Mexico - Livestock and Agricultural Development Project

Dokant of The World Bank FO OMaAL USE ONLY Rept No. 13002 PROJECT COMPLETION MEMORANDUM MEXICO LIVESTOCK AND AGRICULTURAL DEVELOPMENT PROJECT (LOAN 610-ME) APRIL 29, 1994 Agriculture Operations Division Country Department II Latin America and the Caribbean Regional Office This document has a restricted distribution and may be used bv recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   FOR OFFICLAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Dlrector-Generel Operartons Evaluaton April 29, 1994 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Memorandum on Mexico Livestock and Agricultural Development Project (Loan 610-ME! Attached is the Project Completion Memorandum (PCM) on Mexico Livestock and Agricultural Development Project (Loan 610-ME) prepared by the Latin America and the Caribbean Regional Office. Given the substantial amount of time elapsed since the closing of the Loan (more than twenty years), a simplified reporting format was adopted and the Borrower was not asked to prepare Part II or to comment on the PCM. The project was the second in a series of nine loans approved over a twenty-year period (FY65 to FY85). It had a sound conceptual basis, clearly understood by both the Bank and the Borrower, reflecting lessons learnt from the first loan. Project implementation was satisfactory; under strong farmer demand for sub-loans, the project was completed in just two years rather than the five envisaged at appraisal. Project objectives were achieved, with (a) a beneficial impact on physical production and the profitability of the sub-borrowers, and (b) an enhanced operational capacity of the project management agency. As typical of the times, the project did not take into consideration the equity effects of its operations; sub-lending concentrated on commercial farmers, disregarding small-scale farmers and ejidatarios, and poor farmers with insufficient collateral. The project did not include a monitoring and evaluation component. A Special Impact Study on the First and Second projects was carried out in 1972. The outcome of the project is rated as satisfactory, its achievements as sustainable, and its impact on institutional building as substantial. The PCM, based on an internal desk review (as for other aged projects in the 'backlog"), is satisfactory. No audit is planned. Attachment 5# This document has a restricted distribution and may be used by recipients only In the performance of their official duties. ts contents may not otherwise be disclosed without World Bank authorization.   FOR OFFICIAL USE ONLY PROJECT COMPLETION MEMORANDUM MEXICO LIVESTOCK AND AGRICULTURAL DEVELOPMENT PROJECT (LOAN 610-ME) TABLE OF CONTENTS Page No. PREFACE ......................................................... i EVALUATION SUIMMARY ............................................. iii 1. PROJECT REVIEW FROM THE BANK'S PERSPECTIVE ..................... 1 1. Project Identity ............................................... 1 2. Background ............................................... 1 3. Project Objectives and Description .............. ...................... 2 4. Project Design and Organization . ...................................... 2 5. Project Implementation ............................................. 4 6. Project Results ............................................... 5 7. Sustainability ............................................... 6 & Bank Performance .............................................. 6 9. Borrower Performance ............................................. 7 10. Project Relationship .............................................. 7 11. Consulting Services .............................................. 7 12. Project Documentation and Data . ..................................... 8 13. Lessons Learned .............................................. 8 ANNEX 1: STATISTICAL INFORMATION ........... ........................ 9 This document has a restricted distribution and may be used by recipients only in the performance of their lofficialduties. Its contents may not otherwise be disclosed without World Bank authorization.  I  PROJECT COMPLETION MEMORANDUM MEXICO LIVESTOCK AND AGRICULTURAL DEVELOPMENT PROJECT (Loan 610-ME) PREFACE 1 This is the Project Completion Memorandum (PCM) for the Livestock and Agricultural Development Project in Mexico, for which Loan 610-ME in the amount of US$65 million was approved on February 20, 1969. The Loan was fully disbursed and the Project closed on June 30, 1971. 2. This PCM was prepared by the Agriculture and Natural Resources Operations Division of the Latin America and the Caribbean Regional Office, in lieu of a Project Completion Report. Given the substantial amount of time that has elapsed since the Loan closed, this PCM does not contain Part II (to be prepared by the borrower) and includes only a limited Part III (statistical appendix). This PCM was prepared on the basis of available information in the Project files, the Staff Appraisal Report (SAR), and Project Performance Audit reports for follow-up Loans No. 747-ME and 91 0-ME.   - iii - EVALUATION SUMMARY Objectives i. The purpose of the Loan was to increase livestock and agricultural production by providing medium- and long-term finance to commercial producers through two sub- components: one essentially continuing support for the development of livestock, annual and perennial crops and certain agro-industries initiated under Loan 430-ME; and the second financing the development of cattle ranches in the southeastern wet tropical region of Mexico (para. 3.2). This Loan was the second in a series of five loans approved between 1965 and 1979, altogether providing US$400 million of Bank funds. Implementation Experience ii. The Project objectives were apparently achieved and Project implementation was satisfactory (para. 5.1). Organizational restructuring enhanced the operational capacity of the project administration agency. Increased credit demand by sub-borrowers, mainly due to attractive discounting terms from the Agricultural Guarantee and Development Fund (FONDO) to commercial banks, resulted in the disbursement of funds three years ahead of schedule, prompting a follow-up Third Livestock and Agricultural Development Loan (Loan 747-ME). Results iii. The Project had a beneficial impact on physical production and the profitability of livestock production, cropping and agro-industries, according to a Special Impact Study of the first and second IBRD supported Livestock and Agriculture Development Projects undertaken in 1972 (para. 6.2). Production gains were generally achieved through scale expansion rather than through improved production efficiency (para. 6.3). Nonetheless, the precise returns of this agricultural credit program on production were difficult to quantify, as was the ERR (para. 6.6). Sustainability iv. Given the rapid absorption and presumed efficient allocation of funds, the Bank continued to provide agricultural finance for livestock production (para.7. 1) through several follow-up projects after the completion of Loan 610-ME, indicating a high degree of program sustainability. Findings and Lessons Learned v. The Project reached its main objective by contributing to increased production levels and initiated steps towards decentralization and institutional strengthening. Nonetheless, the Project design was biased towards large commercial producers,  - iv - overemphasized physical production targets and neglected clear criteria for beneficiary assessment and sectoral priorities for sublending. The effectiveness of the Project could have been enhanced by (i) improved evaluation and monitoring of subloans through both FONDO and Bank and (ii) a stronger focus on poor rural households. Follow-up Bank loans not only provided larger lending volumes, but also rightly placed more emphasis on monitoring, decentralization and support for low-income farmers, infrastructure works, rural housing as well as training (see paras. 13.1 to 13.3).  PROJECT REVIEW FROM THE BANK'S PERSPECTIVE 1. Project Identity Project Name Livestock and Agricultural Development Project LoanNo. 610- ME RVP Unit Agriculture and Natural Resources Operations Division, Country Department II, Latin America and Caribbean Regional Office (LA2AG) Country Mexico Sector Agriculture Subsector Livestock 2. Background 2.1 When the Project was prepared in the late 1960s, agricultural products accounted for over 50% of Mexico's export earnings and local production satisfied about 95% of domestic food consumption. About 35% of the net value of farm output was derived from livestock. The late 1960s were a period of major structural change in the Mexican economy, and government policy aimed to modernize agriculture through technological change. Production was to be expanded through yield and acreage expansion, and special trust funds were created to stimulate and provide financing for entrepreneurial agriculture. Irrigation and mechanization were the main sources of intensification in agricultural production. As a major component of the modernization policies, credit to the agriculture sector increased steadily, Government credit programs were targeted primarily at the private sector, and assisted the limited numbers of large landowners, while neglecting the vast number of small private producers and ejidatarios. The agricultural sector became increasingly polarized by the disproportionate credit allocations to both large-scale commercial farmers and the irrigated areas of northwestern Mexico. 2.2 An agricultural crisis developed in the early 1970s, as agricultural production fell substantially short of consumption demand. Government policies placed an increased emphasis on agricultural investment, especially in poorer areas which traditionally had not received support. Based on forecasts of beef shortages, the Mexican Government initiated a National Livestock Program to increase productivity in traditional production areas, develop new areas for livestock production, and improve internal distribution. The wet and dry tropical areas of southeastern Mexico offered the best scope for livestock expansion. 2.3 The expansion of livestock was constrained by several factors. Many livestock products were subject to price controls in response to rising prices in major centers of consumption. While these measures were not always effective in preventing price increases, they did provide a disincentive to production. The lack of small agro-industries or farmer-service enterprises was another significant obstacle to modern agriculture.  - 2 - Mexico required additional investments in enterprises for storage, preservation, processing and the marketing of food and fiber crops. With regard to livestock development, more facilities for animal slaughter, milk pasteurization and mixing of animal feed concentrates were needed. 3. Project Objectives and Description 3.1 The principal objective of Loan 610-ME was to support livestock development, with 75% of total Project cost earmarked for this purpose. In addition, the Project supported crop and agro-industries development and included project- related technical services. 3.2 The Project consisted of a line of credit with two components: (a) a Countrywide Livestock and Agricultural Development Sub-Project was to account for 55% of total Project cost (US$110 million equivalent). Essentially a continuation of Loan 430-ME, this sub-project was to provide 2,800 loans in all parts of the country for: (i) livestock development; (ii) annual crop development; (iii) perennial crop development and (iv) certain types of agro-industries. (b) a Southeastern Cattle Development Sub-Project aimed to support beef production in tropical areas with high development potential. It accounted for 45% of total Project cost (US$90 million equivalent). Approximately 2,200 loans were to support cattle development in a 12 million ha tropical area bordering the Gulf of Mexico. 4. Project Design and Organization 4.1 As under the first livestock credit loan (Loan 430-ME), the Project was administered by the Fondo de Garantia y Fomento para. la Agricultura, Ganaderia y Avicultura (Agricultural Guarantee and Development Fund, FONDO). Operating as trustee of the Bank of Mexico, this technical services agency discounted loans through private and public participating banks. FONDO also provided technical services, basically farm planning and supervision, on behalf of the participating banks. To ensure the quality of technical services provided, Loan covenants contained assurances regarding an intensive reorganization and decentralization of FONDO. 4.2 The project had a sound conceptual base, which was clearly understood both by the Bank and the Borrower, reflecting the fact that this was the second Bank-financed livestock credit project in Mexico. Under the first one, Loan 430-ME, US$25 million had financed 2,617 individual projects; in terms of value, 58% of the Loan were made for investment in livestock, 20% for general crops, 17% for agro-industries, and 5% for fruit and tree crops. The principal differences with the first Loan were that Loan 610-ME contained: (i) a regional component emphasizing high priority areas, (ii) stricter lending maturities and interest conditions and (iii) a larger emphasis on livestock production (75%).  - 3 - 4.3 The Project was to be implemented over a period of five years, at a total cost of US$200 million, including a direct foreign exchange component of US$48.7 million. IBRD lending of US$65 million was to cover 32% of total costs. 4.4 Loan maturities to sub-borrowers were generally for a minimum of three years under the Countrywide Sub-project and five years under the Southeastern Sub-Project. A technical service fee of 1% was charged for agro-industries loans, which involved more technical preparation for the participating banks and FONDO than crop production and cattle raising loans. Rediscount and interest rates were fixed according to loan size, in order to encourage private banks to invest a larger proportion of their own funds with increasing project sizes. The target for this share was set at 20% in SAR estimates, to be reached by rediscounting on average not more than 80% of loans made to sub-borrowers. Unlike the follow-up loans, Loans 430-ME, 610-ME and 747-ME were unencumbered by a controversy over appropriate interest rates, for two reasons: First, these subloans were limited to commercial-scale farmers, for whom there was no interest subsidy; and second, inflation did not begin to accelerate until early 1973, from a level of around 5% in the consumer price index at appraisal. The following rediscount and interest rates were applied under the Project: Size of Loan to % of Loan Rediscount Rates Interest Rates Beneficiaries Rediscounted Up to 500,000 Pesos 90 7% 10% 80 6% 10% 70 5% 10% Between 500,000 80 7% 11% and 1,500,000 Pesos 70 6% 11% More than 1,500,000 70 7% 11% Pesos 4.5 The Project reflected the Bank's desire to ensure a continuous flow of funds for agricultural credit in Mexico and improve the efficiency of agricultural lending. However, with an emphasis on increasing physical output, the Project lacked clear criteria with respect to: (i) sub-lending priorities among eligible investment projects and (ii) possibilities for reaching poor farmers with insufficient collateral. Instead of assisting low-income producers, the Project concentrated sub-lending on commercial farmers, given their presumed capacity to utilize credit more rapidly.  -4 - 5. Project Implementation 5.1 The project was fully disbursed by June 30, 1971, three years prior to the projected five year period. Disbursement in all Project categories considerably preceded the estimated dates, particularly for annual and perennial crops under the Countrywide Sub-Project. Supervision reports attribute the rapid disbursement to: (i) a heavier than expected demand for credit; (ii) the availability of an increasing number of loan officers with technical expertise in the participating commercial banks; (iii) the short maturity of investment credits (4 to 5 years), (iv) repeated lending to the same borrowers; (v) the lack of meaningful lending priorities regarding borrowers and types of investment, and (vi) the profitability for commercial banks of using FONDO resources. Banks were not only offered attractive spreads and a guarantee (free of charge) covering the risks of subloans to low-income producers, but were also reimbursed for most of their administrative costs. 5.2 A total of 11,651 subloans were financed during a period of two years under the Project, nearly double those made during Loan 430-ME. FONDO, as the sub-lending agency, confirmed its proven record of channeling resources to private banks. Auditing and loan supervision were adequate to prevent loan diversion, although the Bank at one point urged a more timely delivery of FONDO audit reports. 5.3 The actual distribution of subloans under Loan 610-ME was similar to Loan 430- ME, with 61% of the funds being allocated to livestock instead of the SAR estimate of 75%. Annual crops and perennial crops absorbed 28% and 8%, respectively slightly more than the SAR estimates. Agro-industries accounted for 3%, falling short of appraisal projections, although the development impact of these plants was considered significant (paras. 6.3 and 6.5). According to the Project Performance Audit Report for Loan 747- ME (Report No. 1573), the Bank attributed divergences from SAR estimates to technical and administrative staff weaknesses. 5.4 Given the greater emphasis on livestock and agro-industries, the SAR had estimated an average subloan size of about $35,000, compared to an average of $15,000 under Loan 430-ME. The actual average subloan size of $17,000 fell short of appraisal estimates, and 85% of loans averaged $6,400 equivalent. About 10% of the funds disbursed were granted to loans in excess of 1 million pesos ($80,000 equivalent), representing 1% of the total loans. Nonetheless, smaller subloans did not necessarily benefit smaller farmers, as they were repeatedly granted to the same borrowers (para. 6.4). 5.5 Local competitive bidding for project procurement was followed, and outputs from the project were marketed through normal commercial channels; this practice had proved satisfactory under Loan 430-ME. Given the Mexican government's policy not to grant import permits for equipment and machinery comparable to those manufactured domestically, Loan covenants required prompt issuing of permits for Project-related imports, in case any foreign supplier was the lowest evaluated bidder. No problems were reported concerning this provision, although project files do not indicate whether foreign suppliers were contracted.  -5 - 6. Project Results 6.1 In 1972, the Bank commissioned a Special Impact Study of the First and Second Livestock and Agriculture Development Projects (Loans 430-ME and 610-ME) from an external consultant. The comprehensive study was based on two field surveys during May, 1972, less than a year after Loan 610-ME had been fully disbursed. However, the small sample of farms surveyed (4%) limited the general validity of the study and little indication was provided as to what extent the physical project targets and rates of return projected in the Staff Appraisal Report had been achieved (Table 5.A). While no cut-off rates for the economic and financial returns had been set at appraisal, the appraisal estimates of the project ERR and FRR were 31% and 32%, respectively. 6.2 The study concluded that sub-borrowers benefited greatly from these projects. Comparing a pre-loan sample of farms with the situation in 1972, significant developmental progress was indicated by increases in: (i) average annual net cash operating income per farm of 44.7%; (ii) average net worth per farm of 51.7%; and (iii) average gross value of farm production per farm by 98.2%. 6.3 Overall, production gains were primarily achieved through scale expansion rather than through improved production efficiency, with the exception of beef and dairy production. Increased beef production could also be attributed to efficiency improvements related to grazing conditions. Dairy production increased due to both herd expansion and improvements in productivity per cow. By contrast, enlargements of hog enterprises were not accompanied by efficiency improvements through multiple farrowings. Similarly, no noticeable productivity gains could be found for poultry farms. Cropping productivity also showed little improvement. The most significant impact on agro-industries was found to be associated with the creation of new firms; their operating profitability (an average of $Mex 1,342,500 in 1971) was more than double the pre-loan average of existing firrns ($Mex 599,100 in 1971). Agro-industry loans also induced substantial employment creation, reflecting the increased number of firms. 6.4 The incidence of repeat borrowings under the Project was pronounced. Around 37% of participating farms and ranches contracted more than one subloan under Loans 430-ME and 610-ME. While this suggests a substantial degree of borrower satisfaction, project benefits were less widespread. The target for rediscounting of 20% (para. 4.2) was not completely achieved, although participating banks contributed on average about 3% more from their own resources (16%), compared to average contributions of 13% under Loan 430-ME. 6.5 The influence of the two Livestock and Agricultural Credit Loans on the irrigated areas of Northern Mexico was regarded as relatively slight by a 1971 social impact study of Bank irrigation projects in Mexico. Among the major participating public rural credit institutions, Banco Nacional Agricola was found to be not very active in many of the Northern irrigation areas and Banco Agricola and Banco Ejidal did not utilize the rediscount facilities of the FONDO. On the other hand, Bank financing had a beneficial  - 6 - impact on increasing: (i) the number of processing plants, thereby expanding marketing outlets for farmers; (ii) cattle production in adjacent areas; and (iii) cooperative dairy plants and mnilk collection facilities. 6.6 A precise estimate of the economic benefits stemming from the project is precluded by methodological problems and lack of data. Project Performance Audit Reports of successor projects to Loan 610-ME (No.1573 and No.2577) questioned the appropriateness of estimating rates of return for credit programs, given the wide range of individual investments covered. Although available data suggest a beneficial impact of the Project, continued Bank lending in follow-up projects (Loans 747-ME, 910-ME, and 1217-ME) was approved without prior assessment as to what extent original projections for earlier projects (including Loan 610-ME) regarding physical quantities, profitability and number of beneficiaries, had been achieved. One and a-half years after the 1972 survey, OED undertook a study of the impact of the Bank's lending for livestock and agricultural credit in Mexico, which is summarized in Project Performance Audit Report No.1573. Although repeating a number of questions asked in the first Impact Study, the OED study confirmed both the beneficial impact of Bank-financed agricultural credit programs on physical production data and productivity increases below appraisal projections (para.6.3). 7. Sustainability 7.1 As a result of the rapid absorption of funds, the Bank expanded its agricultural credit program with a Third Livestock and Agricultural Development Loan for Mexico in FY71 (Loan 747-ME), which was followed by a repeater project approved in FY73 (Loan 910-ME). The Bank then approved another six agricultural credit loans in Mexico (see OED PAR No.8860 of June 1990), the last one approved in 1987, in addition to credit components in three PIDER (integrated rural development) Projects and two in agricultural marketing. Livestock development has thus been supported by continued Bank lending for agricultural credit from the mid-1960s (Table 1). 7.2 While no new institutions were set up, supervision reports assert that the Project resulted in a strengthening of existing financial intermediaries and technical agencies. Audit reports for successor projects indicate that lending thereby contributed to the viability of Mexico's rural credit system and the mobilization of domestic savings in the agricultural sector. 8. Bank Performance 8.1 With a free-limit of $400,000, the Bank's approval for subloans was only required in occasional circumstances and was generally granted with few modifications in subproject design. The Bank adequately supervised the disbursement of subloans, but little emphasis was placed on the sectoral allocation and ultimate impact of subloans. Clearer indicators for subloan evaluation and monitoring of sectoral distributions could have provided a greater focus on low-income producers; such changes were in fact eventually  - 7 - incorporated in follow-up loans. Supervision reports also failed to raise the issue of a real decline in private lending to the agricultural sector during the early 1970s, which can be attributed to a combination of reduced relative net profitability, increasing defaults and an inflationary environment. There was also little mention of macro-economic variables and their impact on the Project. The Impact Study (para. 6.1) seems to have been followed by relatively little discussion within the Bank, which may be indicative of its methodological shortcomings. According to Audit Report No. 1573, the influence of the Impact Study remained largely limited to a change in the design of the monitoring system for successor loans. 9. Borrower Performance 9.1 The implementing agency (FONDO), operating as a trust fund of the Banco de Mexico, complied with organizational changes required by the Bank; no major queries concerning management efficiency or financial viability of the implementation agency (FONDO) were reported. The establishment of further regional FONDO offices for follow-up subloans indicates that the decentralization of staff and operational procedures undertaken during the Second Livestock and Agricultural Development Project initiated an appropriate response to the diversity of Mexican agriculture. Decentralization allowed FONDO to provide technical assistance and monitor sublending in a more effective manner. 9.2 Project implementation and repayments proceeded on schedule. Bank insistence on a more effective monitoring system by FONDO as a pre-condition of the Third Loan suggests that both monitoring and evaluation of subloans during the Second Loan was considered as insufficiently discerning. In response to the shortfall of lending to agro- industries (para. 5.3), the Bank urged the Borrower to upgrade its personnel capacity to evaluate agro-industrial loans. 10. Project Relationships 10.1 Project relationships between the Bank and the Borrower remained good throughout the project, as reflected in project documentation. Differences over the format of FONDO reports, hiring of consultants and repayment delays were satisfactorily resolved. 11. Consulting Services 11.1 Technical assistance under the Project was provided through local FONDO personnel. A consultant for agro-industries participated in the Project appraisal mission. Although not originally part of the Project and commissioned for Loan 747-ME, consultancy services were required for the Impact Study of the First and Second Livestock and Agriculture Development Projects. Some delays were experienced in hiring a consultant for that study.  -8 - 12. Project Documentation and Data 12.1 The legal provisions of Loan 610-ME provided an adequate framework for this type of project. The Staff Appraisal Report presented an appropriate evaluation of projected Project benefits. However, supervision reports did not focus on the benefits or impact of the Project, but on the volume of sub-lending and organizational matters. Notwithstanding the commissioning of an Impact Study (para. I 11.1), Project documentation reflects an emphasis on fund disbursement rather than assessment of physical output projections. In addition, the lack of clear beneficiary categories made it difficult to ascertain the overall development impact of the Project. No attempt was made to evaluate the cause-effect relationship between the investments facilitated by the subloans and borrower progress. 13. Lessons Learned 13.1 Loan 610-ME reflected few changes in the basic project design utilized for Loan 430-ME. The project introduced a regional component and initiated an organizational restructuring of FONDO as the Project implementation agency, reflecting the Bank's concern to ensure an adequate response to the need of Mexican agriculture for credit. The disbursement rate exceeded expectations, and FONDO performed as an efficient second- tier institution to channel further Bank-funded credit programs. 13.2 The Project reached its main objective by contributing to increased livestock and crop production as well as stimulating agro-industries. It also initiated steps towards greater decentralization and institutional strengthening. Nonetheless, the Project design reflected several shortcomings. First, the effectiveness of the Project could have been enhanced by improved evaluation and monitoring of subloans by both FONDO and Bank. Physical production targets were overemphasized during Project design, while clearer criteria for beneficiary assessment and sectoral priorities for sublending were relatively neglected. Impact evaluation should have been incorporated as part of project design, providing a basis for designing follow-up projects. Finally, a sharper poverty orientation of the Project could have strengthened the beneficial impact on low-income rural producers without access to alternative sources of credit. 13.3 Some differences in the design of the Third Livestock and Agricultural Development Project (Loan 747-ME) reflect lessons from the implementation of the preceding Loans 430-ME and 610-ME. In addition to providing increased volumes of Bank funds, subsequent lending rightly incorporated new elements including (i) lending for infrastructure works and rural housing; (ii) establishment of further decentralized field offices for FONDO; (iii) intensified subloan evaluation and monitoring; and (iv) intensification of FONDO training programs. With the Fourth Livestock Project (Loan 910-ME), the previous lending bias towards large commercial producers was shifted towards lower-income farmers.  9- ANNEX I: STATISTICAL INFORMATION' 1. Related Bank Loans Loan Title Purpose and Loan Year of Status Comments Amount Approval 1. "FIRA 1' Development of FY 1965 Completed Combined Agricultural Credit Livestock 1969 Impact Study Project (Loan 430- Production for Loans 430- ME) (US$25.0 million) ME and 610- ME issued in 1972 2. Third Livestock Development of FY 1971 Completed Audit Report and Agricultural Livestock 1975 No.1573 issued Development Project Production in 1977 (Loan 747-ME) (US$75.0 million) 3. Fourth Livestock Development of FY 1973 Completed Audit Report and Agriculture Livestock 1975 No.2577 issued Development Project Production in 1979 (Loan 910-ME) (US$110.0 million) 4. Agricultural (US$125.0 million) FY 1976 Completed Audit Report Credit Project 5 1980 No.04240 (Loan 1217-ME) 5. Agricultural (US$200.0 million) FY 1978 Completed Audit Report Credit Project 6 1982 No.04240 (Loan 1569-ME) 6. Agricultural (US$325.0 million) FY 1980 Completed Audit Report Credit Project 7 1984 No.07931 (Loan 1891 -ME) 7. Agricultural (US$300.0 million) FY 1984 Completed Audit Report Credit Project 8 1988 No.08860 (Loan 2454-ME) (June 1990) 8. Agricultural (US$180.0 million) FY 1985 Completed Audit Report Credit Project 8A 1987 No.08860 (Loan 2610-ME) (June 1990) lSome Project data were not available, perhaps because they were never documented or due to the time elapsed between Project completion (1974) and the Project Completion Memorandum (1993).  - 10 - 2. Project Timetable Item Date Planned Actual Date Appraisal Sept./Oct. 1968 Post Appraisal Loan Negotiations 4/69 4/69 Board Approval 5/20/69 5/20/69 Loan Signature 6/12/69 6/12/69 Loan Effectiveness 9/9/69 9/19/69 Loan Closing 7/1/74 6/30/71 3. Loan Disbursements A. Cumulative Estimated and Actual Disbursement (millions of US$) FY69 FY70 FY71 FY72 FY73 Appraisal Estimate 12.712 19.528 26.344 5.640 0.776 Actual 4.148 28.051 32.800 0 0 Actual as % of Estimate 32.6 143.6 124.5 0 0 Date of Final Disbursement: 30 June 1971  4. Project Cost and Financing A. Project Cost (US$ million) Appraisal Estimate c Local Foreign Exchange Total Livestock - Countrywide 25.8 11.1 36.9 - Southeastern 66.2 12.6 78.8 Annual Crops 1.2 5.3 16.5 Perennial Crops 6.2 1.4 7.6 Agro-Industries 17.2 17.4 34.6 Technical Services 0.7 0.9 1.6 Working Capital 24.0 - 24.0 Total Project Costs 151.3 48.7 /b 200 /a Figures are rounded and based on prices prevailing in Mexico; contingencies of 10% included in components. /b In addition, aggregate foreign exchange costs of US$4 million were to be included in the working capital; commitment charges and interest on external borrowings during the disbursement period were estimated at USS12 million. /c No actual data were found in Bank records B. Project Financing (US$ million) SAR estimates /a IBRD Producers Participating Banks FONDO Total Amount % Amount %% Amount %0 Amount %% Amount Livestock - Countrywide 14 38 5 16 5 16 11 30 36 - Southeastern 28 36 15 20 13 16 22 28 78 Annual Crops 6 38 2 16 206 16 5 30 16 Perennial Crops 2 38 1 16 1 16 2 30 7 Agro-Industries 12 36 6 20 5 16 9 28 34 Technical Services 1 50 - - - - 1 50 1 Working Capital - - 7 30 3 16 13 54 24 Fotal Project Costs 65 32 39 20 32 16 64 32 200 ia No actual data were found in Bank records  - 12 - 5. Project Results A. Direct Benefits Indicators Unit Appraisal Estimate Estimated at closing Date Livestock -animal products for domestic metric tons 360,000 a/ consumption - incremental sales of males No. 17,000 Annual Crops metric tons 130,000 Perennial Crops metric tons 215,000 Agro-Industries -Value added US$ million 300.0 Additional Annual Export US$ million 8.0 Earnings a! Only available assessment is contained in an impact report based on a small loan sample (paras. 6.1 and 6.2) B. Economic Impact Appraisal Estimate | Actual Estimate Total Countrywide Southeastern Average Subproject Subproject Economic Rate of Return a 31 % 28% 34% _/ a/ Underlying assumptions of calculations based on farm models: Project rate of return estimate based on a 10 year life and adjusted for technical services and taxes. b/ Only available assessment is a qualitative one contained in an impact report based on a small loan sample (paras. 6.1 and 6.2). C. Financial Impact Appraisal Estimate | Actual Estimate Total Countrywide Southeastern Average Subproject Subproject Financial Rate of Return 32 % 28% 35% a/ a/ Only available assessment is a qualitative one contained in an impact report based on a small loan sample (paras. 6.1 and 6.2).  - 13 - 6. Status of Major Covenants Subject of Loan Agreement a/ Status (a) - Establishment of regional office for implemented Southeastern Sub-Project; appointment of Regional Resident Representative, regional technical Sub-Resident and General Coordinator; improve FONDO's organization (b) - Functional chart of FONDO organizational implemented structure (c) - Appointment of Senior implemented Technicians for Livestock, Agriculture and Agro- Industries; establishment of planning committee for technical services (d) - Promotion of improved seeds and plant /b varieties (e) - Promotion of lending program implemented (f) - Revision of interest rate pattern implemented (g) - Prior approval of IBRD of subloans exceeding complied with US$400,000 (h) - Arrangements on terms and conditions for lending complied with (i) - Prompt issuance of import permits for Project b equipment (j) - Use of loan repayments for Project related /b lending a/ As summarized in the SAR and Project supervision reports b Information not available in Bank files  - 14 - 7. Use of Bank Resources Missions Mo/Yr Number of Days in Speciality Performance Types of Problems Persons Field Rating Status Preparation /a 2 2 /a /a Appraisal 9/68 5 Ia /S /a Board Approval 6/69 1 4 /a /a through lb Effectiveness Supervision 1 11/69 /c /c /a /a Supervision 2 2/70 1 11 /' satisfactory Supervision 3 8/70 1 7 /a satisfactory Supervision 4 9/71 1 /a satisfactory Supervision 5 3/72 5 12 /a satisfactory - delays in appointing consultant for loan impact study Supervision 6 Ic 10/72 Ia /a Ia /a /a information not available in Bank files /b together with supervision for Loan 430-ME /c together with appraisal for Fourth Livestock and Agriculture Development Project