Liberia - Rubber Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 9606 PROJECT COMPLETION REPORT LIBERIA RUBBER DEVELOPMENT PROJECT (LOAN 1544-LBR/CREDIT 786-LBR) MAY 24, 19S1 Agriculture Operations Division Country Department IV Africa Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY Currency Unit - United States Dollars WEIGHTS AND MEASURES 1 acre (ac) - 0.405 hectares (ha) 1 mile = 1.61 kilometers (km) 1 square mile 640 acres - 259 ha 1 metric ton - 0.98 long ton ABBREVIATIONS AETC Agriciltural Extension and Training Center AHT Agrar-und-Hydrotechnik GMBH ACDB Agricultural and Cooperative Development Bank BWI Book Washington Institute CDC Commonwealth Development Corporation CTO Chief Technical Officer GOL Government ot Liberia GDP Gross Domestic Product IDA International Development Association IBRD International Bank for Reconstruction and Development LRPC Liberia Rubber Processing Corporation MA Ministry of Agriculture MLM Ministry of Lands and Mines ODM Overseas Development Ministry PRS Pilot Rubber Scheme PSC Project Steering Committee RAS Rubber Advisory Service RPAL Rubber Planters Association of Liberia SPA Senior Rubber Advisor USAID United States Agency for International Development UL University of Liberia FISCAL YEAR July 1 - June 30 FOR OMCI"L ust otny THE WORLD SANK Washington, D.C. 20433 U.S.A. Oic* of Dktear-Cewal Opeaskans EvauWon May 24, 1991 HEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Liberia Rubber Development Project (Loan 1544-LBR/Credit 786-LBR) Attached, for information, is a copy of a report entitled "Froject Completion Report on Liberia Rubber Development Project (Loan 1544-LBR/Credit 786-LBR)" prepared by the Africa Regional Office. No audit of this proje,t has been made by the Operations Evaluation Department at this time. Attachment This document has a restricted distribution and may be used by recipients only In the performance of their omcial duties. Its contents may not otherwise be disclosed without World Bank authoriation. FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT LIBERIA RUBBER DEVELOPMENT PROJECT (LOAN 1!44-LBR/CREDIT 786-LBR) TABLE OF CONTENTS Pae No. . Preface . . . . . . . . . . . . . . . . . . . . . . . . . i Evaluation Summary .................. iii PART I PROJECT REVIEW FROM BA PERSPECTIVE . . . . . ........ 1 Project Identity . . ........... 1 Background . . . . . . . . . . . . . . . . . 1 Project Objectives and Description . . . . . 2 Project nesign and Organization . . . . . . . 3 Project Implementation . . . . . . . . . . . 4 Project Results . . . . . . . . . . . . . . . 6 Project Sustainability . . . . . . . . . . . 7 Bank Performance . . . .. .. ..... 7 Borrower Performance ............ 8 Consulting Services .. ... ....... 9 Project Documentation and Data . . . . . . . 9 PART II PROJECT REVIEW FROM BORROWER'S PERSPECTIVE . . . . . . . . . . . 10 * See Note Below PART III STATISTICAL INFORMATION . . . . . . . . . . . 11 Related Bank Loans/Credits . . . . . . . . . 11 Project Timetable . . . . . . . . . . . . . . 12 Loan/Credit Disbursements . . . . . . . . . . 12 Project Implementation *... . .. 14 Project Costs and Financing . . . . . . . . . 15 Project Results . . . . . . . . . . . . . . . 16 Status of Covenants . . . . . . . . . . . . . 16 Use of IBRD/IDA Resources . . . . . . . . . . 16 Mission Data .. ... .. ... .. .... 17 MAP IBRD NO. 13114R * NOT Part II was not provided since Government collapsed due to ongoing civil var. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. *-- PROJECT COMPLETION REPORT LIBERIA RUBBER DEVELOPMENT PROJECT (Loan 1544-LBR/Credit 786-LBR) PREFACE 1. This is the Project Completion Report (PCR) for the Rubber Development Project in Liberia, for which Loan 1544-LBR in the amount of US$7.0 million and Credit 786-LBR in the amount of US$6.0 million equivalent were approved on March 30, 1978. The project was co-financed by the Commonwealth Development Corporation (CDC), which provided a loan equivalent to US$7.0 million. The United Kingdom Ministry of Overseas Development (ODA) made a technical assistance grant equivalent to US$1.4 million for eight British rubber experts. The Credit was fully disbursed before its extended Closing Date of December 31, 1985. The Closing Date for the Loan was also extended to December 31, 1985. However, in order to honor withdrawal applications the Loan was kept open until October 7, 1986 when, after the last disbursement, it was closed. An amount of US$1.0 million of the Loan remained undisbursed and was cancelled. Including this amount, and the earlier cancellation of US$3.5 million, total cancellations of the Loan were equivalent to US$4.5 million. 2. The PCR was prepared by the Agricultural Operations Division (AF4AG) in the Western Africa Department of the Africa Regional Office (Preface, Evaluation Summary, Parts I and III). The Borrower was not sent Parts I and III, nor could they provide Part II because the government collapsed as a result of the ongoing civil war. Preparation of this PCR is based on the Staff Appraisal Report; the Credit and the Loan Agreements; supervision reports; correspondence between the Bank and the Borrower; and internal Bank Memoranda.1/ 1/ A Project Completion Mission visited Iberia in June, 1986 to collect data. The Government also carried out its own review of the project. However, most of these materials are not traceable in the Bank's records. - iii - PROJECT COMPLETION REPORT LIBERIA RUBBER DEVELOPMENT PROJECT (LOAN 1544-LBRICREDIT 786-LBR) EVALUATION SUMMARY Introduction 1. Liberia has a dualistic economy. Its agricultural economy coexists with an enclave sector which is export-oriented and produces besides iron ore, rubber and forest products. The enclave sector provides about 70% of export earnings, generates about 25% of GDP and about 151 of all government revenues. Total population is about 1.7 million. About 60% of the population is classified as agricultural households. Soils are generally fertile and the climate is suitable for a variety of field and tree crops. With the decline in demand for iron ore, which was a dominant product for export earnings, government began to make serious efforts to diversify the economy and emphasize development of its export oriented tree crop production. However, with the collapse of the government, the continuing civil war situation is likely to have serious impact on the tree crop sector. 2. Obiectives: The aim of the project was to increase Liberia's export earning from natural rubber and to improve income distribution within the country. As designed originally the project included a program to replant abandoned small rubber farms and rehabilitate mature, but untapped rubber trees. Small and medium sized rubber farmers were to be helped to achieve higher productivity and incomes by providing them with better extension services and credit for farm inputs. The project also aimed at strengthening the institutional capability to plan and carry out further development of Liberia's rubber industry by establishing the Liberian Rubber Development Unit (LRDU) and training local staff. Funds were also provided to enable the Government to carry out a rubber pricing study and a feasibility study for a second stage project. 3. Implementation Experience: Project performance was below expectation throughout. During a review of the project in June 1980, it was found that only 800 acres had been replanted compared to a target for that date of 6,000 acres, and only 2,500 acres had been rehabilitated, against a target of 8,500 acres. The only training provided had been to some field staff, and the building program was a year behind schedule. There were three main reasons for poor performance: (a) inadequate management; (b) insufficient capacity to process rubber; and (c) low producer prices resulting from high transport and handling costs and the low quality of rubber. Farmers' low interest because of inadequate support services for purchase of smallholder rubber, inadequate management and unrealistic tarZete prompted the revision of the project in March 1982. The objectives -iv- 4 remained the same and there was a drastic reduction in the planting/rehabilitation targets. Other significant changes were the addition of a processing component and a rubber collection unit to service the project farmers. Even the revised planting/rehabilitation program was under-fulfilled, and at reappraisal in August 1983, the project was found not to be viable economically .r financially. The agricultural program was then phased out and only the processing component was pursued. When the Rubber Corporation of Liberia (RCL) factory was established after a long delay, it suffered from financial, technical and operational problems. Bank staff relationship with the expatriate project management appeared to undergo stresses and strains, particularly during the later years. 4. Results: The project objectives of increaning rubber production from Liberian-owned small farms and productivity and income of small/medium farmers were not realized. Only about 25% of the original appraisal target of 40,000 acres of planting and 23,500 acres of rehabilitation was achieved. Actual project costs (US$18.1 million) were about 60% of the Appraisal Cost (US$29.6 million). However, the project Unit and the RCL accounts show 100% and 25% cost overruns respectively. The project's economic rate of return (ERR) which was originally estimated at 13%, was re-estimated at 16% at the time of the project revision (1982). At reappraisal in 1983, the ERR was estimated to be 5.5% and the financial rate of return to be 4.1%. The main reasons for the reduction in ERR were the reduction in rubber yields (from 1450 lbs/acre to 1200 lbs/acre and the lengthening of the period to maturity (from 6.75 years to 7.5 years). The resulting overall reductions in yield were not offset by a proportional reduction in real production cost. Due to insufficient data re-estimation of ERR was not done at the time of preparing the PCR. 5. Sustainability: The project, even with the 1982 revisions, was not sustainable. Lack of farmers' interest and inadequate extension, training, marketing and processing facilities led to a situation in 1983 when it was considered imprudent to pursue the project's agricultural program. The farmers were not getting an adequate price for rubber and consequently did not have sufficient incentive to produce and sell their raw rubber. The ERR to incremental planting at the time of reappraisal was estimated at only 5.5%. Liberia had natural comparative advantage in the rubber sub-sector but required a much stronger effort in reaching its objective of putting outgrower rubber on a viable footing. The institutional format that could handle this task needed to be carefully examined together with a different target group (larger farmers) before Liberia could proceed with a follow-on project. 6. Findings and Lessons Learned: (a) A project of this type can not be successful on the basis of agronomic possibilities alone; complex sociological and institutional issues also need to be thought through (para 22). (b) Small farmers need intensive extension and training assistance which impose a burden on any project management; *V. investment of scarce funds and management resources in the early stages of sectoral development on such farmers, who are often scattered over a wide area, may not be fruitful (para 26). (c) Production and output efforts require road and transportation network as well as marketing and processing facilities; in far-flung rural areas, unless these matters are given equal attention, farmers' profitability and consequently incentives are bound to diminish (paras 16 and 18). (d) Timely availability of adequate funds is important for project implementation but equally important is the management's ability to plan and execute a project. Lack o funds can often be a weak management's cover to hide lack of direction and efficiency (para 14). (e) Project mid-term reviews are desirable in some cases. They can be beneficial only if an examination is made of the project's fundamental shortcomings. Adjustments in the targets and project costs can prove to be illusory (para 25). PROJECT COMPLETION REPORT LIBERIA RUBBER DEVELOPMENT PROJECT (Loan 1544-LBR/Credit 786-LBR) PART I PROJECT REVIEW FROM BANK PERSPECTIVE PROJECT TDENTITY Project Name: Rubber Development Project Loan No.: Loan 1544-LBR/Credit 786-LBR RVP Unit: Africa Country: Liberia Sector: Agriculture Subsector: Tree Crops - Smallholder Agriculture Background L. The Development Plan of Liberia attached high priority to agriculture as the corner stone of the Government's diversification strategy. The objective was to diversify and modernize agricultural production, increase productivity, improve associated rural economic activities such as marketing and processing, and provide social and physical infrastructure to promote income distribution and improve the quality of life in the rural as well as urban areas. Agriculture is the second largest productive sector in the economy and provided one-quarter of gross domestic product. About 54.5% of the total population of Liberia work in agriculture. With low average population density, land is not a constraint to agricultural development. The critical constraints are trained manpower and efficient institutions. 2. The Plan earmarked about one-fifth of total investment resources for developm2nt of agriculture. Based on general ecological conditions, factor endowments and market prospects, agriculture had greater potential for efficient diversification of the economy than any other productive sector. It could also provide a continuing source of the country's growth and development to suprlement earnings from iron-ore which was likely co gradually decline. Within this framework, the Government had adopted two basic strategies: development of smallholder agriculture and development of industrial tree crop plantations. 3. A distinctive feature of Liberian agricultu-e is the existence of a dominant rubber industry, accounting for 702 of all agricultural exports and employing one third of the national labor force. The rubber industry is divided into foreign-owned concessions and Liberian-owned rubber farms. Two decades of '_clining rubber prices had led many Liberian planters to abandon and neglect their plantations. As a consequence, only 143,000 acres (38% of the total acres planted) were in production in 1978, and about 502 of the plantations were estimated to become over-aged by 1984. Poor planting material and low management -2- standards were responsible for the low yields -- 150 to 500 lbs./acre compared with over 1000 lbs./acre on the foreign-owned concessions. While Liberian-owned farms accounted for 72% of the total rubber acreage, they produced only 31% of the total output estimated at 83,000 tons. Except for the Liberian Rubber Processing Company (LRPC) which was owned by the Government, all the five companies which purchased rubber from Liberian farmers for processing and exporting vere foreign-owned. Fireitone buying 70% of Liberian-owned farm production, was the largest and effectively set producer prices. 4. The most critical constraint to rapid expansion in the agricultural sector was shortage of trained manpower. Another major constraint was the institutional deficiencies in the delivery of essential Ministry of Agriculture (MOA) was aware of the need to develop an effective structure for servicing smallholders. The Bank supported the MOA's efforts through consultants provided under previous Bank-financed projects. The Government also consulted closely with the Bank regarding the appropriate organization and operating policies for institutional credit for the traditional agricultural sector and established the Agricultural and Cooperative Development Bank (ACDB). Proiect Obiectives and Description (i) Objectives 5. The principal objectives of the project were to increase Liberia's income and export earnings from rubber through an intensive program of replanting of old rubber and rehabilitating of mature untapped rubber. This was to be the first phase of a long-term effort to increase and sustain production from Liberian-owned rubber farms. The project also aimed at improving productivity and the incomes of about 6,300 small and medium size rubber farms (70% of total Liberian holdings) through provision of credit, better extension services and assistance for on-farm processing and marketing. In order to strengthen the Government's capability for the further development of Liberian-owned rubber industry, the project made provisions for establishing a Liberian Rubber Development Unit (LRDU), staff training and technical assistance. (ii) Components 6. The project included the following: (a) creation to rep! 9 the existing Rubber Advisory Services and provide a permanent extension service; (b) provision of financial assistance to farmers for replanting 40,000 acres of old rubber with high-yielding varieties and rehabilitating 23,500 acres of mature untapped rubber; (e) training project headquarter and field staff, managers, overseers, headmen, budders, tappers and farmers in modern rubber production techniques; - 3 - (d) providing marketing assistance to smallholders in on-farm processing and transportation; (e) providing farm planning advice to large farmers and helping them to prepare investment proposals for commercial financing; and (f) provision of funds for hiring consultants to assist the Agricultural and Cooperative Development Bank, conduct a rubber pricing study, prepare a follow-up project, advise LRDU on smallholder marketing and train instructors. Proiect Design and Organization 7. The Project was designed to increase the productivity of Liberian-owned rubber farms by providing credit, extension services and training. Arrangements for collection and purchase of rubber from the farmers at prices profitable to the farmers was recognized by the Bank preparation team to be vital to maintaining farmers' interest in increasing production. The insufficiency of processing capacity available to the stuallholder rubber was also known to the team. Therefore, it should have been quite obvious to the preparation team that there had to be a radical change in the purchasing and processing of rubber, if an equitable return was to be ensured to the small farmers. In this context, designing and financing of a primarily agricultural project aimed at increasing the production of raw materials instead of a manufacturing (processing) project was clearly inadvisable and untimely. The high cost per beneficiary of the project had also been raised by the Bank's senior manageme,t. 8. Since its inception in 1978, the project faced many difficulties in implementation. The Bank, however, continued to focus mainly on the shortfalls in achieving the planting and rehabilitating program. The June 1980 Bank and CDC (Commonwealth Development Corporation) project review mission found that inadequate sanagement and low farmers' interest were the main reasons for the project's poor performanco. The project management failed to provide planting material and organize an effective training program and extension service. Low farmers' interest was caused by insufficient producer prices to cover labor, input and transportation costs. Inadequate processing capacity and delays by the enclave plantation factories in payment to farmers compounded the farmers' difficulties in keeping labor as farmers were unable to pay cash-wages on time. 9. Changes in project design, revision in the agricultural program and modifications in organization were discussed with the Government in 1981-82. Project amendments were approved by the Executive Directors on March 16, 1982. Although the aims of the project remained the same, five significant changes to the original project were made. The -aplant'ng and rehabilitation targets were scaled down from 40,000 acres to 20,UOO acres and from 23,500 acres to 14,000 acres respectively. To serve project farmers and provide adequate processing capacity, a processing component under a new agency -- the Rubber Corporation of Liberia (RCL) with an initial capacity of one ton/hr was added. Other changes were the incorporation of a small land survey and road construction unit into LRDU, and organization of rubber collection service to assist farmers in marketing. The project implementation period was extended by 18 months until June 1985. 10. The Bank along with CDC showed considerable flexibility and realism in making the above changea. However, there were delays in setting up the processing plant, rttbber collection services did not work well, and even the revised planting and the rehabilitation program could not be fulfilled. In September 1983, the project had to be reappraised. It was found to be unviable economically or financially (ERR and FRR both below 6%), due mainly to lower than expected yields, drop in international prices, high mortality of new plantings, and poor field maintenance by the farniers. In light of the reappraisal mission's conclusions, and after discussions with the Government, the Bank decided to continue with the factory rehabilitation program while phasing out the planting program in such a way as to minimize unnecessary losses and damage to the LRDU operations and the project farmers. 11. The Bank begun to realize that the project was inappropriate and wrongly designed. It as recognized that rubber was not attractive to small farmers with limited land. It was introduced as the sole crop. Food crops could only be cultivated by inter-planting during the first 2-3 years; thereafter, farmers had no means of subsistence or resources to bring the rubber crop to maturity at year 8. The Liberian conditions called for a different strategy with an adequately designed system to achieve project objectives. It appeared that larger farmers who had other sources of income should be involved with such development projects, and nucleus estates with satellite block plantations should be included. The Bank also realized that what was needed were facilities to process an internationally accepted grade of rubber that could command a higher price. Farmers would then rehabilitate their rubber areas to enjoy good income. Project Implementation 12. Since the time of appraisal in mid-1977, changes in economic and political climate in Liberia had adversely affected project performance. Equipment, building and transport costs increased substantially and the government-set agricultural wage rose from US$1.50 in 1978 to US$2.00 per day. Despite an increase in rubber prices on the world market between 1975 and 1979, the higher transport and labor costs which the Liberian farmer faced decreased his returns. Processing capacity for Liberian rubber declined significantly and by the end of 1980, the Bank's Review Mission concluded that unless adequate collection and processing facilities could be provided to the farmers in the project, there was no point in continuing with the planting and rehabilitation program. The Government's suspension of land transactions following the April 1980 coup resulted in delays in deeding and this affected project operations in the subsequent years. 13. From the commencement of the Project in 1978, project performance was routinely poor. Successive Bank superviion missions reported on project problems and recommended actions to alleviate them, including * 6 " adversely affected the execution of a project which already had a host of other problems. ProJect Results 17. The project's main objectives of doubling rubber production from Liberian-owned farms and bringing about a substantial increase in productivity and the income of small and medium farmers were not realized. In July 1986, a Bank project completion mission found that only about 252 of planting and 242 of replanting of the appraisal targets were achieved. Only 402 of the rehabilitated area was being tapped at the time, bringing down the actual rehabilitated area to only 102 of the appraisal target. Farmers' interest could not be raised and sustained due to a number of complex reasons - high transportation and collection costs, inadequate processing capacity and above all the farmgate price was insufficient to provide a strong incentive. 18. Following a major review of the project in June 1980, changes were formally introduced in 1982 but the project objectives remained the same. The changes were in respect of the agricultural targets (which were lowered) and processing capacity (expansion). Certain institutional changes were also introduced through the establishment of the Rubber Corporation of Liberia (RCL) which was to be in charge of collection and processing of project farmers' rubber output. As a result of a re .ppraisal in 1983, the agricultural component, which was faltering, was agreed to be gradually abandoned. Meanwhile, it was considered expedient to proceed with the rehabilitation of an existing public sector processing plant. 19. The particular socioeconomic situation of the smallholdere in Liberia (e.g. low economic capacity, and necessity for intensive extension and training, and price incentive) explains the project's poor performance. In addition, the poor selection of participants, poor farm maintenance and high proportion of absentees among project farmers and a very low credit recovery rate of less than 62 among rehabilitation farmers contributed to the project's shortcomings. The extensive area covered by the project required higher input of lower base contact personnel which was not provided, and resulted in higher transportation cost and poor supervision. The inadequate project management compounded these difficulties. 20. Pricing of rubber and receipt by the farmers of a fair price were major issues identified during project appraisal. Farmgate price was expected to be increased as economies were realized in the marketing and processing stages between the farmgate end international markets. A pricing study financed by the project was completed through consultants but the report was not acted upon by the Government which was not satisfied with it. At the time of the project's revision it was agreed that a pricing formula based on international prices and updated production costs of farmers, and transport and processing costs would be adopted by the Government within six months of the start-up of the rehabilitated processing plant. Faragate price was to be reviewed and adjusted regularly. Various methodologies were discussed between the Government and the Bank, but the matter was not finalized until the - 5 - the removal of the first project manager in June 1979 and the scaling-down of field targets. Despite increase in the factory-gate price of rubber in early years, the project continued to experience difficulty in attracting participants. The non-achievement of targets were due to managerial problems within LRDU and problems in smallholder marketing, processing and rubber pricing resulting in low farmer returns and a lack of farmer response. Other problems such as poor farm management and knowledge of modern rubber production techniques and seasonal and regional shortfalls in labor supply for tapping also affected farmer response. The latter (i.e. labcr shortage) was clearly identified as a risk by the Bank's appraisal mission. Loan recovery, particularly from the rehabilitation farmers was unsatisfactory. By end-1983, all 211 such farmers had defaulted. This was to some extent due to a steep fall it rubber prices. 14. The supervision missions during 1983-85 had mentioned the lack of funding, particularly for LRDU, as a major problem requiring commercial bank overdraft facility. This was attributed to the Government's desperate financial situation and the Bank and CDC suspension of disbursement from time to time. However, the Bank mission for collection of project implementation data in July 1986 concluded that the financial problems faced by the project during its implementation was not a serious constraint in project development activities; donors' contributions, along with overdraft facility granted by ACDB which was used to bridge gaps caused by delays in releasing funds, met all project financial requirements. 15. The actual project cost estimated in July 1986 was US$18.1 million which was about 60% of the appraisal estimate (US$29.6 million). However, RCL 'had cost overrun of 25% compared to its estimated cost; LRDU had cost overrun of 100% with only 25% achievement of its revised planting/replanting target. The original appraisal estimate of an economic rate of return of 13% was not achieved. At the time of revision of the project in 1982, the rate of return was optimistically estimated to be 16% on the expectation of higher efficiency of RCL and higher rubber prices. This, however, could not be achieved in the circumstances that the revised project found itself. In 1983, as pointed out earlier under Evaluation Summary (para 3), the economic rate of return to incremental planting was estimated at about 5.5%. 16. The project management was inadequate. The high turn-over rate of personnel in top management had its toll on project productivity and performance. During the implementation period (1978-1985), three project managers were appointed and about 12 expatriates worked in the project for an average of 2 1/2 years. Some of them were found unsuitable for the tasks and as a result, the project failed to effectively provide the materials, extension services and training. The project management did not appreciate the expertise of the supervision mission staff, nor the quality of their advice. While both project management and Bank staff were in agreement that rubber made good ecological and economic sense in Liberia, their views on the appropriate development strategy and the sequence of required actions differed considerably. Also, their relationship was often strained. This - 7 - completion of the project. Prices meanwhile were being determined by market forces, as in the past. Proect Sustainability 21. The project as originally approved was not sustainable due to lack of farmers' interest, and marketing and processing shortcomings. The revised project was an improvement in the sense of a more realistic target of planting and rehabilitation areas, and the recognition of processing inadequacy through provision of a processing plant. However, at the time of reappraisal in 1983, it was found that pursuing the agricultural program was not prudent due to the very low rate of economic return to incremental planting. During the subsequent years, even the scaled-down agricultural targets were not reached and the component was gradually abandoned. Only the rehabilitation of the processing facility was actively pursued towards the end of the project. 22. The sustainability issue for this project involves the fundamental question faced during implementation--whether in the Liberian socio- economic situation for smallholders it was possible to increase the rubber yield through a high-input high-output approach. The smallholders could theoretically reach a higher yield than they achieved under the project, but that would have required a more favorable financial condition for the farmers, better farm management, higher prices received by them, and a much better management of input supply and extension and training efforts. These conditions were not attainable in Liberia at the time and even with all the good intentions on every side, the project as conceived was not viable and could not be sustained. 23. Perhaps a different strategy was needed for the subsector -- that of working with the larger farmers who had greater financial strength and crop management skills. Advisability of utilizing available land for nucleus estate and block plantations could also have been considered. This, in conjunction with the development of access roads, collection systems, effective training and adequate processing capacity could have been considered for future development. In fact, the Bank's thinking was moving in that direction when, in conjunction with the Government, terms of reference were drawn up and proposals sought from consultants to prepare a possible follow-up project for the rubber sub- sector. However, because of the suspension of Bank operations in Liberia on debt service grounds, the matter could not be further pursued. Bank Performance 24. The most positive element in the Bank's performance on this project was its flexibility in dealing wth the problems as they surfaced. This was amply demonstrated by its readiness to undertake a review of the project contents early in the project execution period and an agonizing reappraisal of the project towards the end. The Bank openly acknowledged the project's shortcomings, and by closely working with CDC and the Government, it successively modified the project. After the reappraisal, the Bank was realistic enough to be ready to - 8 - abandon the project save the one element (processing capacity) V.Ich still made economic and practical sense. The Bank's pragmatism helped in avoiding further misdirected efforts and minimizing financial and investment losses (project expenditures in the end were well below appraisal estimates). 25. The main weakness of the Bank was that it vent too quickly into too big a program. It did not fully appreciate the situation of the smallholder rubber farmer and their low yielding old rubber trees on which the project concentrateO and the shortcomings of the marketing and processing capacity in r - f the smallholder output. The pricing issue was recognized from the ou set and the Bank required that a pricing study be completed and acted upon. The Bank was, however, unable to effectively deal with it, complex as it was with the transportation costs, price setting by Firestone (largest concessionaire) and the international rubber price movements. The quality aspect of rubber in price determination was not fully taken into account by the Bank at appraisal and the output/yield increase estimates were out of line with the Liberian reality. Consequently, the realization that probably the project design was inappropriate and untimely did not come to the Bank staff until the evaluation of the reappraisal mission's findings (close to the project's originally scheduled completion time). It was clear that during discussion on amending the project in 1980-82, the Bank either did not appreciate that the project design was flawed or was not ready to accept it at that stage. It did recognize the need for a fundamental review of the rubber sub-sector and a sector review as subsequently undertaken by the Bank in September 1984. On hindsight, it may be said that a sector review should have preceded launching of the project. The Bank naturally relied on the Malaysian experience and staff were sent there for training. These could not, however, mitigate the conceptual and design deficiencies in the project arising from the fundamental differences in the Malaysian and Liberian situations, particularly in respect of the smallholder farmers. 26. The lesson that the Bank can draw from the project experience is that preconceived notions of agricultural development strategies and priorities, particularly when it involves the uneducated poor traditional rural sector, should be very critically examined at the time of project preparation. It would be prudent to consider more cost- effective investments in extension, demonstration and training-intensive ways of assisting the small farmer. Also there are stages of development in every sub-sector. It is essential to resolve credit, transportation, marketing and processing issues while planning an increase in agricultural production. A project design, which may be appropriate at one time, can be premature at a different or earlier time. This is particularly so where the private sector (as in Liberia) is incapable, or slow in its response to meet the deficiencies in the market. Borrower Performance 27. The Borrower had show commitment at the outset by completing start-up actions on time e.g. acquiring of land for nursery and project - 9 - headquarters and establishing of the Project Steering Committee before the negotiations. It also showed sufficient flexibility in dealing with the project issues. For example, when it came to dismissing the first Project Manager due to his ineffectiveness, it was quick to do so; when it came to shuffling project staff to more appropriate positions matching their expertise, the Borrower acted wisely. The Project Steering Committee functioned well at an appropriate level of representation. However, the Borrower's handling of the important pricing study was dilatory and when it decided not to follow the recommendations of the expatriate consultants, it delayed agreement on alternative ways of producer price determination. Project staff performance was generally satisfactory but there were problems at the lower levels mainly because of lack of discipline and agronomic skills. 28. The funding of the project was often inadequate, caused by the Government's own financial difficulties. But remedial measures recommended by the supervision missions were acted upon, e.g. arranging through the ACDB bridging funds (overdraft facilities). In any event, either due to slow project implementation and/or inadequate management, iii the end the funding issue was not considered to have been the major constraint. The Borrower was slow in arranging the rehabilitation of the processing plant which was a critical matter. It did set up the RCL and through it the rubber collection service which was functioning satisfactorily. The last Bank mission is 1986, however, found that after a year and a half of the RCL factory coming on stream and eight months since management was taken over by Liberian staff, RCL's financial, technical and operational situation was deteriorating. Factory maintenance was inadequate causing operational problems and reducing productivity. Lack of spare parts and poor maintenance also caused near collapse of the rubber collection system. If the RCL factory collection system was not introduced as an alternative to the foreign concessionaires' facilities, one would have ventured to suggest that perhaps these RCL activities could have been given to the private sector. However, in the Liberian situation, this might not have been a feasible alternative particularly if one looked for Liberian entrepreneurs. Consulting Services 29. Project consultants provided valuable assistance to the Project Management in project implementation including training of local staff. A good relationship existed between the consultants and the Project Management and the Borrower. Project Documentation and Data 30. The documentation for the project was adequate. The Loan and Credit Agreements were quite adequate for achieving project objectives. The appraisal report provided a useful framework for review of project implementation. - 10 - PART II - PROJECT REVIEW FROM BORROWER' S PERSPECTIVE Part II was not provided since Government collapsed due to ongoing civil war. - 11 - n=OJCT COIMT1ON REPORT LIBRIA RUBBER DEVELOPMENT PROJECT (Loan 1544-LBR/Credit 786-LBR) PART III STATISTICAL INFORMATION 1. Related Bank/IDA Loans/Credits Year of Loan/Credit Title PKrpose Anroval Status A. Cr. 306-LBR To assist the Government to 1972 CaWleted. Liberia Agricultural determine means of Development & Tech. improving the Liberian- Assistance Project owned rubber industry in the context of implementing its plans for agricultural development. - 12 - 2. Project Timetable Date Date Planned Revised Actual Identification ) Preparation ) 9/76 9/76 Appraisal 5/77 5/77 Credit/Loan Negotation 2/78 2/78 Board Approval 3/78 3/78 Credit/Loan Signature 4/78 4/78 Credit/Loan Effectiveness 10/78 10/78 Completion 12/83 6/85 Credit Closing 6/84 12/85 12/85 Loan Closing 6/84 12/85 10/86 This project was identified by GOL and prepared by consultants, Agrar-UND- Hydrotechnic (AHT), financed under Liberia Agricultural Development and Technical Assistance Project (Credit 306-LBR). The Pilot Rubber Scheme (PRS) also financed under Credit 306-LBR, has provided useful organizational, financial and technical lessons beneficial to the project. The project was revised in March 1982 and reappraised in September 1983. 3. Loan/Credit Disbursements Cumulative Estimated and Actual Disbursementg (USS'000) 2 Actuall FY Estimate Actual Estimate 79 2300 93 4 80 5800 574 10 81 9400 1173 12 82 12400 2153 17 83 13000 2830 22 84 -- 4415 34 85 -- 6106 47 86 -- 8431 65 87 -- 8500 65 Date of Final Disbursement: October 7, 1986. Comments: No follow-on Project. Disbursement data for cofinanciers not available. LIBERIA RUBBER DEVELOPMENT PROJECT Estimated and Actual Disbursements 13 - 12 - 11 10- C9 2 7 o - 6 5- O4 - 3 2 1 79 80 81 82 83 84 85 86 87 PERIOD (FY) 0 Actual + Appraisal Estimate - 14 - 4. Protect IMmemtatioUS Indigatorst Appraisal Revised AI Z Actual 2 Actual Estimate Bmtimate Actual Anraisal Revised -------------- w----- acres---------- Replanting 40,000 20,000 9,615 24 48 Rehabilitation 23,500 14,000 5,640 24 40 (2,300) (10) (16) Note figures ( ) indicate area of trees actually tapped. A/ Estimates of RaplatIng and Rehabilitation were scaled down dating 1982 supervision mission, recognizing the factors affecting project Iaplementation. - 15 - 5. Project Costs and Financina A. Proiect Costs 1983 Appraisal 1982 Revised Reappraisal 2 Actual 2 Actual % Actual Estimate Program Eat. Estimate Actual Appraisal Revised Reappraisal ----------------- US$ million ---------------- TOTAL 2_. 28.3 22.2 18.1 60 64 82 Building, Equipment & Vehicles 4.5 2.8 2.6 Salaries & General Services 7.6 12.3 10.0 Training & Studies 2.8 0.4 0.3 NA Replanting 14.2 8.2 5.0 Rehabilitation 0.5 1.4 1.2 Factory Rehabilitation -- 3.2 3.1 B. Proiect Financing Planned Ln./Cr. Revised at Agreement Revised Reappraisal Final -------------- US$ million -------------- Bank/IDA 13.0 442 13.0 46% 9.3 42% 8.5 472 CDC 1.0 232 7.0 252 5.5 25% 3.5 192 ODA 1.4 52 1.4 52 A/ A/ Govt. 8.2 282 6.9 24% 7.4 33% 6.1 34% TOTAL 29.6 100 28.3 100 22.2 100 18.1 100 a/ ODA Provided technical assistance but actual figures not available. 16 - 6. Project Results It is over four years since the project was completed. Data for assessing direct benefits axi evaluating economic and financial impact are not available. 7. Status of Covenants: N.A. 8. Use of Bank/IDA Resources A. Staff Inputs (Staff Weeks): EY Preappraisal Appraisal Negotiation Supervision Total 75 2.0 -- -- -- 2.0 76 -- -- - -- -- 77 8.6 33.4 -- -- 42.0 78 -- 54.2 28.4 4.3 86.9 79 -- -- -- 11.9 11.9 80 -- -- -- 19.3 19.3 81 -- -- -- 30.1 30.1 82 -- -- -- 24.8 24.8 83 -- -- -- 11.6 11.6 84 -- -- -- 19.7 19.7 85 -- -- -- 9.2 9.2 86 -- -- -- 3.5 3.5 87 -- -- -- 11.2 11.2 TOTAL 10.6 87.6 28.4 145.6 272.2 17 - B. MISSION DATA: Month/ No. of Days in Specializatlon Performance Rating Types of Year Persons Field Revres.oned 1t Status 213 Etq" m- Prhse Identification/ Preparation 3/75 3 3 5/75 1 2 f -- 9/76 1 2 -- -- 2/77 1 4 c -- -- -- Appraisal 5-6/77 4 28 c,e,o -- -- Supervision 1 5/78 1 3 c -- 2 10-11/78 1 5 e 1 -- -- 3 5/79 2 4 c,f 2 2 M 4 7/79 1 5 c 2 2 M 5 11/79 2 6 c,f 2 1 T,F 6 4/80 4 14 e,f,o 2 1 T,F 7 6/80 5 21 e,f,o 2 2 T,F 8 9/80 3 6 e,f,o 3 1 M,T,0 9 4/81 1 7 c 3 1 T,F,O 10 5/81 5 3 e,f,c,g,o 3 1 ,,F,0 11 11/81 4 2 e,g 3 1 ;.F,0 12 3/82 2 9 c,e 3 1 T,7,0 13 9/82 1 9 c 3 1 T,F,O 14 2/83 2 4 c 3 1 T,O 15 9/83 3 10 c,f,e 5/ 3 3 T,M,0 16 1-2/84 1 1 a 3 3 T,M,O 17 2/84 2 8 c,f 3 3 T,M,F,0 18 9/84 2 6 c,f 3 2 M,F,0 19 2/85 1 1 c 3 2 M,F,O 20 7-8/85 1 3 f 3 3 M,F,O 21 4/86 1 4 f 3 3 M,F,O 22 7/86 2 10 f,g 3 3 M,F,O 1/ a = Division Chief; c a Agriculturalist; e = Economist; f = Financial Analyst; g - Operations Assistant; o - Other. 2/ 1 - No significant problem; 2 - Moderate problems; 3 - Major problems. 2/ 1 = Improving; 2 - Stationary; 3 - Deteriorating. 4/ M - Managerial; F - Financial; T - Technical; 0 = Other. 1/ Agriculturist from CDC and the Economist from ODA. IBRD 13114 Til'l rP -i beln»p LIBERIA l NRUBBER DEVELOPMENT PROJECT - .ao nd s o r;uwn . n. Kølobtib r6oopOlibø r N M TeIenNG A F R l C A & h •4lp r øø m ..p,' . (h no Rubber Belt i r1 .1' rh i. Wølld a-A ~n imø LIBERIA ni.ln .,so c"w"i. Pilot Rubbei Scheme Folimo.t 0 o, Concessions and Robber ind~waonn., dCincc' Prixesing Comoporns PROJECTs G U l N E A L O FoArzor Protect Apo Roundaiy / [» Propos,d N,sed Ste Zolowoc( Gog Pooseduoi g (red 5, E Proosed Hedq C O Ui N T YPip%dB L EON E 'SANiU ) MANO R,V£R G R A N D Poved Roads Bendato Beh,~ - --- Roods under Co sr,o n N t M B A Internalional A( ponm OUN T LPC4 A,elds ond A.,,,,s COUN TY alci''lyøa COMPANY Motor Poris 700 Kog Bplv&B ON G 4G csw e,Ports Poehun yongoh SG,bbu,g 'C O U N T Y+- Roilrocds møcco -Koeru Q 0NTSER ADO $cno T201t0 ® ^paCity SCUcounty cpl Kle ake ~,C]SALALA RBE ls ROSERTSPORT m F R,vers and CreeU Gboigbo C 0 T y --- County Boundores C Nrernooon l oundories fIrewe'vie <p slep'e MONROVIA G R A N D B A S A MRSORCom,pound No 2 Ggople RoberIsIeid w marsbo,H okub C O U N T YDRVuR ~600 6'00' G R A N D G ,E D EH t.A C., BUCHANAN L Kabl,c C C OU NT Y RwrCess I NOE ;C 0 U N T joke" AfRICAN FRU)T Q .111'COMPANY -5 w GREENVItLE 0 - Okpo.~me 5°o' MARYL AND 4 COUNTY t. se. . ..s ,s a,.e'»tese. . . .. .» *. 4! 0 20 40 60 s 4tou~~~KLC ETIERS r i ifr es lb 7''t*. r., n *0 to 20 30 F R - Gala.e MItLES F'ish Q,- l'00' 10, 00' 9° 00' 9° 00 MAY 1990