Turkey - Agricultural Research Project

ocumentf Aof I AJt- 7/C The World Bank FOR OMCAL USE ONLY MICROFICHE COPY Report No. P- 5630-TU Type: (PM) GASSNER / X32072 / H5071/ EMlAG RepotNtNo.P U 1 RNDUI ^AND RCNDATION OF THE PRESIDENT OF THE INTRATIONAL BM FOR RECONSTRUCTION AND DEVElOPMENT TO Tug EXCUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$55.0 KILLION / TO THE REPUBLIC OF TURKEY FOR AN AGRICULTURAL RESEARCH PROJECT April 9, 1992 Tps dome has a rcted dih and may be used -by rpients ooly in the perfoma4 of tbeir offieua duties. Its contents may not otlberwise be disclosed wtout World Bank atouti.  CURRENCY EOUIVALENTS Currency Unit - Turkish Lira (TL) AVERAGE EXCHANGE RATES (Turkish Lira per US$) 1988 1989 1990 2991 1O92(Feb.1 1421 2121 2608 4160 5700 WE!IXTS AND MEA8URES IMetric System British/US e .Metric Unit Ecuivaleznt 1 millimeter (mm) 0.039 inch I meter (m) 39.37 inch 1 kilometer (km) 0.62 mile 1 hectare (ha) 2.47 acres 1 square kilometer (km2) 0.386 square mile 1 liter (1) 0.264 gallon (USA) 1 kilogram (kg) 2.2046 pounds 1 metric ton (m ton) 2,205 pounds PRINCIPAL ABBREVIATIONS AND ACRONYMS USED kEARP - Agricultural Extension and Applied Research Projects (Loans 2405-TU and 3177-TU) AERI - Agricultural Economic Research Institute APK - Research, Planning and Coordination Bureaus of MARA and MOF GDAR - General Directorate of Agricultural Research MARA - Ministry of Agriculture and Rural Affairs MOF - Ministry of Forestry ., TURREY - FISCAL YEAR January 1 to December 31 . . .~~~~~~~~~~~~~~~~~~~~~~~~~~~~  FOR OMCUL USE ONLY TURKEY AGRICULTURAL RESEARCH PROJECT LOAN AND PROJECT SUMMARY Borrower: Republic of Turkey. Beneficiaries: Ministry of Agriculture and Rural Affairs (MARA) and Ministry of Forestry (MOF) Amount: USS 55.0 million equivalent. Terms: Seventeen years, with a five-year grace period, at the Bank's standard variable interest rate. rinancina Plan: Government US$ 22.6 million IBRD USS 55.0 million TOTAL US$ 77.6 million Economic Rate of Return: Not Applicable Staff A=raisal Renort: Report No. 9890-TU, dated April 9, 1992. IBRD 23282R Turkey Agricultural Research Project This document has a restricted distribution and may be used by recipients only in the performame of their official duties. Its contents may not otherwise be disclosed without World Bank authorizadon.  MMORANDUh AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNTIONAL BANK FOR RECONSTRUCTION AND DEVELPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED WAN TO THE REPUBLIC OF TURKEY FOA l AGRLTURA RESEAM PR-OJECT 1. I submit for your approval following memorandum and recommendation on a proposed loan to the Republic of Turkey for US$ 55 million equivalent. The proposed loan would have a term of 17 years, including a five-year grace period, at the Bank's standard variable interest rate, and would help finance an Agricultural Research Project. 2. Backgrgund. Turkish agriculture's share of total CDP has declined from 34X in 1965 to about 16X in 1990, due mainly to rapid industrialization. Never- theless, agriculture still generates directly over 202 of export earnings while providing about 501 of civilian employment. Industries based upon agricultural raw-materials provide an additional 50X of Turkey's exports. Turkey is one of the few countries in the Middle East which is virtually self-sufficient in food production. Nevertheless, while official statistics show agricultural GDP growth keeping pace with population growth, opportunities to increase income and exports of the sector have not been fully exploited. In addition, crop yield growth rates are declining. Such continued declines could clearly affect Turkey's competitiveness in various agricultural products. In addition, recent large scale irrigation investments need to be complemented by development of appropriate cropping patterns and technologies for these regions, in order to get full benefit from the physical investments. Finally, a serious cause of declining growth in productivity has been inappropriate practices which are degrading Turkey's agricultural resource base. Agricultural research is essential in formulating sustainable solutions for reversing the decline in crop yield growth rates and land degradation through new technologies for increasing quantity and quality of produce to improve.farmers income. It becomes particu- larly urgent if Turkey 'La to maintain competitiveness with other countries in its exports to Middle Eastern countries and to the EC as well as providing for its growing population. Yet, at present, only about 0.2X of agricultural GDP is invested in agricultural research, far below countries of similar levels of development. 3. While the agricultural research system showed good results in the 1960s and 1970s, the system deteriorated badly thereafter. Research staff morale and performance were also severely weakened by organizational changes in the research system, inadequate funding of operational expenditures, frequent staff transfers, and non-adherence to research staff career regulations. The Government has recognized the problem and has taken initial steps to improve the situation. This has included the decision in August 1991 to consolidate agricultural research into a new General Directorate of Agricultural Research (GDAR) with responsibility for providing effective planning, programming, budgeting, coordination and monitoring of research. The Government request for Bank assistance in the preparation and financing of an agricultural research project represents part of an overall Government effort to restore and strengthen the agricultural research system as an important part of its overall strategy for improving agricultural productivity and raising farm income levels.  4. Although the Bank has played an active role in supporting agricultural extension activities in Turkey for many years, the Bank's6 involvement in agricultural research has been limited to small components for adaptive research in support of extension activities, primarily under the 1984 Agricultural Extension and Applied Research Project (AEARP), and the 1990 AEARP-II. These projects introduce improved extension methods and extension/research linkages in s a^rate pruject areas, each covering about 25% of Turkey's provinces. AEARP was delayed by a major reorganization in the former Ministry of Agriculture, Forestry and Rural Affairs which severely disrupted proje:t start-up. Thereafter, good progress was shown during the 1986-89 period, and In many parts of the project area the effect of improved extension activities on farmers practices is evident. Progress slowed, however, due to constrained budgetary resources in 1990 and 1991. The reduced budgetary resources has also affected AEARP-II, but a start has now been made with the hiring of consultants and the procurement of vehicles. 5. Ratlonale for Bank Involvement. The project forms an integral part of the Bank's sector development strategy which includes, inter ali, supporting institutional reform and particularly technical support services of research and extension. This strategy has been initiated by the two extension projects since 1984 with assistance to research limited to backstopping support to provide training to extensionists in the project provinces, and significant progress has been made in improving farmer-extension-research links. However, little has been done to date to resolve other problems affecting the research service. At present, the service is inadequate to the task ahead with many of the existing professional research staff having little training in research methodology. The Bank is currently the only agency giving significant assistance in improving agricultural technical services. This proposed project would be supportive of other Bank activities for poverty alYeviation and environmental improvement. 6. Protect Ob iecives. The proposed project would assist the Government in strengthening its agricultural research programs to upgrade the system's ability to develop improved technology, and to provide recommendations to be transferred through the extension service to farmers so as to achieve increased agricultural production and farmer incomes. It would concentrate on strengthening agricultural research programs of relevance to the less developed regions of eastern and southeastern Turkey, which would contribute to poverty reduction, and also include a few research programs of high priority on a nationwide basis. Furthermore, the project would focus on natural resources development (agriculture, livestock, forestry and fisheries), and contribute to food production and to more sustainable agricultural methods. The project would also strengthen institutional capacity for research coordination, monitoring and evaluation, and for agricultural economic and policy analysis, and therefore, it would contribute to improved efficiency and effectiveness of the Government's agricultural research activities. 7. Project Description. The largest component of the proposed project would consist of investments to strengthen selected research programs of importance to eastern and southeastern Turkey in crops, livestock, irrigation and drainage, forestry and, where feasible, contract research at cooperating Turkish universities. This would include research institutes in these regions and lead institutes in other parts of Turkey. The project would also strengthen priority  national resbArch programs on erosion control and soil conservation, soil fertility, integrated pest management, pesticide residue control, and farming systems research. A major emphasis of the project would be strengthening institutional capacity for research programming, planning, budgeting, monitoring and evaluation. This would include institutionalizing a system within the Ministry of Agriculture and Rural Affairs (MARA) for preparation of long-term research master plans, which would be updated annually, and the establishment of a research management information system. The project would also support establishment of an Agricultural Economic Research Institute (AERI) to provide answers to government decision makers on agricultural policies affecting land, marketing and export matters impinging on farmers' incomes and as guidance to * researchers on crop, livestock and forestry research programs. In addition, the project would include a small component for strengthening MARA's capacity for testing food products for compliance with pesticide and hormone residue regulations. The project is expected to be executed over a period of seven years. The project would incltude: civil works consisting of laboratories, offices, workshops, and staff housing (281 of project costs); laboratory and field equipment (15X); vehicles (71); training locally and abroad (26X); technical assistance (101); office equipment and library sad information services (61), and incremental operating costs (8X). The latter small component is included as it covers expenses (spare parts and fuel), which are critical for carrying out the research programs. 8. The project has an estimated total cost of US$ 77.6 million equivalent, with a foreign exchange component of US$ 55.0 million (701). The proposed Bank loan of US$ 55 million would finance about 701 of project costs. Schedule A shows a breakdown of costs and the financing plan, while Schedule B shows amounts and methods of procurement and disbursement and the disbursement schedule. A timetable of key processing events and the status of Bank Group operations ln Turkey are given in Schedules C and D, respectively. The Staff Appraisal Report (No. 9890-TU) dated April 9, 1992, is being distributed separately. 9. Project Inlementation. The implementation of the project would be coordinated by GDAR, except for forestry components which would be coordinated by the Ministry of Forestry (MOF) Research, Planning, and Coordination Bureau (APK). Specific research programs under the project would be carried out at 18 research institutes and substations within GDAR, and two forestry research institutes and substations within MOF. o 10. Project Sustainability. Recent Government action to create GDAR within MARA is an indication of the Government's increased emphasis on the importance of agricultural research. The long-term research master plan and other research institutional development under the project would be expected to strengthen project sust4inability. The Government has agreed at negotiations to maintain adequate operational financing after project completion. 11. Lessons Learned from Previous Bank Involvement. While limited Bank funds have been made available for agricultural research, primarily in connection with programs for strengthening extension services, this project would be the first to aim specifically at improving agricultural research. Bank experience under extension operations in Turkey supports the need to have a flow of improved  -4- technology packages developed by research to enable extension to impact effectively on farmers' productivity and incomes. Experience with these projects also indicates that having research staff regularly involved in training extension officials, and subjected to their questions, is an effective device for making research more relevant to farmers problems and for accelerating the dissemination of research findings. Finally, it is clear that a stable research environment and ministerial management committed to the importance of research are essential prerequisites for effective research efforts. 12. Agreed Actions. At negotiations, agreement was reached with the Government on the following: (a) an indicative plan and schedule for strengthening GDAR headquarters to enable it to uniertake responsibility for coordination of all MARA research, including planning, programming, budgeting, monitoring and evaluation and for strengthening staffing of APK of MOF to enable it to undertake similar responsibilities fo- forestry research; (b) the preparation of an annually updated 13-year Master Research Plan (under an agreed sch-dule and TOR) with the initial master plan completed by October 31, 1994; (c) establishment of an Agricultural Economics Research Institute no later than October 31, 1993; (d) arrangements would be made no later than April 30, 1993 for provision of 1,000 ha of land for pasture research in Erzurum; (e) the terms of reference for, and the establishment by no later than April 30, 1993 of, four new farming systems research teams in the regional research institutes in Diyarbakir, Erzurum, and Eskisehir, and the GDRS research institute in Sanliurfa; (f) engagement of internationally recruited consultants with qualifications acceptable to the Bank to assist in administering the training program abroad, strengthening of GDAR's research capabilities in the areas outlined in (a) above; initiating farming systems research; the establishment of the AERI; and assisting the various research programs as required by April 30, 1993; (g) preparation by MARA and MOF assisted by consultants of research effectiveness assessments not later than April 30, 1995 and October 31, 1997, in accordance with terms of reference acceptable to the Bank, and discussion with the Bank of the findings and implications of the report and of implementation experience in terms of Jesirable adjustments in the project; (h) reactivation of the national commodity research program approach and commencement of biannual reviews of each MARA research institution and measures for strengthening research/farmer links; and (i) renewed implementation of research staff career structure regulations. 13. Environmental AsRects. Environmental benefits can be expected from the forestry, soil conservation, soil fertility research programs and two plant protection programs of integrated pest management and residue control. The forestry and soil conservation program will help to maintain and/or improve the natural resource base. The soil fertility and the integrated pest management programs will develop technology to reduce inputs of fertilizer and pesticides. The residue research and control programs would contribute to redu:ing such incidence. 14. Program Objective Categories. By focussing on the impoverished East and Southeast of the country, where incomes are one-third of the national average, the project would contribute to improve incomes through strengthening research programs of relevance to agriculture in Turkey's least developed regions.  5 - 15. hen2glUa. To remain competitive and to develop new markets and products, Turkish agriculture must become more efficient, both in the modern and traditional smallholder subsectors. The proposed research project is needed to prov_de a means for developing and testing a continuing stream of improved agricultural practices, without which the continuing investment and recurrent costs of extension would not be justified. The project would assist to develop more sustainable agricultural practices. Concentrating on research benefitting the less developed regions is justified for social/ec, '.,y reasons and because of large irrigation investments currently underway in these areas. However, much of the research undertaken would be expected to provide benefits throughout Turk-ey. Programs to improve research planning, budgeting, and monitoring would increase the efficiency of the system and its responsiveness to farmer require- ments. The new AERI would provide policymakers with information on the costs and benefits of various policy options, as well as improved information on agricul- tural investment priorities, trade opportunities, and human resource issues in rural areas. 16. Risks. The main project risks are: (i) insufficient funding by Government in the face of budget constraints; and (ii) inadequate control of research coordination and management of priorities leading to inefficient research or new technologies inadequately adapted for farmer requirements. The first risk was addressed by reducing the project size in line with Government estimates of financing capacity. The second risk is being addressed by project supported efforts to improve research planning and budgeting systems, and research/extension/farmer links. The recent decision to create GDAR is an indic.tion of the Government's increased commitment to the importance of strengthening agricultural research. Finally, two research and project effectiveness assessments provide opportunities. for making any required adjustments based upon implementation experience. 17. Recommendation. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve the proposed loan. Lewis T. Preston PRESIDENT Attachmentg Washington DC Date: April 9, 1992  AGRICULTURAL RESEARCH PROJECT Estimated Costs and Zinanc$na Plan Estimated Cost Foreign Comoongats Local Foreian- Total lghangs Base Oot ------US$ million