India - Agricultural Development Project - Tamil Nadu

Document of The World Bank FOR OFFICIAL USE ONLY A4' &BDO/A/ -aZ / 3 - IA/ Report No. 9080-IN STAFF APPRAISAL REPORT INDIA AGRICULTURAL DEVELOPMENT PROJECT - TAMIL NADU JANUARY 31, 1991 Agricultural Operations Division Country Department IV Asia 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 World Bank authorization.  INDIA AGRICULTURAL DEVELOPMENT PROJECT - TAMIL NADU CURRENCY AND EQUIVALENT UNITS CURRENCY EQUIVALENTS US$ 1 Rupees 17.5 FISCAL YEAR GOI, States = April 1 to March 31 WEIGHTS AND MEASURES The metric system is used throughout the Report. ABBREVIATIONS AND ACRONYMS AI - Artificial Insemination APC - Agriculture Production Commissioner DAH - Directorate of Animal Husbandry DHRW - Department of Highway and Rural Works DOA - Directorate of Agriculture DOF - Department of Forestry DOH - Department of Horticulture DOS - Department of Oilseeds DRD - Department of Rural Development DEAR - Department of Evaluation and Applied Research GO - Government Order GOI - Government of India GOTN - Government of Tamil Nadu ICB - International Competitive Bidding LCB - Local Competitive Bidding MTR - Mid-Term Review NGO - Non-Governmental Organization PCC - Project Coordination Committee PCR - Project Completion Report PPD - Policy and Planning Division RR - Rural Roads RWS - Rural Water Supply SCF - Standard Conversion Factor SLTI - State Level Training Institute SIDA - Swedish International Development Agency SOE - Statement of Expenditures SPC - State Planning Commission TANWA - Tamil Nadu Women in Agriculture TCMPF - Tamil Nadu Cooperative Milk Producers Federation Limited TNAU - Tamil Nadu Agricultural University TNWSDB - Tamil Nadu Water Supply and Drainage Board WPCC - Watershed Production Coordination Cell  FOR OFFICIAL USE ONLY INDIA AGRICULTURAL DEVELOPMENT PROJECT - TAMIL NADU Table of Contents I. LOAN/CREDIT AND PROJECT SUMMARY .............................. 1 II. THE AGRICULTURE SECTOR .................................... 4 Agriculture in the National Economy ......................... 4 Agriculture in Tamil Nadu ................................. 4 Experience with Past Bank Lending ........................... 7 III. THE PROJECT ............................................ . 8 Rationale for Bank Involvement and Origin ................... . 8 Project Objectives; Description ... ............... 8 Project Area ........................................ . 9 Detailed Features .. 9 Agriculture Planning ................................ 9 Agriculture Extension .........................., 10 Seed Production ............... ..................... 12 Watershed Development ............. .................. 12 Livestock Development ............. .................. 14 Forestry Development ............. ................... 16 Rural Roads ....................................... 17 Rura' Water Supply .................................. 17 Support to Women in Agric. and NGO Participation . . 18 Technical Assistance/Studies ............ .................. 18 Project Costs and Financing Plan ........... ................ 19 Procurement ............................................ 21 Disbursements .......................................... 23 Retroactive Financing and Special Account ....... .. ........... 23 Accounts and Audits ...................................... 23 Project Organization and Implementation ........ .............. 24 Institutional Arrangements ........... ................ 24 Project Implementation ............ .................. 24 Reporting Requirements ............ .................. 25 Benefits and Justification ............. ................... 25 Project Benefits ............... .................... 25 Economic Analysis .............. .................... 26 Cost Recovery ...................................... 27 Impact on Women ............... ..................... 27 Environmental Impact ............. ................... 27 Project Risks .......................................... 27 IV. AGREEMENTS AND RECOMMENDATION ............................... 28 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.  List of Annexes Annex 1 India-Background Description Annex 2 Tamil Nadu Table 1 Climatic Data Table 2 Land Use/Tenure Table 3 Areas and Yields of Major Crops Table 4 Production of Food Grains Annex 3 Tamil Nadu-Background Description Annex 4 Strengthening Planning at SPC Annec 5 Strengthening Coordination and Monitoring at APC Annex 6 Incremental Staffing and Extension Training Annex 7 Methodology for Calculating Costs of Seeds Annex 8 Watershed Treatments Annex 9 Watershed Organization and Management Annex 10 Watershed Framework for Work Plans Annex 11 Watershed Consultative Planning Annex 12 Terms of Reference - AI Conception Rate Study Annex 13 Livestock Experts - Terms of Reference Annex 14 Methodology for Calculating Semen Costs Annex 15 Forage Development Strategy Annex 16 Forestry Treatments Annex 17 Forestry Incremental Staff Annex 18 Terms of Reference Roads Impact Study Annex 19 Rural Water Supply Incremental Staff Annex 20 Project Costs Annex 21 Schedule of Disbursements Annex 22 Key Staff to be Deployed Before Effectiveness Annex 23 Main Elements of the MTR Annex 24 Economic Analyses - Assumptions Annex 25 Documents Available in the Project File MAP IBRD No. 22663 Agricultural development Project-Tamil Nadu This report is based on the findings of a Bank appraisal mission, which visited India in June/July, 1990. The mission consisted of Messrs./Mmes. H. G. Nasr (Task Manager), A. Venkataraman, T. Estoque, M. Fischel, C. Antholt, N. Jones (P/T), J. Alexander (P/T), C. Nawathe (P/T), M. Mitra (P/T), (Bank), L. Bell (consultant), and G. Smith (consultant). The report has been endorsed by Mr. H. Vergin (Director) and Mr. J. Wijnand (Division Chief). Assistance was also provided by peer reviewers Messrs. H. Eisa, C. Antholt, N. Jones and C. de Haan.  INDIA AGRICULTURAL DEVELOPMHNT PROJECT - TAMIL NADU 1. LOAN/CREDIT AND PROJECT SUMMARY Borrower: India, Acting by its President. Ezecuting Agency: The State of Tamil Nadu. Amount: IBRD Loan US$20.0 million equivalent IDA Credit SDR 64.1 million (US$92.8 million equivalent) Terms: IBRD: 20 years, including 5 year grace period at the Bank's variable interest rates. IDA: Standard with 35 years maturity. On-Lending Terms: Government of India would make available the proceeds of the Loan and the Credit to the State of Tamil Nadu under standard arrangement for developmental assistance to the States of India. GOI would assume the foreign exchange risk. Project Description: The project in its broad agricultural development approach would be the first of its kind in India focussing on Tamil Nadu, one of the more progressive states, and would serve as a model for similar projects in other states. The project's objectives are to: (a) improve the capability of the Government of Tamil Nadu to analyze development constraints and establish priorities; (b) further develop the institutions for rendering more cost-effective service to farmers; and (c) support selected priority state investment programs in agricultural and rural development identified in the state agricultural perspective plan. To achieve these objectives, the seven year project would comprise the following components: (a) agriculture planning; (b) agricultural extension; (c) seed production; (d) integrated watershed development; (e) livestock development; (f) forestry development; (g) rural road infrastructure; and (h) rural water supply. The project would support the participation of Non-Government Organizations in project implementation. Benefits and Risks: The main project benefits are long-term and broad in nature, coming mainly from broad-basing and improving the quality of the extension service, strengthening the sector policy formulation and planning institutions, improving effective coordination among government departments, protecting the environment, and improving the quality of rural life. Production increases directly attributable to specific components would be annually about 1.0 million mt of milk, 45,000 mt of food, 140,000 mt of fuelwood and 61,000 cubic meters of poles and timber. The main project risk is the timely and adequate implementation of the broad- basing of the extension service and of the strengthening of the planning process. Govermnaent orders establishing the administrative set-up have  -2- been issued, and .key staff would be deployed before effectiveness. However, because of the considerable adjustments required on the part of the various departments involved, delays in adequate implementation may take place. Thi3 will be closely monitored during project implementation. Other risks are: (a) the timely change of seed/semen pricing policies and the phasing out of seed/pesticide trading to ensure that seed subsidies and in ut trading are not hampering private sector involvement; (b) the timely implementation of the animal nutrition and forage development program; and (c) the long-term adoption and sustainability of the watershed and forestry treatments including cost/benefit sharing. These are addressed respectively by: (a) the introduction of adequate costing procedures, the elimination of state subsidy through phased introduction of full recovery of state's cost of seed/semen production/distribution, and the GOTN's aareement to phase out of pesticide and seed trading; (b) by supporting a larger role to DOA in forage development and strengthening the relationship between DAH and DOA; and (c) by introducing consultative planning and community participation including substantial involvement of Non-Government Organizations. Further, the MTR will allow for early identification of implementation problems and for adopting corrective measures. Estimated Project Costs1: Component Local Feign TotaI