pulses and tubers the remaining 7Z. 2.04 Through the 1970s, Turkey's agricultural policies were inward-looking, stressing food self-sufficiency through subsidized inputs and producer prices. This led to relatively rapid growth of production through the first half of the 1970s, averaging 4.7% from 1972-75. However, with a deteriorating overall macroeconomic situation, these growth rates could not be maintained due in part to the strain placed upon the budget by the level of subsidization, and the competing demand for resources from the manufacturing sector. As a result of the overall economic crisis, growth in the sector slowed to less than 1.5% per annum during the late 19709. Ineffective public investment policies, weaknesses in technical services, and problems in marketing and credit also contributed to sluggish growth. During this period, sectoral exports remained a small fraction (about 4Z) of total production due to the overvalued exchange rate and other disincentives to export. 2.05 Nev Policies. As part of the structural adjustment program adopted by the Government in 1980, many of the incentives were dismuantled, and market-oriented policies were introduced. With the introduction of a flexible exchange rate policy, most commodity prices were brought in line with or below export prices. The Government deregulated agricultural exports to a large extent and, as a result, agricultural exports increased rapidly. The commodity composition of exports gradually diversified, export markets  -3- expanded to the Middle East and North Africa, and private exporters- responding to the increasing opportunities--in part replaced publi export agencies. The Government also undertook to reduce input subsidies_/ and production price supports, and to gradually convert the remaining supports from artificially high incentive prices to floor prices. More recently, it has liberalized the import regime for commodities and imported inputs. These policies, in combination are designed to encourage specialization of production in accordance with Turkey's comparative advantages through intensified crop and animal husbandry patterns. 2.06 In the area of sector financing policies, the overall restraint on monetary policy forced a curtailment of agricultural credit availability. However, the Government committed itself under SAL IV to achieve and maintain thereafter positive real interest rates in agricultural lending. Recent interest rate increases and the decline in the rate of inflation suggest major progress towards achieving real positive rates before end-1986-the target date stipulated during the recent SAL V tranche review. In the Government's medium-term objectives, resources available for agricultural lending will be augmented and institutional capabilities will be strengthened. 2.07 The Government made progress towards rationalizing the public investment program by constraining the rate of growth of the overall program below 2.5% per year, in real terms, compared with over 18% per year before 1977, and by reducing the number of investment programs. In accord with the adjustment program, the post-1980 investment policies led to an increased share for agriculture in the public investment program, from 7% in 1980 to 10Z in 1985 (Annex 1, Table 1). While public investment allocations were not fully rationalized, the Government emphasized project completions and investments with short gestation periods. Facing a shortfall in Government revenues and worsening overall fiscal performance, the Government in 1981 introduced a 5% tax ("stoppage" tax) on all crop sales and 2X on animal and animal products sales, in 1984 began to reduce export tax rebate incentives and in January 1985 introduced a value-added tax (VAT) of 10X. In addition, in 1983 under the IAEE project (Loan 2433-TU), the Government agreed to increase cost recovery assessments and collections (para 6.06). Progress has been made in implementing these agreements. 2.08 Performance. As was expected, adoption of the new polirty package initially resulted in severe short-run shocks for the sector: the growth of agricultural GDP in real terms fell to an average of only 0.9% in 1980 and 1981. In 1982 and 1983, however, real growth in agricultural GDP recovered to an average annual rate of 3.1%. During 1984, it reached 3.7Z. Due to the adoption of a realistic exchange rate and relaxation of export licensing restrictions, agricultural exports increased by an annual average of 17.7Z during 1980 aud 1981. If agroindustrial exports are included, the average annual rate of gcowth increases to 18.9%. In 1982 and 1983, while agricultural exports continued to grow in volume, the average annual rate 1/ In 1979, prices paid by farmers for fertilizers averaged 70% below import parity prices. By 1984 the average subsidy had been reduced to less than 50% below adjusted parity prices, while subsequent price adjustments have largely eliminated the subsidy on the more important fertilizers used in Turkey. The Government is committed under the ASAL to eliminate the retail subsidy entirely (except for the costs of transport to remote low income areas) by the end of 1988.  -4- of growth of the value of agricultural exports dropped sharply to only 1.2%, due to the decline in the prices of the main commodities. However, for agriculture and agroindustries combined, the average annual rate of export growth remained at a &ealthy 9.5X, indicating a significant switch from unprocessed to processed exports. During 1985 the agricultural growth rate declined to 2.3Z and exports for the first nine months declined by about 7Z, reflecting the effects of an unusually severe drought. 2.09 Prospects. The potential for Turkey's agricultural sector, over the medium-term, was examined in the recent agricultural sector study by the BankY and updated with more recent data. The report stated that the possibilities for growth through expansion of the cropped area or of livestock numbers under a system of extensive grazing, were largely exhausted by the mid-1970s. Growth must now come primarily from increased productivity-for which agricultural intensification is the key--and changing the crop mixture to better reflect Turkey's comparative advantage. Increased productivity would require expansion in the irrigated area through improved efficiency of the implementing agencies (better planning, increased use of contractors), better extension and research programs, expanded imports of improved seeds and appropriate equipment, and increased availability of institutional credit (particularly for small and medium-scale farmers). 2.10 The demands of an export-oriented approach have led to a change of emphasis in Government policy from food self-sufficiency to increased net agricultural contribution to the balance of trade. Thus, imports of certain foods in which Turkey does not have a comparative advantage have been allowed. Increasing agricultural exports has involved appropriate pricing ignals, maintenance of a competitive exchange rate, reduction of export regulations, and improved marketing. The initiatives introduced in these policy areas since 1980 will have to be maintained. 2.11 While significant progress has been achieved in Turkey's structural adjustment program over the past five years, the task of restructuring is by no means over. During the second phase of the adjustment program, the Government is determined to deepen the adjustment process to the sectoral level in order to complete the foundation for sustained growth. Reattaining historical growth rates in the agriculturaL sector, under conditions of markedly reduced subsidization and increased exposure to market forces, will require additional strengthening of the inputs distribution systems; reform of agricultural SEEs and marketing agencies; a major effort to further discipline public investment expenditures and to improve the priority and selectivity of the irrigation and drainage program; an increase in the effectiveness of technical services (agricultural extension and research) and credit, and improved sectoral planning. With continued reform in these areas, and adherence to policies designed to increase exports, agricultural GDP is expected to achieve a growth rate of about 3.0X annually during the remainder of the 1980s, and a growth of agricultural exports (excluding agroindustries) from 5Z-8% annually. 1/ Turkey - Report No. 4204-TU, June 30, 1983, Agricultural Development Alternatives for Growth with Exports.  -5- B. The Irrigation and Drainage Subsector 2.12 Initiated through the ASAL and to be continued under the proposed project, a marked change is being introduced in the development strategy for irrigation and drainage with a view to rationalizing their public investment, project selection criteria and method of carrying out the construction of works to speed up project completion. Importance of Irrigation and Drainage 2.13 Irrigation investment represents about 66% of the public sector agricultural investment program and has been a major factor in increasing and stabilizing agricultural production. While less than 15% of arable land is irrigated, roughly 40% of all plant output and about 25% of agricultural exports are grown under irrigation. In many respects, however, irrigated agriculture has performed considerably below its capacity. Newly developed irrigation projects have often failed to produce expected production increases, while the increase in irrigated crop areas has lagged significantly behind the expansion of irrigation infrastructure. The underutilization of this infrastructure, built at comparatively high cost, results in a large loss to the economy. 2.14 The main irrigated areas are along the Mediterranean coast and southern reaches of the Aegean coast. The total area put under irrigation in recent years is estimated to be about 4.7 million ha (out of 28 million ha of arable land) which includes major Covernment irrigation projects (1.3 million ha), Government constructed small irrigation schemes (1.0 million ha) and private irrigation (2.4 million ha). However, the cropping intensity is low -and no more than 70% of the area provided with public irrigation inrrastructure is under crops in any year. Moreover, the total irrigated area varies considerably from year to year, since wheat is not usually irrigated in years of adequate rainfall. 2.15 Two public agencies are responsible for the construction of irrigation facilities. The General Directorate of State Hydraulic Works (DSI) of the Ministry of Energy and Natural Resources (MENR) is responsible for the construction of the basic irrigation infrastructure for large-scale projects. The General Directorate of Rural Services (GDRS) of the Ministry of Agriculture, Forestry and Rural Affairs (MAFRA) is responsible for the construction of on-farm development works on large-scale irrigation projects and the development of small-scale projects. These agencies have not been able to contribute fully to agricultural productivity increases because of budget constraints, attempts to work on too many projects, excessive reliance upon force account work, inadequate coordination between the two agencies in project design and implementation, and poor supporting services, resulting in slow project completion and limited agricultural benefits. It o d Draina Pential 2.16 According to the last available comprehensive study by GDRS, an estimated total area of 8.7 million ha could be irrigated. It is likely that only a smaller area could be developed economically, when the cost of development and competing uses of water resources are taken into account.  -6- 2.17 In addition to increases in irrigated areas, a large potential is available for exploitation through the rehabilitation and completion of the existing infrastructure and on-farm development works, respectively, within the completed irrigation projects. A widespread system of surface drains and pumping stations has been constructed simultaneously with the development of irrigation infrastructure. However, since the introduction of large scale irrigation, the surface drains and natural drainage streams have deteriorated due to lack of maintenance and have been incapable of discharging the surface runoff and the seepage from the fields and canals. The high water table has caused waterlogging and consequent loss of production and, in some areas, prevented leaching of incoming salts from the root zone. Installation of subsurface drainage at the farm level, which was foreseen during project preparation in areas with adverse soil conditions, has been completed only in a small percentage of these areas. Rehabilitation and expansion of the surface drainage systems and installation of subsurface drains on the farms have thus become prerequisites for restoring and preserving the productivity of the irrigated areas. An area of about 440,000 ha can thus be restored and developed to full production at relatively low cost (Annex 2, para 2.06). These areas, which can be developed in a relatively short period of time, constitute the best economic potential for immediate agricultural development. Previous Investment Strategy 2.18 Since 1981, irrigation investment levels have been increasing at about 4Z per year, in real terms. The DSI investment program has averaged about twice that of GDRS. Since 1980. when DSI resources were spread thinly over 142 ongoing projects, considerable progress has been made in concentrating DSI's resources on a smaller number of projects. As a result, the new area placed under command each year by DSI has increased from 18,000 ha in 1981 to 86,000 ha in 1984. However, GDRS has recently been able to complete only 10-12,000 ha per year of on-farm development, creating a major backlog of work for on-farm development on completed DST schemes (para 2.20). This ever-increasing backlog between irrigation infrastructure development by DSI and GDRS' on-farm development works represents a major misallocation of public resources for irrigation investment. 2.19 In the past, Turkey's public investment programs favored allocations to large new irrigation infrastructure. By the end of 1984, DSI had completed 146 large irrigation projects covering an area of 1.11 million ha. Meanwhile, partial completion has been achieved on another 52 projects (total area 0.44 million ha). The actual irrigated crop area has lagged significantly behind the expansion of irrigation infrastructure, as shown in Table 2.1 below. By the end of 1984, an area of 266,000 ha which had been provided with the irrigation facilities was not being used.  -7- Table 2.1 Use of Areas Developed and Operated for Irrigation by DSI (1965 - 1984, Year of r. rgation Area Irrigation Total Cropped Not Utilized - 000 ha-- Z 1965 289 161 128 44 1970 521 285 236 45 1975 671 420 251 37 1980 755 494 261 35 1981 773 561 212 27 1982 814 606 208 26 1983 879 623 256 29 1984 965 699 266 28 Source; DSI Statistical Yearbooks 2.20 The reasons for this discrepancy between DSI development and actual utilization lie in (i) the neglected state of operation and maintenance, particularly of the surface drainage systems, which has now assumed such proportions that these drains would require rehabilitation, and (ii) the absence of on-farm development works in most areas. These latter works, summarized in Table 2.2 below, which are the responsibility of GDRS, include subsurface drainage and land reclamation works and, to a lesser extent, land levelling. Table 2.2 GDRS Backlog of On-farm Development Works Estimated 1989 Additions Total Backlog To end-1984 to Program at Pres. Pro- Program to end Rate of grammed Completed Backlog 1985-89/1 1989/2 Progress/3 _ _ __ - -ha - -- Farm Surface Drainage 198,577 112,877 85,700 62,600 148,300 87,755 Subsurface Drainage 375,842 153,739 222,103 117,497 339,600 287,855 Land ReclAmation 72,248 11,251 60,997 16,603 77,600 70,020 Access Roads 178,500 99,800 78,700 90,600 169,300 117,860 Land Consolidation 105,219 61,396 43,823 27,077 70,900 50,895 Land Levelling 556,234 374,703 180,531 178,069 358,600 216,880 1/ On-farm development works on DSI completions during 1985-89. 2/ The sum of the end-1984 backlog and estimated additions to Program. 3/ Based on average annual rate of completions, 1977-1984. In case GDRS continues at the present rate of completion, the progress which can be achieved up to the end of 1989 would be no more than 152 for key items, leaving intact a growing backlog and its adverse effects on the agricultural economy.  -8- 2.21 Total budgetary allocations to the irrigation and drainage subsector, and distribution of funds between DSI and GDRS appear to have been based on historical trends. Of the total for the irrigation and drainage subsector, DSI's allocation covers about two-thirds vs GDRS's share of about one-third. Thus, the fact that there was a major difference in the rate at which GDRS and DSL were finishing their respective work loads did not have an impact on overall allocation policy. The investment program in current and constant prices for both agencies in recent years is shown in Table 2.3. While GDRS's budget in 1980-the year when Government first moved to meet the economic crisis--showed a significant reduction in constant 1985 terms, overall, since 1979, the budget has shown an increase of about 30%. However, this increase does not reflect the high priority required for on-farm development works. Table 2.3 Public Investment of Irrigation and Drainage Subsector Current Prices Constant 1985 Prices DSI GDRS Total DSI GDRS Total -