Peru - Agricultural Research and Extension Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 10630 PROJECT COMPLETION REPORT PERU AGRICULTURAL RESEARCH AND EXTENSION PROJECT (LOAN 2150-PE) MAY 15, 1992 Agricultural Operations Division Country Department I Latin America and the Caribbean Regional Office This document has a restricted distribution and mav be used by recipients oniv in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS US$1 at Appraisal (September, 1981) - 410 Peruvian Soles (SI.) SI. 1,000 - US$2.44 S/. 1,)00 as of January 1, 1986 - I Inti (I/.) US$1 at Completion (Suspension, May 1987) - I/. 75 I/. 1,000 - US$13.33 WEIGHTS AND MEASURES Metric System ABB2EVIATIoNS BAP Peruvian Agricultural Bank CDR Rural Development Centers CGIAR Consultative Group for International Agricultural Research GOP Government of Peru CIPA Agricultural and Livestock Research and Extension Centers IDB Interamerican Development Bank INIPA National Institute for Agricultural Research and Extension HAG Ministry of Agriculture MEF Ministry of Economy and Finance M&E Monitoring and Evaluation NCSU North Carolina State University REE Research, Education and Extension System R&E Research and Extension SAP Special Action Program SENE National Extension Service T&V Training and Visit USAID United States Agency for International Development  THE WORLD BANK FOR OMCIL USE ONLY Washington, D.C. 20433 U.S.A. ONice of DirectotrGenfera Opetatmns Evaluati(m May .5, 1992 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Peru Agricultural Research and Extension Proiect (Loan 2150-PE) Attached, for information, is a copy of a report entitled "Project Completion Report on Peru - Agricultural Re3earch and Extension Project (Loan 2150-PE)" prepared by the Latin America and the Caribbean Regional Office with Part II of the report contributed by the Borrowe:. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment 2 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.  FOR OFMICIAL USE ONLY PROJECT COMPLETION REPORT PFRU AGRICULTURAL RESEARCH AND EXTENSION PROJECT (LOAN 2150-PE) TABLE OF CONTENTS Pate No. Preface ...... .. . * .................... ...................... i Evaluation Summary ....... .. ....... . , , .......... iii PART I: PROJECT REVIEW FROM BANK'S PERSPECT:VE Proj ect Identity ........... .......................................... I Bacgoud............................... 1 Project Objectives and Descriptione.......... 2 Project Design and Organization .......... ................ . 4 Project Implementation*...* ...... ... ... ................... 7 Project Results ............. . .......... ... 15 Project Sustainabilitya... .i ... . .. ......... ... 16 Bank Performance ........... ... .......... ...................... 16 Borrower Performance ................ . ...... 17 Project Rel.otionship ...... o. ..... ... ..... ............ 18 Consulting Services .ns..... .. ... .*. . ........... 18 Project Documentation and Da a.. 18 PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE .. ......... 19 PART III: SUPPLEMENTARY STATISTICAL INFORMATION Table 1: Related Bank Loans ...................... .... 24 Table 2: Project Timetable .............................. 25 Table 3: Loan Disbursement. ... . ............ .. ......... .... 25 Table 4: Project Implementation ...........0 ....................... 26 Table 5: Project Cost and Financing ... ......................... 27 A. Project Costs .......... . ........ ................. .*. 27 B. Project Financing .. .,*#*.* ..... ................. ... 27 Table 6: Project Results .............................. ........... ... 28 A. Direct Benefits ................................. . .. .. 28 B. Economic Impact ........................................ 28 Ct Studies .............................................. 29 Table 7: Status of Covenants .............. ................... 30 Table 8: Use of Bank Resources.*.* ............................ . 32 A. Staff Inputs ............................................ ......... 32 B. Missions ........................ ....................... 32 Map No: IBRD- 16012R 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.  PROJECT COMPLETION REPORT PERU AGRICULTURAL RESEARCH AND EXTENSbON PROJECT (LOAN 2150-PE) PREFACE This is the Project Completion Report (PCR) for the Agricultural Research and Extension Project in Peru for which Loan 2150-PE in the amount of US$40.6 million was approved by the Board of Directors on May 20, 1982. Disbursements (on all Bank projects in Peru) were suspended by the Bank on May 5, 1987 for non-payment of arrears. The Closing Date of the loan (March 31, 1988) was not extended, and an undisbuirsed balance of US$21.3 million was cancelled on December 11, 1989. Parts I and III were prepared by the Agricultural Division of Country Department I of the Latin America and the Caribbean Regional Office. They are based on the Staff Appraisal Report, the Loan Agreement, supervision reports, studies, internal Bank memoranda, correspondence and interviews, as well as a Completion Report prepared by the Borrower. Part II represent. the Conclusions of the Borrower's Completion Report. The complete Spanish original is held in LAC files. The report makes a commendable effort to critically evaluate the project.  - iii - PROJECT COMPLETION REPORT PERU AGRICULTURAL RESEARCH AND EXTENSION PROJECT (LOAN 2150-PE' EVALUATION SUMMARY Background and Objectives 1. The performance of the agricultural sector in Peru deterioratea markedly in the 1970s due to extensive government intervention in the sector after the military takeover of 1968, a sweeping but ineffective agrarian reform program and prolonged drought from 1978 to 1980. Research and extension (R&E) activities, once effective in Peru, were seriously affected. Extension services were dismantled as extension workers were shifted to agrarian reform assignments, while the little research being done was weakened by an exodus of trained personnel, and was not transmitted effectively to producers. 2. The Agricultural Research and Extension Project was a vanguard attempt to rebuild and expand Peru's agricultural research and extension (R&E) within the context of a new Government's efforts to promote sectoral recovery through changes in pricing, marketing, credit and land tenure policies and through reorganization and strengthening of sectoral institutions. The institutional vehicle for the planned human and physical recapitalization of R&E was the newly- created National Institute for Agricultural Research and Extension (INIPA) which combined both services. The concept envisaged an integrated, demand-driven coi2modity research and extension program sensitive to agro-ecological needs and nourished by extensive collaboration between various multilateral and bilateral agencies, scientific institutes and universities. Project preparation and appraisal were notably straightforward, benefitting from the commitment and creativity of the Peruvians, the cooperative efforts of other donor agencies, and the effective contribution of the FAO/CP. Implementation, however, was troubled. The project succumbed fundamentally to chronic shortages of resources and diminished priority under a new government elected in 1985 (Part I, paras.2-7). 3. Proiect Obiectives. The project was designed to reinforce the institutional capabilities of INIPA at the national level, and give intensive field assistance to five northwestern Agricultural and Livestock Research and Extension Centers (CIPAs). The project included: (a) strengthening of the national and field research program by providing (i) internationally recruited research specialists to reinforce research, introduce farm systems analysis, and upgrade in-service staff training; (ii) additional land and buildings for selected research stations; (iii) investment and operating costs of vehicles and equipment, and salaries of incremental staff; (iv) training of research staff; (v) consultancies for specific research problems; and (vi) research projects contracted to selected institutions;  - iv - (b) building up o; the extension p-ogram by (i) providing internationally recruited consultants to introduce the Training and Visit (T&V) extension system nationwide; (ii) construction of buildings in the 5 CIPAs; (iii) funding of vehicles and equipment, and salaries of incremental staff in the 5 CIPAs; (iv) funding for in-service training programs; and (v) providing a credit specialist to study constraints on credit to smallholders, and train credit officers for the extension service; (c) reinforcement of INIPA's Planning Department through additional staff, a Mor.itoring and Evaluation Unit, and a Project Management Unit; (d) construction of a Documentation and Training center, and provision of equipment, incremental operating costs, and consultant services; (e) provision of a computing and statistical service in INIPA, inc'luding equipment, incremental sJlaries and operating costs and consultant services; and (f) provision of consultants to study (i) INIPA's role in providing agricultural machinery and marketing services; (ii) a second-phase agricultural R&E project; and (iii) a third irrigation rehabilitation project in coastal valleys (Part I, para.8). Implementation Experience 4. Project implementation was perpetually frustrated by the budget impact of prolonged economic crisis, repeated changes in leadership and management style in INIPA, and irrational F.rsonnel and remuneration policies which affected morale and efficiency at every level of the institution. The vision of a smoothly coordinated, national system with multi-donor participation and international scientific linkages placed a considerable managerial and financial burden on the institution in its formative years, which required a focussed effort on the part of the Bank to resolve. Actions by the Bank to improve project financing (Revolving Fund, Special Account and inclusion of the project under the Special Action Program) had only limited effect. Moreover, INIPA's handling of accounts, finance, audits and procurement was unsatisfactory. 5. The new government's decision in 1986 to decentralize bureaucracy and shift the emphasis of agro-economic development to the southern Sierra (the Trapecio Andino), away from the five project CIPAs, reduced the project's priority. While the GOP expressed strong public support for INIPA as a key element in its new Sierra strategy, budget allocations remained meager. The Minister of Agrlculture sought to divest INIPA of its extension role on the grounds that its integrated structure was incompatible with changed sectoral priorities. Bank arguments for keeping INIPA intact temporarily staved off such action, but INIPA was ultimately reorganized in early 1988, after the general suspension of disbursements to Peru (May, 1987) but prior to the planned project clesing date (March 31, 1988), representing a clear breach of the project concept and the Loan Agreement (see Part I, paras. 20-28).  - v - 6. Agricultural Research. Development of the research elements of the project was mixed. The institutional in.egration of R&E was only partly successful in producing technology packages relevant to farmers' needs. INIPA's internal coordination of both services was clearly inadequate. The important farm systems analysis system was not implemented, while monitoring and evaluation evolved as best it could without budget, management support or regional representation. Researchers tendvd to pursue avenues of enquiry largely divorced from regional and farm realities in what became essentially a supply-led approach. Training of research personnel fell far short of targets and the small numbers trained often returned to administrative or private sector jobs d'ue to irrational personnel and salary policies (Part I., paras.29-31). 7. Extension Development. Internationally recruited consultants were to train INIPA extensic- sts in the T&V system nationwide, but limited budget restricted this effort to the five pzoject CIPAs. Results were less than expected. Mindful of T&V's inherent limitations, the consultants worked to introduce an improved form, focussing on constituting groups of farmers with characteristics likely to promote receptivity. However, as in other cases worldwide, extensionists were unable to grasp the methodology for independently selecting good contact farmers, resulting in limited program coverage and effectiveness. Other technical, physical and financial problems hindered extension development including (i) insufficient supplies of vehicles and equipment (purchases of both reached only 50% of target); (ii) meager, poor quality training programs; (iii) inadequate tailoring of extension packages to local conditions; (iv) inconsistent availability of operational research facilities in the project area; (v) insufficient extension agencies and sector offices in the project area to serve targeted beneficiaries; (vi) unrealistic salaries and poor morale; and (vii) poor coordination of credit and water resources with extension. 8. The T&V system was substantially modified in early 1987 to a group system, administered by a new extension agency in MAG, using INIPA extension personnel. The objectives were to sharply expand coverage per extensionist and to give the program a greater poverty orientation, in accordance with the new government's Agricultural Plan for 1986/90. Extensionists and CIPAs were only hastily versed ir the new system, salaries did not improve, and Lnorale and efficiency remained low. Physical coverage improved but quality declined markedly (Part I, paras.32-36). 9. Credit. The planned credit study was not carried out. While credit per se was not provided under this project, several other Bank projects (Sixth Agricultural Credit Project, Ln.2302-PE, and the Irrigation Rehabilitation Project, Ln.1771-PE) were providing credit, and the IDB was implementing a credit line in southern areas through the Banco Agrario del Peru (BAP). In general, farmers were reluctant to seek credit due to traditional peasant aversion to debt, and because the BAP required excessive documentation and paperwork, delivered the funds in an untimely manner, and gave preference to those farmers it knew or who were already solvent. About 60% of the credit in the project CIPAs went to farmers receiving extension from IWIPA, while the crops most favored with credit were either regional staples (e.g., potatoes) or subject to price guarantees and subsidies (e.g., rice and corn) (Part I, para.37).  - vi - Results IC. The project had the potential for achieving its objectives, but wa6 overwhelmed in large part by economic and political circumstances beyond its control. Institutional and field actions launched could not develop and mature and were, in key instances, reversed. Given the fact that the project was not completed and that its implementation as well as its impact was heavily overshadowed by non-project fartors, the economic rate of return has not been recalculated (Pukrt I, para.44). Sustainabilitv 11. The context of project implementation--fundamental changes in pc , institutional responsibillty and methodology against a backdrop of economic and social dislocation--signifies little likelihood that even its limited achievements will be sustained in any organized sense. In general, sustainability of an R&E system dependis primarily on long-term domestic financial stabilit-, combiaed with the demands of a large clientele with a firm sense of ownership of that system. It cannot be derived solely from international bodies which, even if they are multiple, effective and generous, remain catalysts only. Nevertheless, the human resources to develop affective R&E services clearly exist in Peru. The challenge is to design a longer-term strategy and mechanisms for their coordination and funding within the framework of the Government's new agricultural and regional development policy (Part I, para.45). Conclusions and Lessons Learnt 12. Lessons for the Bank. The principal lessons are the following: (a) even the best-designed projects will be hard-pressed to withstand macroeconomic crisis, re-ordered policy priorities, and repeated changes in institutional leadership as experienced in Peru for most of the 1980s; (b) the argument for "housing" research and extension together loses force without systematic actions to forge the institutional, technical and operational linkages designed to produce and transmit appropriate technology; (c) the project experience validated the need for capacity and skills gap analysis followed by specific plans of action to correct deficiencies; even so, the inherent capability of local professionals and their ability to work efficiently in the bureaucracy, remains a key determinat,t of project success; (d) the multi donor involvement in INIPA in its formative years, even though carefully planned and coordinated, exceeded its managerial aund financial capacity under the given budget circumstances; nevertheless, the vanguard nature of the collaboration, in a more stable context, represents a model with high potential; and (e) the manpower allocated to supervision, along with its frequency and timing, should better reflect the nature and scope of the project and the Bank's responsibility to actively pursue timely compliance with basic performance standards, e.g., audits, dated covenants, progress reporting and procurement (Part I, para.47). 13. Lessons for the Borrower. The main lessons for the Borrower are the following: (a) Peru needs to develop a longer-term R&E strategy which stresses, virtually above all, human resource development and retention; (b) while the savinip on bureaucracy and technical advantages of proximity support combining  - vii - R&E in one (preferably independent) institut.ion, it is the systematic, practical linkages and feedback between the two services (and the farmer) which ultimately count, and these can be achieved in different ways given commitment, planning and funding; (c) agricultural R&E must develop the credibility, recognition and stable funding base which translates politically into budgets which match official expressicns of support for agriculture; and (d) agricultural extenslon, whether T&V or other methodu, must get down to the farm level, and not be just a transmission system for improved technologies determined by an institution to be the most important at a particular time (Part I, para.49).  PROJECT COMPLETION REPORT PERU AGRICULTURAL RESEARCH AND EXTENSION PROJECT (LOAN 2150-PE) PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE Prolect Identity 1. Project Name: Agricultural -search and Extension Project Loan Number: 2150-FE RVP Unit: Latin America and the Caribbean Region Country: Peru Sector: Agriculture Subsector: Research and Extension Background 2. The performance of the agricultural sector in Peru deteriorated significantly in the 1970s due to a sweeping land reform program commencing in 1969, and extensive Government regulatory intervention in the sector after the military takeover of 1968. Prolonged drought from 1978 to 1980 compounded sectoral decline. Agriculture's contribution to GDP by 1980 was 11Z, compared to 15% in 1970. The Government's cheap food strategy kept agricultural prices low to benefit urban consumers. Per capita food production decreased, with serious consequences for consumption and foreign trade. The volume of food imports, especially wheat, hard corn, rice, vegetable oil and milk products, rose sharply, while exports of Peru's agricultural staples such as sugar, coffee, cotton and wool dezreased dramatically. 3. Of the 11.6 million hectares expropriated by Government under the land reform program (representing 48% of the total land in agricultural units in Peru), only 8% was adjudicated to individual families, the remainder being distributed to various forms of cooperative enterprises of 2,000 ha or more per unit. Inspite of generous financial support from the Government, the planned increase in agricultural production failed to materialize due to the lack of cooperative spirit and businiess acumen among enterprise members. Enterprises formed from large estates which were left intact and wher;a the required technology was already understood, tended to perform better than newly- established enterprises, but m s: eventually succumbed to a steady exodus of qualified technicians and administrators; and a failure to accord priority to longer-term planning over the short term benefits of ownership. Further, the Government's concentration of effort and resources on the reform sector, meant that the 78% of the rural poptlation not directly affected by the reform (of which 65% had holdings of 2 ha or less), were neglected. 4. Aaricultural Research and Extension Peru had a solid background in agricultural research and extension (R&E' going back several decades but both services deteriorated in the 1970s for the following reasons: (a) inadequatc budget resources and general neglect; (b) the military government integrated what had been a successful, semi-autonomous R&E institution into the Ministry of  -2- Agriculture where it languisk-ad within a large, poorlr paid and poorly motivated bureaucracy; (c) extension staff were shifted to agrarian reform assignments; and (d) the reduced emphasis or. professional competence coupled with inflation-eroded salaries ca.ised a majority of the most experienced and highly-trained agricultural sciencists to leave the country. Institutional changes in the mid- 1970s designed to improve agricultural R&E failed due to the persistence of these problems. S. With the return to constitutional government in 1980, the agricultural sector was assigned high priority. In 1981, MAG was divested of its technical support functions, and responoibility for agricultural research, extension, farm mechanization and rural marketing passed to the new, remi-autonomous National. Institute for Agricultural Research and Extension (IN, ?A). To carry out its responsibilities, INIPA created and staffed 18 Agricultural and Livestock Research and Extension Centers (CIPAs), each with its own Director reporting to the head of INIPA. In research, all 17 experimental stations and 27 sub-stations for crops and livestock were transferred from the old National Agricultural and Livestock Research Institute (INIA) to INIPA, with their staffs. 6. At the time of project preparation (1981), the key constraints on R&E in Peru were described as being: (a) the absence of suitable (and suitably located) administrative and organizational infrastructure to serve dive-4e agro- ecological and commodity conditions; (b) inability to recruit and/or retain adequate numbers of well-trained, experienced staff due to u.;attractive salaries, poor morale and technical professionalism, and meager funding and programs to use personnel effectively; (c) an inadequate pool of trained personnel, especially at M.Sc. and Ph.D. levels, and need for technical and methodological training programs for extension staff; and (d) completely inadequate support facilities and services for research (buildin3s, library and scientific information services, computing, laboratories and equipment). 7. The project's potential to remove these obstacles was frustrated by a combination of totally inadequate budget allocations and untimely release of funds, frequent leadership changes within INIPA (four chiefs in 5.5 years) and project management's consequent inability to set up planned systems and implement needed improvements. The vision of a smoothlv coordinated, national system with multi-donor participation and international scientific linkages placed a considerable managerial and financial burden on the institution in its formative years. The project succumbed fundamentally to chronic shortages of resources, exacerbated after 1985 by diminishing priority resulting from the newly-elected government's major re-orientation of agricultural policy ar.d institutional responsibilities which affected INIPA and all donor organizations working with it. The Bank suspended disbursements on all projects in Peru in May, 1987 due to Peru's non-payment of arrears on foreign debt, then closed the loan in November, 1989. Project Obiectives and Descri2tion 8. The project's main objective was to rebuild and expand Peru's agricultural R&E services to increase production and producer welfare. The project was designed to reinforce the institutional capabilities of INIPA at the  national level, and give intensive field assistance to five CIPAs located in the northwestern part of the ceuntry. The project included:l1 (a) sLrengthening of the national and field research program by providing (i) 10 internationally recruited research specialists to reinforce ongoing research, introduce a farm systems analysis capacity, and upgrade in-service training of staff; (ii) additional land, office, laboratory and storage buildings for specific field research stations; (iii) investment and operating costs of transportation and scientific and office equipment, and the salaries of incremental staff; (iv) training of research staff; (v) 19 man-months of consultancies to assist in specific research problems; and (vi) research projects contracted to selected national institutions; (b) building up of the extension program by financing (i) 30 man-years of internationally recruited consultants to introduce the Training and Visit system of extension throughout Peru; (ii) construction of 5 CIPA headquarter buildings, 37 agency buildings and 44 sector buildings in the 5 CIPAs; (iii) transportation equipment and salaries of incremnental staff in the 5 CIPAs; (iv) in-service training programs; and (v) a credit specialist to study the modalities to extend credit to smallbolders and train credi+ officers within the extension service; (c) reinforcement of INIPA's PlanninC Department by the addition of five professional staff and the establishment of a monitoring and evaluation unit and a project management unit; (d) construction of a eocumentation and training center at La Molina in which the central library for INIPA's research and extension activities would be located; provision of equipment, incremental operating costs including salaries; and a three man-month consultancy to organize the documentation services; (e) provision of a computing and statistical service for INIPA, including equipment, incremental salaries and operating costs, and a 15 man- month consultancy to establish computer services; and (f) the provision of consultants to study (i) INIPA's role in providing agricultural machinery and marketing services (48 man-months); (ii) a second phase agricultural rescarch and extension project; (iii) a third irrigation rehabilitation project in coastal valleys.2/ 1/ As described in SAR, pera. 4.03. 2/ To follow on from Irrigation Rehabilitation I (Ln.1403-PE) and Irrigation Rehabilitation II, Chira-Piura (Ln.1771-PE).  - 4- Proiect Design and Organization 9. Concevtual Foundation. The project was a first-phase program designed to accelerate institutional and organizational change, both regionally and nationally, while relying largely on existing infrastructure (land, buildings) and avoiding unnecessary new investments. The field operations of INIPA would reflect the successful experience of the 1960s and be organized around regional R&E centers (CIPAs). Research would continue its commodity and discipline orientation. Foreign technical assistance would help INIPA introduce a nationwide T&V extension system for small and medium-sized producers.3/ The project also provided INIPA with the capacity to coordinate assistance from various donors/financiers through its Planning Department. The farm systems analysis and the credit study would identify suspected problems of delivery of production inputs and credit to small-scale farmers. 10. The integrated organizational structure of INIPA was seen as an excellent conceptual basis for the proiect. However, INIPA's capacity to fully absorb and effectively utilize external assistance was constrained by its simultaneous involvement with a number of donors (e.g., USAID, IDB, CGIAR, FAO/UNDP and several North American universities) all of which were providing financial and/or technical assistance to INIPA for agricultural research, extension and training, without coordination or a defined strategy. Meetings between Peruvian leaders and these external donors during preparation of the project in 1981 resulted in a coordinated plan, in many respects a model of its kind, to re-invigorate an agricultural science-based growth strategy in Peru. It needs to be noted that this strategy included national!' and regional universities, private sector efforts and other public institutions and was referred to collectively as the research, extension and education (REE) system. 11. The joint Government (GOP)/donor plan (which collectively committed US$72.2 million in various loans and grants) provided for a geographic division of labor along with some functional specialization. The IDB was to concentrate its efforts in the "Trapezio Andino" area of southern Peru, while USAID would work in the central coastal region plus the selva (forest zones). The Bank concentrated on five northern regions (where the new project would be complementary to several irrigation projects then under implementation, Loans 1403-PE and 1771-PE). In all locations, a set of priority national commodity programs, including research and extension, was to be implemented. Both degree and non degree training was included. An agricultural credit effort with IDB support would be initiated, along with IDB assistance for developing selected factor and product marketing ccmponents. The Bank supported the idea of a single donor providing technical assistance at the central level (NCSU with USAID support). The Bank would finance a co-leader for each priority national 3/ Extension to large producers would be through a programmed but less intensive service, complemented by technical assistance from private agricultural consultants. 4/ Most importantly, the National Agrarian University (UNA) which contributed effectively to planning, education, research and to a lesser extent, extension.  commodity program; co-leaders would in most cases be recruited from the institutes of the Consultative Group for International Agricultural Research (CGIAR). In general, the level of integration of this project with other donors efforts was unusually high at all stages. 12. Prolect Scale. As agreed, project scale was limited to five CIPAs in the North (Piura, Cajamarca, Chiclayo, Trujillo, and Huaraz) to avoid the Bank's activities overlapping those of other donors, and to function within existing INIPA staff constraints. The areas delineated were considered highly promising and potential models for the remaining 13 CIPAs in Peru to be implemented under a possible follow-on project. The five CIPAs represented: (a) contiguous administrative divisions which, as a group, covered the three major Peruvian agro-ecological zones; and (b) 40% of Peru's most important agricultural land, 43% of its irrigated area, and producing some 45% of total agricultural production. 13. Innovative Aspects. The project design had several innovative features: (a) introduction of the T&V extension methodology, the first large- scale use of this system in South America; (b) the design of effective mechanisms for the delivery, promotion and supervision of credit tailored to the needs of small farmers.5/ (INIPA saw its role as one of supporting agricultural producers to make the most efficient use of inputs and credit, while avoiding direct involvement in the administration of either); and (c) introduction of a farm systems analysis capacity.