Document of The World Bank FOR OFFICIAL USE ONLY Report No. 6918-GUI STAFF APPRAISAL REPORT REPUBLIC OF GUINEA NATIONAL SEEDS PROJECT November 16, 1987 Agriculture Operations Country Department I Africa Region 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 Wodd Bank aouthorization. CURRENCY EQUIVALENTS Currency Unit = Guinean Franc (FG) US$1 = PG 400 a! SDR 1 = US$1.27964 b/ WEIGHTS AND MEASUREMENTS Metric System ABBREVIATIONS AND ACRONYMS AfDB - African Development Bank BSD - Bureau de Strategie et de Developpement CCCE - Caisse Centrale de Cooperation Economique (France) DAG - Direction Generale d'Administration DGFPR - Direction Generale de la Formation et Promotion Rurale DNRA - Direction Nationale de la Recherche Agronomique FAO - Food and Agriculture Organization FED - Fonds Europ6en de Developpement IFAD - International Fund for Agricultural Development IITA - International Institute for Tropical Agriculture MDR - Ministbre du Developpement Rural NSC National Seed Committee ONADER - Opnration Nationale pour le Developpement de la Riziculture ORS - Operation Rizicole Siguiri PAG - Projet Agricole de Gueckedou PDRI - Projet de Developpement Rural Int4gr6 PPF - Project Preparation Facility PPV - Projet Pilote de Vulgarisation SCC - Seed Conditioning Center SPU - Seed Production Unit UNDP - United Nations Development Program USAID - United States Agency for International Development WARDA - West Africa Rice Development Association FISCAL YEAR January 1 - December 31 a/ Represents the exchange rate at appraisal in June 1987. The exchange rate is established through an auction system and was FG 440 to the U.S. dollar at time of negotiations (October 1987). _/ As of September 30, 1987. FOR OFFICIAL USE ONLY GUINEA NATIONAL SEEDS PROJECT TABLE OF CONTENTS Page DOCUMENTS CONTAINED IN PROJECT FILE ...... ......................... iii CREDIT AND PROJECT SUMMARY .. ....................... . .. ........ v KEY FEATURES OF THE AGRICULTURAL SECTOR ..........,...,,,,.,...., ix I. INTRODUCTION . ..................................... 1 II. THE AGRICULTURAL SECTOR ....... .......................... 1 Main Features ... ........................................ 1 Major Constraints to Growth ...... ..................... 3 Institutional Environment . ............................ 4 Government Policies and Strategy . ..................... 5 IDA's Secto. Strategy and Expe-ience ............... ... 6 Varietal Selection and Seed Production ........... ..... 7 III. THE PROJECT ..... .... 9 A. General .. ....... . 9 Project Rationale ......... ...................... 9 Project Concept and Objectives ............. .. .... 9 Project Description ............................. 9 B. Detailed Features ....... .......................... 10 (a) Base Seed Production ....................... 11 (b) Improved Seed Production ................... 12 (c) Quality control . ................... 13 (d) Training ... ........... . . . . .-...-. 14 (e) Project Administration .. ................... 14 C. Project Costs and Financing ..... .................. 14 Cost Estimates . ................................. 14 Project Preparation Facility .................. .. 15 Financing . ...................................... 16 Procurement ................... 16 This report is based on the findings of a Bank Appraisal Mission which took place from May 18 to June 3, 1987, consisting of Messrs. E. Locatelli (mission leader), M. Raine and R. Whyte (IDA), Mr. F. Troude (consultant) and Mr. T. Diallo (MDR). Figures were checked by Mr. B. de Chazal. Drafting was checked by Mrs. C. Gui4, J. Ogang, and M. Layton. The secretarial work was done by Mrs. J. Ogang. This document has a restricted distribution and may be used by recipients only in the performance of their offcial duties. Its contents may not otherwise be disclosed without World Bank authorization. - ii - TABLE OF CONTENTS (Continued) Page Disbursements ......... ........................... 18 Revolving Funds .................................. 18 Financial Management, Accounts, Reporting and Auditing Requirements ............... ....... 19 IV. ORGANIZATION AND MANAGEMENT ......... ............ 20 Project Administration. 20 National Seed Policy and Seed Quality Standards 21 Base Seed.... 21 Seed Conditioning Centers ..22 Privatization ..22 Financial Implications to Government 23 V. PRODUCTION, DEMAND AND PRICES .... ............. 24 Incremental Production and Beneficiaries ... ...... 24 Demand ........................................... 25 Prices .......... ................................. 26 VI. PROJECT BENEFITS AND JUSTIFICATION .... ............. 27 Overall Benefits ............. .... ..... ..... 27 Economic Rate of Return ...... .................... 27 Sensitivity Analysis ....... ...................... 28 Risks .. ...... ................... 28 VII. AGREEMENTS AND RECOMMENDATION ....... ................ 29 ANNEXES 2 National Production, Seed Requirements and Project Seed Production of Rice, Maize and Groundnuts 3-1 Commercial Seed Production by Seed Center/Crop/Year 3-2 Implementation Schedule 3-3 Detailed Cost Tables 3-4 Estimated Disbursement Schedule 4-1 Organizational Chart 4-2 Bordo Seed Center: Income and Expenditure; Cash Flow and Return to Purchaser 4-3 Government Cash Flow 5-1 Amount of Seed Available to Farmers/Crop/Year; Incremental Production from Improved Seed; Economic Value of Production 5-2 Seed Center Purchase and Sale Price of Rice, Maize and Groundnuts 6-1 Economic Analysis 6-2 Economic Farmgate Prices MAPS; IBRD Nos. 20468: National Seeds Project 20469: Agrizultural Production Zones - iii - REPUBLIC OF GUINEA NATIONAL SEEDS PROJECT DOCUMENTS CONTAINED IN PROJECT FILE A. DOCUMENTS AND REPORTS 1. Projet Semencier National. Rapport de Preparation FAO/CP, February 1987. 2. Projet Semencier National. Rapport d'Identification. FAO/CP, September 1986. 3. Etude de Restructuration des Services Agricoles et de Sch6mas Directeurs R6gionaux de D6veloppement Rural. Agroprogress, August 1986. 4. Guinea Economic Report No. 469-GUI. B. WORKING PAPERS 1. Type and Amount of SeedlResearch and Seed Center 2. Equipment and Civil Works 3. Agricultural Potential; Seed Requirements; Available Varieties of Rice, Groundnuts and Maize; Training Program. Extracted from Agropro$ess Report of August 1986 and FAO/CP Preparation Report of February 1987. 4. Detailed Cost Tables 5. Terms of Reference International Staff 6. Economic Analysis i llz- v - REPUBLIC OF GUINEA NATIONAL SEEDS PROJECT CREDIT AND PROJECT SUMMARY Borrower: Government of Guinea Beneficiary: Ministry of Rural Development Amount: SDR 7.1 million (US$9.0 million equivalent) Terms: Standard IDA terms, with 40 years maturity Project Description: The project will, over a four-year period, set up the first national improved seed production system in Guinea. It will serve as a catalyst of ongoing activities and will build on existing institutions (research stations, agricultural development and extension projects) to identify, produce and distribute improved rice, maize and groundnuts seed. This will contribute to an increase in fooderop production and farmers' income and will be implemented through: (a) strengthening the Ministry of Rural Development's research stations to identify, select and produce base seed of adapted varieties of foodcrops, suitable for various environmental conditions and meeting consumers' preferences; (b) setting up strategically located Seed Conditioning Centers which will (i) supervise the production of base seed and its multiplication by contract outgrowers engaged through development and extension projects; and (ii) condition improved seed and supply it as commercial seed tc farmers through existing development and extension projects, as well as private traders; (c) establishing seed quality control facilities; (d) training staff to carry out selection, base and improved seed production and quality control activities; and (e) providing an organization and management system that will ensure the control and coordination of country-wide seed production activities. - vi - Estimated Proiect Costs al Local Foreign Total Z of -(US$ million)--------- Base Cost Base Seed Production 0.2 1.0 1.2 13 Improved Seed Production 0.8 3.7 4.5 48 Quality Control ... 0.1 0.1 1 Training 0.1 ... 0.1 1 Project Administration 0.3 3.1 3.4 37 Total Base Costs b/ 1.4 7.9 9.3 100 Physical Contingencies 0.1 0.5 0.6 7 Price Contingencies 0.5 0.2 0.7 7 Total Project Costs 2.0 8.6 10.6 a/ Inclusive of taxes and duties which are negligible. /L Including PPF for US$0.58 million. Financin2 Plan Local Foreign Total -(US$ million)--------- Government 1.6 ... 1.6 IDA 0.4 8.6 9.0 Total 2.0 8.6 10.6 Estimated Disbursements from IDA Credit IDA Fiscal Year FY88 FY89 FY90 FY91 1992 1993 1994 U----------(US million)------------------------- Annual 0.6 1.3 2.1 2.0 1.6 1.0 0.4 Cumulative 0.6 1.9 4.0 6.0 7.6 8.6 9.0 - vii - Benefits and Risks The project will provide the assistance and organization necessary for reliable production and distribution of improved seed. Improved seed at full development will cover about 20% of the area planted in Guinea with rice, maize and groundnuts. This will increase crop productivity by 20-30%. Additionally, the Seed Conditioning Centers will generate revenues from PY3 onwards and the system has been set up in such a way that it can be privatized a few years after start up. Finally, the project will train local staff to take over responsibility for base and improved seed production and quality control. Two possible risks are (a) delays or complications in project implementation due to difficulties in coordinating several institutions involved in the project, and (b) inadequate Government counterpart funding. Delays will be minimized because the project has already started under PPF financing. Coordination among various institutions wi?l be facilitated by the eagerness with which the entire agricultural ccmmunity in Guinea awaits improved seeds, and by the explicit coordination mechanisms established by the project. The research centers are looking forward to collaborating with the project, which will assist them technically and financially in exploiting available research results and producing base seed. In addition, the ongoing rural developmient projects need improved seed to supply their farmers. Furthermore, a management unit and a consultative process have been provided to direct project activities. Regarding timely Government counterpart funding, risks have been minimized by reducing Government's contribution to a minimum, by creating a revolving fund in which Government's contribution will be provided in advance, and by ensuring that revenues from the seed sales will be kept in a bank account for the use of the project. Economic Rate of Return: 30% Maps IBRD Nos. 20468 - National Seeds Project 20469 - Agricultural Production Zones "I,% %r 4r, i "ZI.-- ;PC 4 S- - ix - REPUBLIC OF 3UINEA NATIONAL SEEDS PROJECT KEY FEATURES OF THE AGRICULTURAL SECTOR Unit 1974-76 Av. 1985 1. Population Total M 4.7 6.2 Rural as Z of Total z 84.0 78.0 Rural Families '000 611.0 770.0 2. Economic Overview GDP/Head of Total Population (cons. 1981) $ 310.0 320.0 Agric. GDP/Head of Rural Development $ 14J.0 165.0 Agricultural GDP as X of Total 2 43.0 40.0 3. Land Use Lan.d Area sq. km 246.0 246.0 Perennial Crops '000 ha 131.0 211.0 Annual Crops '000 ha 912.0 1,328.0 4. Output a/ (i) Rice 74-75 Av. = 100 100.0 144.0 (ii) Fonio 100.0 165.0 (iii) Cassava " 100.0 120.0 (iv) Coffee 100.0 51.0 5. Inputs Fertilizer '000 tons -- 1.0 6. Trade (Current Prices) Total Exports (FOB) $ m 186.0 465.0 of which: Agricultural Products X 5.4 1.9 of which: (i) Palm Kernels X 35.0 -- (ii) Coffee 2 25.0 -- (iii) Pineapple 2 31.0 -- Total Imports: $ m 257.0 370.0 of which: Agricultural Products 2 9.0 -- 7. Government Expenditures Total Recurrent Budget $ m 212.0 450.0 of which: Agriculture X - 10.0 Total Capital Budget $ m 174.0 170.0 of which: Agriculture 2 17.0 18.0 I t REPUBLIC OF GUINEA NATIONAL SEEDS PROJECT STAFF APPRAISAL REPORT I. INTRODUCTION 1.01 The Government of Guinea has requested IDA's assistance in the identification and selection of adapted rice, maize and groundnuts varieties, and in the establishment of a national system to produce and distribute improved seed of these varieties. This low risk, rapid means of improving agricultural productivity was foreseen in Bank dialogue with Government in 1984. The concept was further elaborated as a strategy in the Government's Agriculture Strategy Study (1985186) and highlighted in the consultant SCET- AGRI study on the reorganization of agricultural services (1986). At the request of Government, an FAO/CP identification mission visited Guinea from June 19 to July 9, 1986 to identify a National Seeds Project. The need for improved seed was further supported by farmers' response to a survey carried out prior to project preparation and was later confirmed during appraisal. 1.02 The project was prepared by an FAO/CP mission whicb visited Guinea in October/November 1986. In addition to preparation of the project, the FAO/CP mission recommended the immediate selection of varieties that would enter the seed multiplication process as soon as the project became effective. This action was subsequently done under Project Preparation Facility financing. The project will constitute Guinea's first concerted effort to organize the identification, production and distribution of improved seed. The project will focus on (a) the production of base seed through reinforcing the research structure necessary to identify, select and produce this seed; (b) the setting up of a national system for multiplication of this seed through registered outgrowers; and (c) the establishment of seed conditioning centers in such a way that they could be privatized. It would be executed in four years at a cost of US$10.6 million, to be financed by Government and IDA. II. THE AGRICULTURAL SECTOR Main Features 2.01 General Performance. Agriculture is the mainstay of the country's economy, providing a livelihood for about 80? of the population and generating about 40? of GDP. Agricultural production over the past two and a half decades has deteriorated. Agricultural commodities, while accounting for the bulk of Guinea's exports in 1958, now represent less than 2Z of the total value of exports. At the same time, food crop production has not kept pace with the iincrease irL population. Rice imports, which were 7,000 tons in 1958, exceeded 100,000 tons in 1986 and are expected to be higher in 1987; total food imports represent about 30? of the general import bill. 2.02 This picture of stagnating production and mounting import requirements is in marked contrast with Guinea's agricultural potential. The country is endowed with abundant water resources and varied topography and soils distributed within the four agroecological zones (IBRD Map No. 20468). These zones compriset the Maritime Region (Basse Guinee) with high rainfall; the Fouta Djallon Region (largest part of Moyenne Guinee), which is the upland plateau of the countr- where many of the important rivers of West Africa originate; the Upper Region (Haute Guinee), predominantly Savannah; and the Forest Region (Guin6e Forestibre) in the eastern part of the country with high potential for most crops. These varied environments should allow the country to satisfy most of its needs for food crops and to produce coffee, cocoa, oil palm, copra, pineapples and other fruits, and livestock for local processing and for export. While the potential is significant, a combination of serious distortions in the macroeconomic environment and mismanaged public policies and services during the last 25 years (Economic Report No. 469-GUI) has turned agriculture into a subsistence low production sector. Government is addressing these problems through a number of economic policy measures (para 2.09). 2.03 The crops subsector cuoers over 1.6 million ha (62 of the national territory and 272 of the arable land). About 1.3 million ha are under food crops, of which 46Z is under rice, 25Z under other cereals (mainly fonio--Digitaria exilis), 82 under groundnuts, 72 under root crops and 142 under plantation crops. At present, Guinea produces about 330,000 tons of rice, 300,000 tons of other cereals (fonio, maize, millet), 70,000 tons of groundnuts, and 600,000 tons of root crops. Together with imports of rice (100,000 tons), wheat (30,000 tons), sugar (20,000 tons) and oil (5,000 tons), the average amount of calories consumed daily ptr capita is about 2,120 (320 from imports) and just meets the minimum requirements (1,900 to 2,500 in West Africa). 2.04 Rice is the dominant crop in Guinea (750,000 ha, 462 of cultivated area) except in the impoverished soils of Guinea's upland plateau--the Fouta Diallon--where it takes second place to fonio. Rice is Guinea's main food staple, and national consumption is about 78 kg/capita per year, of which 23? (1985) is supplied from imports. By 1997, on the basis of the same consumption per capita, needs will amount to 600,000 tons of rice, i.e., about 920,000 tons of paddy or about 200,000 tons more than is being produced (Annex 2). There is currently an indication of a supply response in production due to area expansion as a result of Government lifting price controls. The constraint to self-sufficiency now seems to lie mostly in the high cost of transport and the low level of agricultural technology. 2.05 Rice is produced under four types of cultural practices: upland or rainfed rice (682 of total) is grown throughout the country but mostly in the Upper and Forest Regions; flooded rice (122), introduced in Guinea after World War II, is concentrated in the Upper Region, especially where soils are flooded by surface water; mangrove rice (11Z) is grown exclusively in the Maritime Region; and swamp rice cultivation (92) is in expansion and uniformly spread among the Maritime, Fouta Djallon, and Forest Regions. Yields vary from 750 kg/ha for upland rice to 1,000 kg/ha for flooded rice, 1,300 kg/ha for mangrove rice and 1,500 kg/ha for rice under irrigation (about 15,000 ha). These low yields are the result of poor quality seed combined with low density and rudimentary cultural practices. 2.06 Maize cultivation has spread from about 50,000 ha in 1954/56 to about 140,000 ha today. It is expanding over the country and has become a substitute for millet and sorghum. Its largest expansion has been in the Fouta Djallon Region (48Z) where it is cultivated under the 'tapade" system--an intensive cropping system with high rate of manure fertilization. It is also cultivated in the Maritime and Upper Regions around the villages and in the alluvial soils, while in the Forest Region it is planted the year following iallow in association with upland rice. Yields vary greatly from 800 kg/ha to a modest 2,500 kg/ha depending on the fertilizer rate. 2.07 Groundnuts, cultivated on about 150,000 ha, were the most important export crop in the past. Guinea's exports of about 6,500 tons in 1954, fill to 2,100 tons in 1975. Today, groundnuts are cultivated throughout the country for family consumption and constitute one of the main sources of protein. Several areas of the country are well endowed for cultivation (mainly around Koundara, Dabola and Bordo prefectures) due to good light soils and sunshine during the rainy s9ason. Yields vary between 500 kg/ha and 700 kg/ha. Major Constraints to Growth 2.08 In much of Guinea, land and climate are not limiting factors to increasing agricultural production. Currently, only about 27? of the arable land is effectively cultivated. The area under food crops could be significantly increased by developing new suitable areas, and productivity could be raised by using available improved levels of technology (both with and without imported inputs). Nevertheless, agriculture has stagnated and food crop production has not kept pace with population growth for the last 25 years. Population is about 5.7 million, of which 1.5 million is urban. It is projected to grow at a rate of 2.8? p.a. Agricultural growth is required not only to keep up with population growth but also to fuel economic growth to catch up for the stagration of the past. The productivity of the smallholder subsector, the principal producing force, has been markedly below its potential due to: (a) Government's distorted macroeconomic policy including poor price incentives; and (b) a limited allocation of government funds and ill-defined strategy for agriculture, which contributed to the disintegration of agricultural services such as extension, research and seed supply. This has resulted in a lack of adequate technical advice and inputs for immediate use to farmers. 2.09 In 1984, a new Government, in consultation with the Bank and the IMF, began to redress the basic macroeconomic problems of the country through market liberalization and removal of the exchange rate and price distortions. Since December 1985, the Government has implemented far-reaching reform measures, including a twenty-fold devaluation, an auction based system for the allocation of foreign exchange, trade liberalization, and major price increases of strategic products and services. In the agricultural sector, officially enforced producer prices have been abolished. State marketing agencies have been either abolished or their monopoly status removed, forcing them to compete with the private sector. The price of rice imported by the Government and sold to the public has quintupled. and coffee and palm kernel prices have also significantly risen. The Government is now in the process of phasing out farm input subsidies and rAducing public intervention in the - 4 - distribution of inputs. These reforms have established the necessary conditions for private sector participation in agriculture and agricultural development. However, the reforms need to be complemented with institutional development, particularly agricultural services. The Government recognizes this need and efforts are underway, with IDA assistance, to improve agricultural services. Institutional Environment 2.10 Sector Planning, Management and Staffing. The Ministry of Rural Development (MDR) is considerably overstaffed and most staff are poorly equipped to carry out their responsibilities. The low standard of technical training, coupled with low salaries, has resulted in low motivation, high absenteeism and ineffective support services. There is no transfer of technical knowledge to farmers. The responsibility for agricultural development is too diffused and there is no coordination among various organizations involved in agriculture. As part of its reconstruction effort, the Government has recently received assistance from IDA in this field through the First Agricultural Services Project (Cr. 1636-GUI). A Research/Extension rehabilitation project is under preparation with IDA assistance (PPF approved) (para 2.18). The Government is about to streamline the MDR, most significantly by reducing the number of staff. 2.11 Resource Allocation. While overall public resources allocated to agriculture are still not in line with the sector's contribution to employment and national income (about 18Z and 40X reopectively in 1986), the major problem is the inefficiency of resource allocation. Resources allocated to recurrent expenditures, other than salaries, are inadequate. Due to its limited resources, the Government will have to seek external financing to increase budgetary allocations for operating costs and reduce salary costs. The Government is slowly making improvements in this area. 2.12 Research. Before 1958, agricultural research was actively conducted in four relatively well managed and financed centers (Bordo, Foulayah, Koba and Seredou). Research during this period was diversified with emphasis on food, fruit and industrial crops. In food crops research, several varieties of rice, maize and groundnuts were selected and disseminated. The same cultivars can be used today due to their good agronomic and cooking characteristics. From 1958 to 1963, resources became scarce and research activities stagnated. From 1964 to 1980, agricultural research was under the tutelage of the Ministry of Education and activities were concentrated on direct production, neglecting research. After 1980, some research was initiated through the creation of a Rice Development Agency (ONADER), the membership of Guinea in regional research efforts including WARDA (West Africa Rice Development Associaticn), and its participation in SAFGRAD (Semi-Arid Food Grain Research and Development). 2.13 Agricultural research activities are minor in Guinea except for externally financed projects such as the IDA-financed Gueckedou Agricultural Development Project (PAG, Cr. 1635-GUI) and the maintenance work carried out in some of the research stations. Guinea's main research stations outside those under PAG have been short of equipment and operating funds. In general, however, Guinea is relatively well endowed with technical - 5 - agricultural research staff, several research stations still maintain some acceptable infrastructure, and some good genetic materials have been maintained. Update of the staff's technical knowledge and provision of operating funds are urgently needed to avoid further deterioration brought about by the loss of qualified staff. With proper measu-es, the research system could be revamped. IDA is assisting in preparing for this rehabilitation under PPF financing (paras 2.10 and 2.18). The National Seeds Project will also contribute to this endeavor. 2.14 Extension. The MDR created in 1984 was given responsibility fer extension. However, except in the case of externally financed rural development projects such as PAG, field level structures remain almost non-operational, and agricultural agents have no training and little experience in extension, no technical messages to transmit and no operating funds to carry out extension work. PAG is helping to develop field level extension structures: an ongoing Pilot Extension Project (PPV) assisted by IDA under a PPF is underway. A Research/Extension project addressing this problem on a national level is under preparation. Two other development projects have extension components: the Operation Rice Siguiri (ORS) financed by IFAD/AfDB and the Integrated Rural Development Project (PDRI) in the Upper Region financed by FAC/FED and managed by the French Cotton Development Agency (CFDT). These projects have their own structures for extension and input distribution, but their efforts are uncoordinated and probably not sustainable once project funds are no longer available. 2.15 Input Supply/Credit. Outside agricultural projects such as PAG, PDRI and ORS where input purchase and distribution and technical advice are provided, fertilizer other than manure is rarely utilized (estimated at 5,000 tons/year). This situation is due to a lack of fertilizer availability, and when it is available, lack of farmer knowledge regarding its use. Farmers complain in general of the unavailability of tools, spare parts, agrochemicals, improved seed and means of transport. Official credit is virtually non-existent except in the rural development projects. Government Policies and Strategy 2.16 The Government's current objectives in the agricultural sector are to promote production to achieve food self-sufficiency, to increase export crop production, and to raise the standard of living of the rural population. To reach these objectives, the strategy adopted by the Government and supported by IDA aims at: (a) as a priority, improving smallholder agriculture through better production incentives; (b) increasing productivity by improving traditional agriculture; (c) reorganizing and streamlining agricultural services with emphasis on research, extension and improved seed production, and concentrating such services on smallholders; (d) privatizing agricultural input supply; and (e) developing MDR's capability in planning, investment review, and monitoring. The Government's investment program reflects this strategy and concentrates on finalizing ongoing, viable projects and on financing and developing new projects with a national coverage. - 6 - 2.17 To support these initiatives, the Government has several ongoing or planned development projects for the various ecological zones. In the Forest Region, there are two projects: the IDA-financed PAG and a proposed Rubber, Oil Palm and Rice project for Nzerekore to be financed by the French Aid Agency (CCCE). In the Upper Region are the major C tton/Food Crop Development Project, PDRI, which covers four prefectures, the AfDB/IFAD-financed ORS Project, and the Kouroussa Kenaf Rural Development Project which is being redesigned to include food crops. In the Maritime Region there is a small USAID-financed rural development project and a rural developiaent project covering several prefectures to be financed by the European Developme:tt Fund (FED). In the Fouta Djallon, there is a UNDP-financed rural development project. IFAD has recently approved a credit for a Livestock Sector Rehabilitation Project (Cr. 1725-GUI). The Government is preparing a National Forestry project which will include reforestation for fuelwood and timber species, and rational management of the remaining natural forest. 2.18 In addition to the above, the Government has started to improve its agricultural services at the national level. It has established a Strategy and Development Office (BSD) which is already helping to define and implement the Government's agricultural policy and strategy, and to identify, prepare and analyze projects. The 1986 Government-commissioned Agricultural Strategy Study for the restructuring of agricultural services, which has just been completed, will serve as background for the National Agricultural Research and Extension Project and various farm input supply projects. The IDA-supported pilot national extension project (PPF financing), begun in 1986, is underway in six prefectures (Bofa, Kindia, Forecariah, Pita, Dabola and Faranah) and will be expanded in 1988 and 1989. These projects will focus on improving research and extension services, and on promoting the supply and distribution of inputs through the private sector. The Government is restructuring MDR to provide a streamlined but more effective work force to serve the rural populatior.. IDA is supporting this effort through a Structural Adjustment Credit (SAC). To complement these actions and due to the increasing demand for improved seed and its immediate effect on production, the Government has requested that selection, production and distribution of improved seed be developed under the National Seeds Project. IDA's Sector Strategy and Experience 2.19 IDA's assistance to Guinea's agricultural sector emphasizes raising smallholder incomes while creating durable sector institutions in both the public and private sectors. At the policy level, this objective has been reached through macro and microeconomic policies aimed at providing incentives for agricultural production, liberalizing marketing, setting adequate pricing policies, enhancing the role of the private sector in agriculture, and increasing the efficiency of essential Government services in the sector (para 2.09). This strategy is being implemented through the SAC (US$25 million) and the Special Facility for Sub-Sahara Africa (US$17 million) of February 1986, and IDA-financed projects. 2.20 IDA has participated in the financing of five agricultural projects, of which two were completed and one cancelled. The Rice Development Project (Cr. 952-GUI) was satisfactorily completed and gave - 7 - origin to the ongoing PAG. The Daboya Pineapple Project (FY76) was completed to satisfactory technical standards but has been experiencing financing, input supply and marketing problems since completion. Attempts to involve a private partner are being made on the Government's initiative. The credit for the Livestock Development Project (FY81) was cancelled in 1983 because of the Government's failure to dismantle the State Livestock Marketing Agency as agreed under the credit. The new Government has dissolved the agency and IDA recently approved a credit for a Livestock Sector Rehabilitation Project (para 2.17). Two additional projects are being executed satisfactorily, i.e., the PAG and the First Agricultural Services Project (para 2.18). IDA is financing the PPV which is satisfactorily progressing (para 2.18). Finally, IDA has provided a PPF to finance preparation and start-up of the National Agricultural Research and Extension Project. These interventions will motivate smallholders by making them primarily responsible for their own development with a minimum of state intervention. Varietal Selection and Seed Production 2.21 A good seed production program involves close linkages between (a) applied and adaptive research carried out at stations and in farmer fields to select and/or develop varieties with good agronomic characteristics that respond to farmers' preferences in terms of taste and cooking quality; (b) production of small quantities of breeder seed in a research environment to ensure varietal purity; and (c) an adequate system for multiplying breeder seed to obtain sufficient base seed. This base seed is then multiplied to produce improved seed which, once conditioned, becomes commercial seed ready for distribution. Although past and current seed production efforts irn Guinea have individually produced some results in one or other of these areas, they have failed to produce a tangible impact either in terms of varieties produced and accepted or in terms of quantity of improved seed commercially distributed. All these efforts have lacked the necessary continuity and the adequate organizational set up. 2.22 Varietal Selection Experience. Since independence in 1958, Guinea has made considerable efforts--with the assistance of several donors and international organizations--to select and produce improved food crop varieties. As a result, several hundred rice and maize varieties of varied origin have been introduced. Research stations have developed the capacity to test and select materials, and local staff have become knowledgeable in the techniques involved. The Koba station has introduced, and is maintaining, a valuable collection of 187 rice varieties of which IR 5 and ROK 5 are of high interest for the mangrove and swamp ecologies. The ongoing PDRI has introduced rice, maize and groundnut varieties while the ORS Project has introduced, and has available, 16 upland and flooded rice varieties. The Kilissi Station has produced the first Guinean rice hybrids and has succeeded in purifying the old Perta maize variety that is now eagerly sought by farmers. It maintains a collection of more than 230 ricp cultivars and has produced four new rice varieties of significant potential and good agronomic traits. PAG has introduced the improved LAC 23 which is being grown in the Forest Region and for which there is still considerable demand. In addition, several past varieties now called "traditional" or "local" varieties such as Sonsonpolo (rainfed rice) and Indochine Red and White (floating rice) are still readily accepted by farmers. Moreover, the activities of a FAO-financed seed project (FAO/TCP 4513) aimed at identifying and selecting varieties in the Kindia prefecture were expanded during the preparation of the National Seeds Project. 2.23 Despite this large effort only PAG and the embryonic work of ORS and PDRI have had a significant impact on farmer production. This is mainly because of (a) disregard for farmers preferences in seed selection; (b) little adaptive research in determining whether the so-called improved seeds are really improved; (c) lack of resources for better research programs; (d) inadequate follow-up of the impact of introducing new seed; and (e) disparate, discontinuous and uncoordinated efforts among the many donors and institutions involved. Many of the varieties used by farmers have deteriorated and some of them are producing only a fraction of their original potential. However, many varieties could be recovered, physically improved, and released. The country has a good stock of potentially good varieties (Perta, LAC 23, ROK 5, IR 5 and "traditional" varieties) and considerable infrastructure and expertise which, if properly supported, directed and utilized, could produce relatively good varieties in the short-term. 2.24 Seed Production: Demand/Supply Situation. A 1986 survey and the interest shown at appraisal by staff and farmers in development and extension projects suggest a strong demand for improved seed. Assuming no growth in area planted, an adoption rate of 50? and seed replacement every four, three and five years for rice, maize and groundnuts respectively, the needs for seed be 7,000 tons per year for rice, 600 tons for maize and 1,200 tons for groundnuts. To supply the demand, the Government has from time to time obtained imported seed of untested varieties. Imported varieties have not worked well, which is not surprising because adaptation was not attempted. There are no known commercial sources of tested and improved seed in West Africa. Because of Guinea's many different ecologies, it is unlikely that a foreign supplier could provide the needed seed, although some imported seed might be multiplied and sold commercially after adaptive trials. 2.25 Existing production of improved seed in Guinea of about 350 tons/year meets the needs of only a fraction of the country's farmers. Seed production and distribution are limited to the isolated efforts of the IDA and AfDB-funded projects (PAG and ORS), and of the PDRI which started in 1986 and has a modest seed production component. III. THE PROJECT A. General Project Rationale 3.01 The proposed project will be a catalyst of the different efforts being carried out (paras 2.21-2.25) which have yet to come together to form an integral part of the Government's strategy for the sector. It focuses on the identified need for developing an improved seed production capacity which, with minimum risk, will improve smallholder incomes. It will provide seeds adapted to Guinea's varied ecological and economic environments. 3.02 The project will start a production system of improved seed. It will complement and build on ongoing research, extension and seed production activities financed by IDA and other donors, and capitalize on the existing human and institutional infrastructure and on the available genetic material. IDA's participation at this stage will fill the void felt in existing projects regarding the lack of an overall national system to help coordinate donors' efforts and ensure the supply of an essential input for agricultural extension messages. The project will set up the system so that important parts of it could be privatized in the future. Project Concept and Objectives 3.03 The main project objectives aim at (a) supplying the financing, assistance, and organization necessary to establish a reliable national seed production system which could be privatized; and (b) increase productivity through the production of improved seed. Under the project, an important part of the seed production process--multiplication--will be contracted to farmers. Production of base seed and quality control will be undertaken by the Ministry of Rural Development. The organization and operation of the Seed Conditioning Centers (SCCs) will be set up for privatization by ensuring profitability. The Centers not sold to the private sector due to lack of demand will have carefully designed management and pricing and cost control systems which will result in production of high quality seed and permit privatization when a suitable investor appears. Three crops (rice, maize and groundnuts) have been chosen because of the demonstrated demand for seed, the ready availability of adapted varieties, and the projected impact on crop yields. Project Description 3.04 The project will support over a period of four years (1988-91) the identification of suitable rice, maize and groundnuts varieties and the establishment of a production system for good quality improved seed. It will be national in scope and include the five following components: (a) Base Seed Production - Selected research stations will identify suitable local and imported varieties and produce base seed. - 10 - (b) Improved Seed Production - Base seed will be multiplied by contract outgrowers; six SCCs will be established in different ecological zones of the country to condition and store improved seed, and to ensure coordination of outgrower production at the regional level. (c) Quality Control - Seed quality will be controlled at the SCC level and in a central quality control laboratory, as well as at farmer level through the monitoring of field results and acceptability. (d) Training - Local staff of all services involved in the project will be trained abroad and in situ. (e) Project Administration - A management unit and a consultative body will be responsible for administering the project and for coordinating seed production at the national level. 3.05 The project will finance the following items: (a) purchase of vehicles, agricultural equipment, field and office equipment for project staff and three research centers; (b) purchase of seed conditioning equipment, appropriate civil works to house the conditioning equipment, and storage/drying facilities for the SCCs; (c) at the research stations, operating costs and equipment associated with the identification of suitable materials, and the production and multiplication of base seed; (d) incremental operating costs of the components on a declining basis and salaries of the few additional staff required; and (e) technical assistance for MDR and consultants to advise on quality control, selection procedures and processing equipment; and a revolving fund for purchasing seed abroad and on the local market. B. Detailed Features 3.06 The National Seeds Project will produce, in the short- to medium-term, seed of improved physical condition (e.g., greater germination rate, better uniformity, true to type, free of foreign material) to ensure higher yields through better crop uniformity, greater plant population and maturation, and easier harvesting. This alone should induce significant yield increases without drastically changing current agronomic practices. Seed production will be carried out through identification, collection and purification of available adapted varieties (para 2.22 and Working Paper No. 3) and conditioning. Through ongoing activities and an administrative organization that will control seed production activities country-wide, the project will launch a process of continuous varietal selection for rice, maize and groundnuts to produce base seed in selected research stations. Base seed multiplied by contract outgrowers, and the improved seed they - 11 - have produced will be conditioned in the SCCs to produce commercial seed. The project will also provide seed quality control and training for local staff in seed production. (a) Base Seed Production 3.07 Selection of suitable varieties and production of base seed directly linked to the project started under the PAO seed project and continued under IDA PPF financing (para 2.20). These activities will continue and expand under project financing. This will comprise surveying the best seed material, its collection, field trials, purification and on-station multiplication. Crops (rice, maize and groundnuts) have been chosen based on area planted, economic importance and indicative seed demand (paras 2.03-2.07 and 2.24). Varieties of these three crops will be selected to constitute the base seed to be multiplied by the contract outgrowers and, once conditioned, sold as commercial seed. The choice of varieties to enter the multiplication cycle will be based on farmers' preferences and minimum quality requirements; they will include the so-called "traditional" varieties (para 2.22 and Working Paper No. 3) readily accepted by farmers and which are less dependent on inputs than high yielding varieties. Where newer varieties which are already grown locally are found to have significantly departed from their original characteristics, the project will obtain new base seed from the original sources. The expected results of this work will be seed of improved physical condition. In addition, research will aim at ensuring a continuous process of varietal selection (local and imported) to provide new materials with better characteristics than those pertaining to seed currently used. 3.08 This type of work will normally constitute routine work for the MDR's Agricultural Research Directorate (DNRA). However, given the urgency to produce base seed and the current lack of regular Government funding, the PPF and the National Seeds Project will continue to finance varietal selection and production of base seed. This activity will be complemented and later expanded under a project to further improve agricultural research, which is being prepared by the Government (paras 2.13 and 2.18). 3.09 The selection of the three research stations (Kilissi, Koba, Bordo) to be involved in this work was based on availability of existing infra- structure, land, laboratories, storage, electricity and staff, as well as individual past performance (IBRD Map No. 20468 shows locations). Each station will produce base seed for the crops prevalent in the region (details on type and amount of base seed to be produced at each station are given in Working Paper No. 1). The Kilissi station has started producing its own seed, is well organized and has reasonable resources; Koba and Bordo stations will require greater project financing, but have the required staff and minimum infrastructure to implement the program. The stations will annually produce the amount of base seed specified by the SCCs and recorded in an agreement. The base seed will be purchased by the SCCs from the stations (para 5.07). 3.10 Work will be carried out by available staff on the stations. This staff is satisfactory in terms of numbers and expertise. The National Seeds - 12 - Project will provide the necessary funds for equipment and operating costs of the stations in undertaking the seed production functions. Additional local staff and occasional labor will also be provided as necessary by the project to participating research stations. A technical assistance program to organize and select adequate seed (an agro-geneticist, a sociologist and an agronomist) will be provided by the project and by the FAO-financed Seed Project (para 2.22). Specialists will also be recruited under the project to provide further advice and evaluate varietal selection work. Guinean staff will receive training to update knowledge (para 3.18). (b) Improved Seed Production 3.11 After purchasing the base seed from the research stations, the SCCs will sell it to the rural development projects and to the extension service which will then sell it along with other farm inputs to private contract outgrowers (para 5.07). The seed will be multiplied by outgrowers and re-purchased by the SCCs to undergo conditioning. Outgrowers will be paid adequate prices for seed multiplied to ensure that they sell it back to the SCCs and not consume it (paras 5.08-5.10). Once the seed multiplied by outgrowers is conditioned in the SCCs, it will be sold to development projects and private traders for re-sale to farmers and directly to neighboring farmers. As soon as private traders are able to purchase most of it and the SCCs can be sold to the private sector, the entire system will be privatized, except for base seed produced by the research stations. Contract outgrowers, the SCCs and the agricultural development and extension projects will be responsible for producing and conditioning, by PY4, about 870 tons of improved rice, maize and groundnuts seed (Annex 3-1). With the facilities to be installed and the system in place, production in PYl0 will cover about 20% of the national seed requirements for these crops (para 5.01 and Annex 2). The contract outgrowers in charge of production will be selected by project staff, with the cooperation of ongoing development projects and extension programs (paras 2.14 and 2.25). Outgrowers will preferably be registered in groups to facilitate and reduce supervision costs. 3.12 The improved seed multiplied by outgrowers will be conditioned (dried, cleaned, graded, treated and stored) in six strategically located SCCs (IBRD Map No. 20468), which will sequentially start operations in PY2 (implementation Schedule is presented in Annex 3-2). The selection of the location of the SCCs has been made according to (a) the importance and agricultural potential of the different zones and the medium/long-term seed needs of the region (Working Paper No. 3); (b) the existence of an ongoing rural development project with an agricultural extension component for food crops or a seed production component lacking adequate processing capacity; and (c) the existence of infrastructure in terms of equipment and electricity (para 3.09). Among these SCCs, two (Gueckedou, Bordo) will be directly linked to ongoing projects with a seed component (Gueckedou Agricultural Project--PAG, Integrated Rural Development Project--PDRI); and the others to the IDA-financed Pilot Extension Project (PPV, Tindo); the ongoing UNDP rural development project; the proposed IFAD project (Bareng); and the upcoming FED rural development project (Koba, Kilissi). - 13 - 3.13 The SCCs will be located within the premises of the stations and projects or at close proximity to benefit from existing infrastructure. Given the Government's intention to privatize the SCCs, assurances were obtained at negotiations that the Government will undertake its best efforts to sell the SCCs to the private sector upon completion of each SCC and that the formalities to establish the SCCs will be cempleted by December 1988 (paras 7.01(a) and (b)). A condition of Credit effectiveness will be that adequate land has been made available to the SCCs (para 7.02(a)). During appraisal, the Government and the agencies responsible for the development projects have indicated their willingness and satisfaction with having the seed project established within their areas of activity. 3.14 The project will finance essential civil works for the conditioning plants and storage area, conditiwning equipment, drying floors--or artificial dryers in exceptionally humid areas--and generators where other sources of energy are not available. Peak output of the equipment ranges from about 300 tons of conditioned seed/year for Bareng to 1,400 tonslyear for Kilissi. Storage capacity will cover the estimated needs during the project life and will be provided in such a way that it could be eventually increased without altering the structures to be built under the project. The project will also provide vehicles for staff running the plants, motorcycles for supervisors, and tractors and trailers. Where possible, all seed transport to and from the SCCs will be done by private hire organized by local development/ extension projects. At PAG where there is seed conditioning equipment, the project will finance the design modifications required to reach processing potential. Details of equipment and civil works are given in Working Paper No. 2. (c) Quality control 3.15 For seed programs to succeed, the improved seed must consistently be better than the seed produced by farmers. To help ensure better quality, the SCCs and the central quality control laboratory will carry out regular and systematic seed testing to assess physical purity, germination capacity and moisture content. Staff from the SCCs and the laboratory, to be trained under the project, will assure that seed produced and distributed has a high rate of germination, is free of seed from weeds or other crops and from seed-borne diseases, and true to kind and variety. The project, through an ad hoc committee (para 4.05), will promote improved seed by establishing seed quality standards and ensuring that only seeds with these standards are distributed by the Government or private agencies. The same principles apply to the purchase of imported seed. Quarantine control will be used only when it is known that the exporting country is plagued with diseases or pests of potential harm to Guinean agriculture. 3.16 The project will provide the SCCs with the minimum equipment required to assess moisture content and germination capacity of conditioned seed. It will also provide the necessary equipment to set up a simple central quality control laboratory to be located within the premises of the Plant Protection Laboratory (LPV) at Foulayah. The project will finance staff, vehicles and operating costs to run the laboratory and short-term consultancy services to set up seed quality standards and train staff. - 14 - 3.17 In addition to controlling the physical quality of the improved seed, the project will train staff of development projects to carry out technical monitoring of outgrowers' improved seed production and farmers' acceptability of improved seed. The Monitoring and Evaluation Unit (M&E) of the Strategy and Development Office of MDR, whose function is to plan, monitor and evaluate agricultural projects, will carry out general monitoring and evaluation of the project's performance. (d) Training 3.18 All staff involved in the project will receive training. A number of pre-project training activities are being carried out under the financing of the FAO Seed Project (para 2.22) and through IDA's PPF. Additional training both locally and abroad will be provided for all staff responsible for the project, prior to their direct involvement in production activities which will not start until PY2 (Annex 3-2). A tentative training program and bchedule have been prepared for about 200 man-months of training (Working Paper No. 3). Local project management staff, the six chiefs of SCCs, the laboratory technician, and key research staff will receive training abroad early during project implementation. This training will be carried out in neighboring countries with similar projects and tradition in seed production (Senegal, C6te d'Ivoire), and in institutions with training programs in this area, such as WARDA and the International Institute for Tropical Agriculture (IITA). Staff in charge of supervising outgrowers and extension agents on seed production and quality control, and staff responsible for seed conditioning, will be trained at PAG which has training facilities. Additional training will be provided in Guinea by consultants, specifically in variety selection and quality control. Upon arrival the internationally recruited staff will be responsible for training local counterparts and preparing a training program for all project staff. (e) Proiect Administration 3.19 The project will provide resident experts and short-term consultants, individually or through consultant firms, to assist the project irn (a) strengthening MDR's capacity to administer, monitor and evaluate project activities; and (b) reviewing technical aspects of the project's and the country's seed production and processing activities. (Details of the structure and technical assistance proposed are given in paras 4.01-4.09) C. Proiect Costs and Financing Cost Estimates 3.20 The cost of the proposed four-year project (1988-91) is estimated at FG 4.3 billion (US$10.6 million), of which FG 3.5 billion (US$8.6 million) or 81Z in foreign exchange. The cost is PG 4.2 billion (US$10.6 million inclusive of taxes a.d duties, which are negligible. Project costs include activities financed under the PPF which will be carried out in 1987 and refinanced under the Credit. - 15 - 3.21 Base costs are given in December 1987 prices. Physical contingencies of 1OZ have been allowed on all items with the exception of pre-project activities and personnel. The average physical contingency is 62 of total project costs. Price contingencies on foreign exchange costs are based on the Bank's projections of international price increases (MUV 1988 and 1989, 12; 1990 and 1991, 3.5Z). Price contingencies on local costs are based on the Bank's forecast of domestic inflation (GNP deflator 1988, 13.9z; 1989, 7.9Z; 1990, 6.8%; and 1991, 7.5%). Total price contingencies amount to 6.9Z of base.costs. Investment costs account for 782 of base costs, with buildings and equipment 35%, and technical assistance personnel 27X. 3.22 Project costs are summarized below and details are given in Annex 3-3 and Working Paper No. 4. Proiect Cost Summary Component Local Foreign Total Local Foreign Total FE Base F--G million ----- -----US$ million ----- Z Cost (Z) Base Seed Production 75 394 469 0.19 0.98 1.17 84.0 12.5 Improved Seed Production 326 1,479 1,805 U.82 3.70 4.52 81.9 48.2 Quality Control Laboratory 2 25 27 0.00 0.06 0.06 94.0 0.7 Training 29 20 49 0.07 0.05 0.12 39.8 1.3 Project Administration 140 1,258 1,398 0.35 3.15 3.50 90.0 37.3 Total base cost 572 3,176 3,748 1.43 7.94 9.37 84.7 100.0 Physical Contingencies 48 195 243 0.13 0.49 0.62 78.9 6.5 Price Contingencies 174 85 259 0.44 0.20 0.64 32.8 6.9 TOTAL PROJECT COSTS 794 3,456 4,250 2.00 8.63 10.63 81.2 113.4 =8r2 ===== =s=== ==== ==wst =====+ ==== ===== Project Preparation Facility 3.23 A PPF has been awarded to finance the collection of missing data, the collection and multiplication of improved varieties, and other start-up activities. The PPF is being used specifically to (a) study traditional varieties of principal food crops and in which zones they are grown, and the characteristics sought by farmers; (b) locate, locally and overseas, and procure the most appropriate varieties; (c) multiply local and imported seed of selected varieties; and (d) start project activities by contracting the project administrator and the agronomist before Credit effectiveness. - 16 - Financing 3.24 Of the total project costs of FG 4.3 billion (Us$10.6 million), the IDA Credit of US$9.0 million will finance 1002 of foreign exchange costs plus 182 of loc&l costs (852 of total costs). IDA's contribution to incremental operating costs will be financed on a declining basis. The Government will finance the remaining 152 of total costs, all in local currency. Forty seven percent of the local costs, however, will come to the Government from net proceeds of seed sales which are expected to contribute about FG 280 million (US$0.7 million) during the project period (para 4.13). Financing Plan (US$ million) Items IDA Government Total Buildings 2.00 -- 2.00 Vehicles 0.79 _- 0.79 Equipment 1.75 -- 1.75 Technical Assistance 2.68 -- 2.68 Training 0.14 -- 0.14 Agricultural Inputs 0.64 -- 0.64 Operating Costs 0.52 1.30 1.82 Local Salaries -- 0.30 0.30 Project Preparation 0.48 -- 0.48 Total 9.00 1.60 10.60 Procurement 3.25 Contracts for goods exceeding US$200,000 will be procured through International Competitive Bidding (ICB). For contracts below US$200,000 local procurement procedures acceptable to IDA will be used. Procurement of goods for less than US$50,000 per contract and up to an aggregate amount of US$400,000 will be on the basis of quotations from at least three reputable suppliets. Contracts for buildings valued at about US$2.0 million would not be attractive to foreign contractors other than those already established in Guinea, due to their dispersed location and the small size of individual - 17 - contracts; such contracts will, therefore, be awarded on the basis of Local Competitive Bidding (LCB) in accordance with procedures satisfactory to IDA. All procurement in excess of US$200,000 or involving building construction will be submitted to IDA for prior review. Technical assistance is expected to be recruited under a single contract. All technical assistance staff will be selected in accordance with IDA guidelines. Procurement arrangements are summarized below; the figures in parentheses show the amounts to be financed by IDA. Procurement Arrangement (US$ million) Items ICB LCB Other N/A Total Buildings 2.00 2.00 (2.00) (2.00) Vehicles 0.79 0.79 (0.79) (0.79) Equipment 1.35 0.30 0.10 1.75 (1.35) (0.30) (0.10) (1.75) Technical Assistance 2.68 a/ 2.68 (2.68) (2.68) Training 0.14 0.14 (0.14) (0.14) Inputs 0.64 0.64 (0.64) (0.64) Operating tosts 1.82 1.82 (0.52) (0.52) Local Salaries 0.30 0.30 Project Preparation 0.38 a/ 0.10 0.48 - - (0.38) (0.10) (0.48) Total Costs 2.14 2.30 3.16 3.00 10.60 (2.14) (2.30) (3.16) (1.40) (9.00) a/ Employment of technical assistance and consultants will be in accordance with IDA guidelines. - 18 - Disb'irsements 3.26 The schedule of disbursements (Annex 3-4) is based on the Guinean disbursement profile amended to take into account the refinancing of the PPF. All disbursements will be fully documented except those against operating costs which will be against statement of expenditures (SOEs). Documentation of SOEs will be held for review by IDA supervision missions. The disbursement categories will be as follows: Allocation and Disbursements of IDA Credit (US$ '000) Percentage of Expenditures Category Iten, Amount to be financed 1 Buildings 1,800 100 2 Vehicles and Equipment 2,400 100 3 Technical Assistance 2,400 100 4 Training 100 lo( 5 Operating Costs 420 lOOZ of foreign costs and 70Z of locail costs in PY1 S0 of local costs in PY2 30? of local costs in PY3 15Z of loca costs in PY4 6 Agricultural Inputs 600 100 7 Refinancing PPF 480 8 Unallocated 800 Total 9,000 Revolving Funds 3.27 IDA will finance most foreign expenditures through direct payments, but some foreign exchange will be needed by the Government mainly to finance certain small items of vehicles, equipment, materials, operating costs, inputs, and the costs involved in technical assistance and training. A Special Account (SA) in foreign exchange equivalent to US$200,000 will be established for this purpose immediately after Credit effectiveness through the withdrawal of this amount from the IDA Credit. IDA will replenish the SA upon receipt of evidence of disbursements from the fund for eligible expenditures. Should any disbursements be made from the SA for non-eligible expenditures, the Government will be required to replenish the SA in the corresponding amount. Disbursements against the SA will be monitored through documented withdrawal requests which will be accompanied by monthly - 19 - statements of the SA, giving details of all withdrawals and deposits as well as the opening and closing balances of the account. 3.28 To meet the needs for local expenditures, the Government will open a local currency Project Account (PA) for the project at a local commercial bank in Conakry. Requirements in local currency will be established half-yearly and will form the basis upon which the local currency account will be maintained. Assurances were obtained during negotiations that the Government's portion of incremental funding will be deposited in the local currency PA; the account will be replenished quarterly and in advance on the basis of supporting documentation for expenditures incurred and cash requirement forecasts so as to meet local expenditures for the next six months (para 7.01(c)). Opening of the PA and initial deposit by the Government of FG 80 million (US$200,000), equivalent to half the first year's expenditure in local funds, will be a condition for Credit effectiveness (para 7.02(b)). Financial Management, Accounts, ReportinR and Audit Requirements 3.29 Financial management of the project will be the responsibility of an internationally recruited project administrator. He will report to the Guinean Project Director (para 4.01) and receive advice from the internationally recruited financial administrator in BSD financed under the First Agricultural Services Project. They will jointly design the project accounting systems. The Seed Production Unit administrator (para 4.03) will be responsible for assuring that systems are operational by the time the first project expenditures are incurred. The accounting system will be based on budgetary accounting by cost canter (Research Stations, SCCs, Technical Assistance, and Training). 3.30 The project will create and maintain appropriate accounting records and will prepare annual budgets for project implementation. Detailed budgets will be submitted to IDA for review and comments prior to the beginning of the implementation year. Accounts at each cost center will be maintained on a simple cash basis and there will be close physical control of inventory and fixed assets. The internationally recruited project administrator will be responsible for consolidating the accounts and preparing disbursement applications and records. Project accounts will be audited by a qualified independent audit firm under procedures satisfactory to IDA, and audited accounts and the audit report will be submitted to IDA within six months of the end of each fiscal year. The audit report will include specific verification of the legitimacy of all expenditures out of the SA and an opinion on the reliability of the SOEs procedures and utilization of goods and services financed under the project. Assurances on the foregoing were obtained at negotiations (para 7.01(d)). 3.31 Reports will also be issued summarizing project's achievements compared with agreed annual programs and commenting on key problems and future priorities and needs. To this effect, the MDR will communicate to IDA before the start of each fiscal year the project's (a) programs of operations - 20 - including projected production of base and improved seed; (b) detailed annual training programs; and (c) annual budget and procurement plans. Project implementation will also be monitored by the BSD which will carry out regular supervision in cooperation with project staff. The M&E unit of BSD will prepare and submit a Project Completion Report within six months of project completion. The Government provided assurances on the above reporting requirements at negotiations (para 7.01(d)). IV. ORGANIZATION AND MANAGEMENT Project Administration 4.01 The Ministry of Rural Development will have overall responsibility for the project. However, to redress the errors of the past in terms of lack of a coherent national policy and adequate direction (para 2.21), a small Seed Production Unit (SPU) headed by a Guinean director assisted by eight technical staff (three internationally recruited, five locally recruited) will be set up at MDR. The SPU will report to the Cabinet of the Minister but will be under the tutelage of the National Directorate for Agricultural Research (Annex 4-1). 4.02 The SPU will be responsible for (a) managing and administering the project; (b) programming and supervising research activities and seed production at all levels (base, improved and commercial seed), and monitoring quality standards; (c) coordinating, both centrally and regionally, the participation of the various MDR agencies and other projects associated with different aspects of seed production; (d) ensuring adequate seed pricing which will provide incentives to outgrowers and the Seed Conditioning Centers and will ensure an adequate use of seed; (e) controlling all financial aspects of the project, including procurement; and (f) undertaking the sale of the SCCs to the private sector. The SPU will coordinate with (i) MDR units such as the DNRA to decide on the adaptive research and activities to be carried out to ensure a permanent supply of good quality base seed; (ii) the Training and Rural Promotion Directorate (DGFPR) to carry out demonstration tests and promote and organize distribution of seed at farmers level; (iii) the Agricultural Directorate (DGA) to ensure quality control; and (iv) rural development projects, prefectures and other agencies concerned with collection/distribution of seed. 4.03 To carry out its functions, the SPU will be staffed with a local project director (as identified above) responsible for project management and coordination with local institutions, who will report directly to the Secretary General, MDR. The Governiment has already appointed a project director who is coordinating activities under PPF financing. The project director will be supported by technical staff including an internationally recruited project administrator; an agronomist specialized in seed production, responsible for supervising the work of the SCCs, research and extension, and the central quality control laboratory; a qualified mechanic specialized in seed conditioning equipment who will also assure proper maintenance and functioning of the equipment of the SCCs. High caliber technical staff will - 21 - be required for heading these services; in view of the lack of trained local personnel, internationally recruited staff will be appointed in the areas of project administration, seed production, and conditioning equipment. 4.04 In total, the project will provide 120 man-months of resident experts and 20 man-months of short-term consultants. The project administrator will be recruited using the PPF funds to start advising the project director in all matters related to organizing purchases, ICB and project management. The agronomist's contract which is being financed under the PPF will be either extended to cover the remainder of the three years or replaced immediately to ensure continuity. Recruitment of the project administrator, the agronomist, and the mechanic will be condition for Credit effectiveness (para 7.02(c)). The mechanic will be contracted to start activities shortly after Credit effectiveness (Annex 3-2). Terms of reference of key staff to be recruited by the project are provided in Working Paper No. 5. All these experts will be assigned local counterparts and will train them. They will have primary responsibility in their fields during about half their assignment period after which they will transfer their responsibilities to the trained local staff and play only an advisory role. National Seed Policy and Seed Quality Standards 4.05 With six quasi-independent decision-making SCCs within the project and a number of seed producing activities outside the project, there will be a need for coordinating efforts in the establishment of production and pricing policies and quality standards at the national level. These functions will be monitored by the SPU and implemented by several organizations. First, a National Seeds Committee (NSC) staffed with a representative of MDR, project staff, representatives of development projects, and farmers, will be responsible for establishing and monitoring quality standards, the national organization of seed production and price policy guidelines (para 5.08). It will study and implement the recommendations of regional and technical committees to ensure the establishment of incentives to producers and contract outgrowers and the profitability of the SCCs. Second, a Regional Committee (RC) of the NSC consisting of the head of the SCC, representatives of the development projects, and farmers will be responsible for determining the needs for base and improved seed within its region. Third, a Technical Committee (TC) to the NSC, with technical staff (four members maximum) drawn from the core of the NSC will be responsible for gathering all the information provided by the RCs at the national level and for elaborating technical recommendations on amount of seed to be produced, seed prices, and quality standards to be presented for study and enactment by the NSC. While the NSC will meet once a year, the TC and RC will meet as often as necessary. A condition for Credit effectiveness will be the establishment of the NSC with membership satisfactory to IDA (para 7.02(d)). Base Seed 4.06 The research stations will principally be responsible for selecting adequate varieties and providing the required amounts of base seed. - 22 - Although varietal selection has been initiated under the FAQ project and the PPF, this responsibility will be transferred to DNRA. Base seed will be produced by the stations with the support of the project-financed staff, equipment, operating costs and occasional short-term consultants to evaluate the implementatien of the program. Seed Conditioning Centers 4.07 The SCCs will be responsible for seed production in each region of operation including: (a) supervising the production of base seed at the research stations; (b) purchasing and distributing base seed to outgrowers; (c) purchasing multiplied seed from contract farmers through the same development projects/extension programs, supervising and training extension staff; (d) conditioning improved seed purchased from outgrowers; and (e) selling commercial seed to the development projects or traders who in turn will sell it to farmers, or directly to neighboring farmers. 4.08 To supervise the quality and production of base seed in the stations to ensure that it is properly multiplied by outgrowers and adequately conditioned by the SCCs, the SCCs will be headed by an agronomist with training in seed production. He will be assisted by a seed production technician who will be re--nsible for adequate functioning and maintenance of the conditioning equipmen . This staff and five field staff will train outgrowers groups and extension staff in cooperating projects in techniques of seed production at the field level and will assure adequate coverage of farmers, especially in regions where extension infrastructure is relatively weak. 4.09 Since the project will utilize existing institutions to carry out most act3vities, incremental staff of the project will be limited to the minimum possible and staffing will be done by redeployment of MDR staff. Recruitment of local staff should not be a major problem because there are qualified staff who, after simple and specific training, could take over responsibility for the various project components. In addition, key staff will be internationally recruited (para 4.03) to help set up the programs and train local staff who will take over responsibilities as soon as possible. Privatization 4.10 The Government intends to build a privately owned seed industry, as has been done successfully in many other countries. Two of the project's operations must be privatized before this can happen in Guinea: (a) seed multiplication and distribution; and (b) seed conditioning. Two other operations--the production of base seed and quality control--will remain in the Government's hands for the long-term due to the infrastructure and expertise required, which only the Government can operate. The situation is common in most countries with largely private seed industries. The project will totally privatize seed multiplication by organizing private outgrowers to participate in the process. It is also expected that the SCCs will be privatized around PY7-8 when their output is sufficient to allow a positive - 23 - cash flow (para 4.12). Nevertheless this could occur earlier since the Government will endeavor to sell the SCCs immediately after their start up (para 3.13). 4.11 From the outset, each SCC will be run as an independent, commercially oriented unit responsible for seed conditioning and for directing all improved seed production operations within the region. The SCCs will have separate accounts and their own bank accounts at the International Bank for Trade and Industry in Guinea (BICI-GUI). These will be opened as the SCCs are completed. Receipts from sale of seed will be deposited in the bank account and used to finance SCC operating costs. During the build-up period to full production around PY7, any cash surpluses will be retained in the SCC account to ensure adequate functioning without the provision of subsidies and to establish conditions for future privatization. Assurances to this effect were obtained at negotiations (para 7.01(e)). The SPU will financially control the operation and will be responsible for approving the annual budgets of the SCCs. 4.12 Estimated income and expenditure, and cash flow statements have been prepared for the centers (Annex 4-2). Costs and selling prices of seeds are based on current market prices (par& 5.10); operating costs include straight line depreciation at 5S for buildings and equipment and 332 for vehicles; investment costs include working capital equal to 25Z of incremental cash operating costs. Under these assumptions, the SCC8 will break even when full production is reached around PY7. It is then that the SCCs will most likely be transferred to private individuals or to groups of farmers. Assuming that the SCCs are sold at their written-down value, the return to the purchaser will range from 12? to 16?. Profitability, particularly to the purchaser, is extremely sensitive to selling price. By raising the price by 10?, the SCCs will break even one year earlier and the return to the purchaser will be increased by about eight percentage points. Profitability could also be increased by dealing with larger quantity of crop seed and by increasing the SCCs output at marginal additional operating costs. A distant future prospect will be the annual production and sale of hybrids. Financial Implications to Government 4.13 The Government's project cash flow is given in Annex 4-3. Costs and revenues have been inflated based on price inflation projections during the project period and held constant thereafter. During the project period, project financing requirements will total FG 4,254 million; FG 3,600 million will be financed by the IDA credit and FG 654 million by the Government. Net proceeds from seed sales are expected to provide FG 280 million of the Government's contribution (para 3.24). The cash flow turns positive in PY6 and the assumed sale of the SCCs at their written down value in PY7 (para 4.12) will more than offset the Government's cumulative net outflow. Earlier sale of the SCCs improves the Government's cash flow position further. Subsequently, costs of base seed production will be covered by sales to farmers. Administration costs will cease in PY10 when the only remaining Government outflows are the IDA credit service charge and repayment. - 24 - V. PRODUCTION, DEMAND AND PRICES Incremental Production and Beneficiaries 5.01 The Seed Conditioning Centers will start operating in PY2 and the first sales of commercial seed will be used for PY3 planting. With the facilities and the system in place, commercial seed production will continue to increase up to PY10, reaching about 3,900 tons (Annex 3-1). This seed will cover about 60,000 ha (rice 41,000, maize 15,000, groundnuts 4,000) and benefit about 120,000 farmers. Considering on-farm multiplication (the originally purchased commercial seed could be used for several years before beginning to loose its quality: rice, four years; maize, three years; groundnuts, five years), the seed will be sufficient to plant a total of 230,000 ha (Annex 5-1) until replacement is necessary. Of the 230,000 ha planted with improved seed, about 70X will be in rice, 202 in maize, and about 1O in groundnuts. Incremental yields from improved seed have been conservatively estimated at 20-30Z, based on observed respenses in farmers' fields in three West African countries with similar ecological conditions. This will yield a total of about 43,000 tons of incremental production annually, valued at FG 4.0 billion (US$10 million) in 1988 constant prices from PY14 onwards. Details of seed available to farmers, incremental production and economic value of production are given below, in Annex 5-1 and in Working Paper No. 6. Yields from Improved Seeds and Incremental Production Yields Production at Full Development Non- Improved Seed Area Incremental Improved Seed Production Planted Production Seed Kg/ha Kg/ha (tons) a! ('000 ha) b/ ('000 tons) cl Rice (paddy) Upland 750 1,000 8,480 113 18 Swamp 1,200 1,500 1,600 21 4 Mangrove 1,300 1,600 2,300 31 6 Sub-total 12,380 165 28 Maize 900 1,150 1,080 43 11 Groundnuts 600 800 2.100 21 4 TOTAL 15,560 229 43 a/ Includes commercial seed produced by project, and on-farm multiplication. b/ Corresponds to 15? of national area for rice, 21? for maize and 13X for groundnuts, assuming a seeding rate of 75kg/ha rice, 25kg/ha maize, and 100kg/ha groundnuts. c/ Figures for rice (not paddy). - 25 - Demand 5.02 Improved Seed. The demand for improved seed has been demonstrated through three agricultural development projects which have been selling seed in various years. The PAG, the ORS and the PDRI have sold varying quality levels of "improved" seed (para 2.25) at market prices plus a premium (para 5.10). These three projects are unable to meet the demand, and other development projects have requested them to supply seed. 5.03 Unmet demand is most evident in the PAG area. Farmers there, as in other areas of the country, complain that their seeds are "tired"--i.e., despite new fertile land, the response from varieties is not what it used to be. This is a normal sign of degeneration (genetic erosion and contamination) of the crop variety from improved seed introduced into the country following independence (para 2.22). The PAG introduced one rice variety (LAC 23) which was quite popular and has spread, by various means, even outside the project area. 5.04 The demand for improved seed has also been demonstrated in the survey requested by the identification team and carried out by MDR among farmers, inquiring as to their perceived needs for improved varieties and whether they will be willing to pay for them. The response was very favorable for improved rice varieties, less positiv, for maize and groundnuts, and poor for cassava. For rice, farmers were willing to "pay" two bags of their rice for one of improved seed. The project will build on these preferences with 80X of seed output going to rice. The project's output for rice seed in PYIO, when output from the SCC should reach its peak, will account for about 18? of national rice seed requirements; maize will be 24? and groundnuts 14? (Annexes 2 and 3-1). Thus, due to the high demand for improved seed and project production of only a small portion of national requirements, oversupply of seed should not be a problem. 5.05 Incremental production. Due to the relatively small amount of incremental production generated by the project vis-a-vis national requirements and the present high level of rice imports, demand for project production is not expected to be a problem. When incremental project production reaches its maximum in PY14, it will amount to about 5? of national production of the three crops and will be easily absorbed by the market. This assumption is further detailed in Annex 5-1. 5.06 Marketing. Initially, the commercial seed will be marketed mostly in areas serviced by agricultural development projects (paras 2.14 and 2.25). The improved seed will be an input to be distributed by the established development projects. The National Seeds Project and the agricultural development projects will complement each other, as a greater benefit is obtained from improved seeds when utilized by farmers who adopt other recommended cultural practices. As seed production increases, and in keeping with the attempts to set up a financial and marketing structure which will be privatized, other marketing channels will be utilized including private traders. This will be in line with the Government's efforts at liberalizing the economy (para 2.09), including privatizing input supply and - 26 - distribution. The product will be sold with instructions in local languages, in conventional (60 kg) sacs or small sealed packages of 10 kilos (mini-kits) which will suffice to plant 1/6th of one ha and will be an easy-to-market, certifiable product. Incremental crop production from the project will be marketed by existing private channels. Marketing of seed should not pose any problems (para 5.04). Prices 5.07 Base seed produced by the research stations will be sold to the SCCs for onward sale (within the same year) to the development projects in their regions. These projects in turn will sell the seed to their selected outgrowers as is currently done. The transfer or sale price from the research station will be at cost. PAG costs for the production of base seed range between market prices at harvest and at planting. These variations in market prices are discussed in para 5.10. For the purpose of determining the Government's cash flow, a price 302 above the market price at harvest has been used, similar to PAG costs. 5.08 The project's price policy for production and sale of commercial seed will introduce and balance two principles which will set a viable financial base for future development of the seed subsector: (a) adequate financial incentives will be given to contract outgrowers to encourage production of a quality product and sale of output to the SCCs; and (b) seed will be sold above the market price of the same crop to encourage the use of a valuable commodity and to ensure financial profitability of the operations, aiming at their eventual privatization. It was agreed at negotiations that the Government will ensure, through the NSC and in consultation with IDA and the RCs, an annual review of seed marketing conditions and prices to determine seed prices for publicly owned SCCs, in order to provide incentives to contract outgrowers and to ensure profitability of the SCCs (para 7.01(f)). 5.09 The guidelines for price setting and for achieving the above objectives will be set and monitored by the NSC (para 4.05). Actual prices of purchase from outgrowers and sale of commercial seed to farmers will be set by each SCC within the NSC's guidelines. This will give the SCC the necessary flexibility to set prices, taking into account varying market prices in different regions at different times of the year. 5.10 The system currently in use by rural development projects that sell seed has worked successfully for several years and will meet the principles stated above (para 5.07). It consists of utilizing the actual regional market price as a basis for purchasing the improved seed from the outgrowers and selling the commercial seed to farmers. Outgrowers are paid harvest time market prices plus 202; commercial seed processed in the SCC is then sold at planting time market prices plus 20?. The spread between harvest/planting market prices (Annex 5-2) plus the premium is sufficient to ensure SCCs' profitability (para 4.12). The rural development projects have had no problems in recruiting outgrowers utilizing this method, and they have sold all the seed they had available. This system will also provide the SCCs with the flexibility required to meet market conditions when they are privatized. As has been done to date, commercial seed will be sold for cash. - 27 - VI. PROJECT BENEFITS AND JUSTIFICATION Overall Benefits 6.01 The project will yield institutional benefits by providing the assistance and organization which, acting as a catalyst of ongoing activities, will help to set up a reliable system of improved seed production. The system will improve the effectiveness of existing agricultural development projects which are requesting improved seed to complement their extension messages. The project will also meet the Government's objectives of increasing crop production and incomes of smallholders. Commercial seed produced at full development will cover about 20? of the area planted with rice, maize and groundnuts which will increase productivity of these crops by 20-302. Annual incremental production of seed will be about 43,000 tons of rice, maize and groundnuts, valued at US$10 million (Annex 5-1) in 1987 constant dollars. This will benefit approximately 120,000 farmers. 6.02 The project will require a relatively small financial outlay from the Government as it will depend on research stations, existing agricultural development projects and private farmers to produce the improved seed (paras 3.02, 3.08-3.10 and 4.02-4.09). Additionally, the project SCCs will begin to generate revenues from PY3 onwards, and the Government's cash flow is projected to become positive by PY6 (para 4.13). The system has been set up to be eventually privatized (paras 3.02 and 4.12), which in other countries has proven to be the final step for the production of the best quality seed, including hybrids, as well as for stimulating the diversification of the range of crops. Finally, the project will benefit local staff through institutional support and the training program. Economic Rate of Return 6.03 The project's economic rate of return (ERR) is about 302 (Annex 6-1) and its net present value (NPV), discounted at 10? (the estimated opportunity cost of capital in Guinea), is FG 9,80 million. The without-project benefits have been assumed to remain constant as improved seed will not be available, except in Siguiri and Gueckedou. The benefits from these two centers have been taken into account in determining "market share" and consequent benefits for the project's SCCs. All costs and benefits are in 1987 constant prices. Assumptions underlying the ERR calculations are as follows: (a) Proiect life. Twenty years, including a pre-project preparation year and a four-year investment period. Seed production will reach a maximum in PY10, and crop production in PY14. (b) Project costs. All incremental costs have been included with the exception of taxes, duties or subsidies (considered transfer payments within the economy) which are minimal. Although all project staff, excluding technical assistance, are already Ministry of Rural Development staff, their cost has also been included because the project is new. The incremental farm labor being negligible, no cost has been assumed. Quality control laboratory costs have been held constant - 28 - in the post-project period. Base seed production and SCC costs have been increased proportionally to production. For the SCCs, this includes payment to research stations for the cost of producing basic seed. Project administration has been decreased from PY7 onwards and phased out after PY10. The costs include vehicle and equipment (but not seed processing equipment) replacement. (c) Proiect benefits. Benefits have been assumed to accrue exclusively from incremental rice, maize and groundnuts production. These were conservatively calculated as farmer-to-farmer exchange was excluded. Incremental production has been valued at import parity prices at the farmgate for rice and maize, using IBRD commodity price forecasts (Annex 6-2). Local prices for groundnuts have been used (Annex 5-2), given the relatively small project production for the crop and their local use which is not comparable with the internationally traded commodities (groundnut meal and oil). Sensitivity Analysis 6.04 The sensitivity of the ERR and NPV to changes in costs or benefit streams has been tested and switching values calculated (the percentage change in a stream or streams, other factors constant, that will reduce the ERR to its minimum acceptable value of 10X, or equivalently reduce the NPV at 102 to zero). To reach the project's switching values, total project benefits will have to drop 70Z, or costs increase 2202 (to bring the ERR to the minimum acceptable 10Z). If project benefits were delayed two years, the ERR would still be 23Z. Further sensitivity analysis is presented in Annex 6-1. Risks 6.05 Two possible risks are (a) delays or complications in project implementation due to difficulties of coordinating several institutions involved in the project, and (b) inadequate Government counterpart funding. Delays will be minimized because the project has already started under PPF financing. Coordination among various institutions will be facilitated by the eagerness with which the entire agricultural community awaits improved seeds and by the explicit coordination mechanisms established by the project. The research centers are looking forward to collaborating under the project, which will assist them technically and financially in exploiting available research results and producing base seed. In addition, the ongoing rural development projects need improved seed to supply their farmers. Furthermore, a management unit and a consultative process have been provided to direct project activities. Regarding timely Government counterpart funding, risks have been lowered by reducing the Government's financial contribution to a minimum, by creating a revolving fund in which t.he Government's contribution will be provided in advance, and by ensuring that revenues from the seed sales will be kept in a bank account for use by the project. _ 29 - VII. ASSURANCES AND RECOMMENDATION 7.01 Assurances Obtained at Negotiations (a) Given the Government's intention to privatize the Seed Conditioning Centers (SCCs), Government will undertake its best effort3 to sell them to the private sector upon their completion (para 3.13); (b) The formalities to establish the SCCs will be completed by December 1988 (para 3.13); (c) The Government's portion of incremental funding will be deposited in the local currency Project Account, which will be replenished quarterly and in advance (para 3.28); (d) The Seed Production Unit will (i) create and maintain appropriate records and accounts; (ii) have accounts, year-end statements and statements of expenditures audited by independent auditors; (iii) submit audited accounts and audit report to IDA not later than six months after the end of each fiscal year; (iv) submit annual budgets and work plans to IDA for review and comments prior to the beginning of the fiscal year; (v) submit bi-annual progress reports; and (vi) prepare a project completion report six months after project completion (paras 3.30-3.31); (e) The Government agreed on the retention, by the SCCs, of the proceeds fron. seed sales to ensure adequate functioning without direct or indirect subsidies, and to establish conditions for future privatization (para 4.11); and (f) The Government will ensure, through the National Seed Committee and in consultation with IDA and the Regional Seed Committees, that an annual review of seed marketing and pricing is carried out to determine seed price for publicly owned SCCs, in order to provide incentives to contract outgrowers and to ensure profitability of the SCCs (para 5.08). 7.02 Conditions for Credit Effectiveness (a) Adequate land has been made available to the SCCs (para 3.13); (b) A local currency Project Account has been opered with a deposit by the Government of FG 80 million, equivalent to half of its first year's contribution to the project (para 3.28); (c) Technical specialists (project administrator, agronomist, and mechanic) have been recruited (para 4.04); and - 30 - (d) The National Seed Committee has been established with membership satisfactory to IDA (para 4.05). 7.03 With the above agreements the project is suitable for a credit of US$9.0 million equivalent to the Government of Guinea on standard IDA terms, with 40 years maturity. November 1987 AF1AA REPUBLIC OF 6UINEA NATIONAL SEEDS PROJECT National Production at, Seed Requiresents and Project Seed Production of Rice. Maize and groundnuts --------------------------------------------------------------__-------------__----------------- (1000 Tons) 1985 1997 (Year 10) Maximum Seed Production National Of which Project Production National New I Of Actual Total Averaqe Ha Seed Estioated --------------------------- Total Average Ha Seed Seed Pro)ect National National Consuap- Yield Planted Require- National 7 of Intre- I of Consuop- tield Planted Require- Require- Seed Pro- Require- Production laports thon (tons/ha) ('000) ments Production Total National mental ationalloports tion tt/ha) gJ ('0001 sents ments hi duction sents Rice 330 100 430 cf .441.8 di 750 56.0 460 156 34 23 5 140 600 .51.9 920 70.0 17.3 3.10 18 i, Maize b: 126 0 126 0.9 140 3., 180 f. 50 28 11 b 0 180 1.0 180 4.5 1.5 0.36 24 6roundnuts 50 0 50 .41.6 ei 120 12.0 70 14 20 3 4 0 70 .5i.7 140 14.0 3.1 0.42 14 (Shelled) 2001 (Vear 14) Maximum Crop Production Rice 520 194 37 29 6 160 680 .51.9 1.050 80 20.0 3 10 16 Maize 200 50 25 11 b 0 200 1.0 200 S 1.7 0.36 21 6roundnuts 80 17 21 4 5 0 BO .5.7 160 16 t.2 0.42 I.` (Shelled) a/ Figures from SCETA6RI Republique de 6uinee. Ministere du Developpement Rural, Etude de Restructuration des Services Agricoles et de Schemas Directeurs ReQionaux de Developpement Rural - Synthese' August 1986. bi Estimated rom *Synthese- report, page 20 extrapolation. IBRD figures 1981 to SCETABRI 1985 estimate .271 of 4201. c/ 70-78 kg/person - population: Primary + Total 1985 4.0 15.50 1995 4.7 17.25 Rural population growth = 1.87year. d/ Rice/paddy = 557. Other sources would utilise a ricelpaddy ratio of between 60 and 657. 500-600 tonns paddy = 280-330,000 tons rice. ei Shelled/in Shell. fi 342 increase in production in 12 years I*Synthese* report gage 46). 91 17 cnepounded productivity increase/year. h/ New seed requirements based on replacesent as 4ollows: Rice, every fourth Year; maize, every third vear; groundnuts. every fifth Year. 1i Adding PAB and ORS project seed production, improved rice seed production will cover about 23% of requirements (3.0"5 4 600 + 200 = 39O tons total). AF 1AA August 1987 l I1 REPUBLIC OF GUINEA NATIONAL SEEDS PROJECT Coemercial Seed- Production by Seed Center iCropi~ear al (tons) Project Fhase Post Project Phase Center PY2 1. PY3 . PY4 HyS PY6 :1 PY7 :1 PIB :Pt9 :. PYtO Ground-: Ground-: Ground-, Ground- Ground- Bround- Ground-: Ground- Ground-. RiEe Miaize nuts Rice Maize nuts Rice haize nuts Rice Maize ntuts :Rice Maize nuts Rice Maize nuts :Rite Maize nuts Rice Maize nuts Rice Maize nuts ---- ---- ------- ---- --- - ------ - ---- - --- ---- -- ---- ---- --- --- I- -- - ----- ------ - -- - --- ------- --- ----
Groupe de la Banque mondiale · Staff Appraisal Report
Guinea - National Seeds Project
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