Announcement of Sixteen Million Seven Hundred Thousand Dollars to Colombia for Livestock Development on May 6, 1966

• 18.18 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 66/18 Subject: $16. 7 million to Colombia for May 6, 1966 livestock development The World Bank has approved a loan equivalent to $16.7 million to Colombia to assist in financing the first stage of a ten-year livestock development program. Essentially a pilot operation, the project will be the first step toward developing Colombia's large potential for more and better beef, dairy products and wool through more efficient and widespr.ead production. Colombia is predominantly au agricultural country and likely to remain so for some years to come. Approximately half the population of 17.5 million is 'rural, and a substantial part of the non-rural population is engaged in services related to • agriculture. Although coffee is the dominant crop, accounting for a quarter of agricultural production and more than two-thirds of. total exports, Colombif:?.~s soil, climate and terrain make it possible to produce a wide variety of crops, as well as livestock. In view of the world coffee situation, there is a great need to further diversify agriculture. One of the most promising sectors is livestock production: vast areas suited to grazing are now only partly use4 or used at low levels of inten- sity. Increased lives~ock production is needed not only for export, but also to meet domestic requirements. The population is growing at an estimated rate of 3.2% a year. This factor, together with rising. incomes, will increase the demand for meat and milk products. Current consumption is low. Furthermore, Colombia now im• ports 8,000 tons of fin~ wool annually. The project for which the Bank loan is being made was drawn up by a mission ~ under the cooperative program of the ·Bank and the United Nations Food and Agri- culture Organization. It covers the first three years of a 10-year program which  - 2 - ~- aims at the improvement of the beef cattle, dairy cattle and sheep industry. This ~ first stage is directed mainly at on-farm improvements, such as land clearance, fencing, water supplies, stockhandling facilities and the improvement of pastures and breeding stock. It is expected that operators of about 900 beef cattle ranches, 250 dairy farms and 35 sheep farms will participate. It is estimated that, by the end of 14 years, the farms participating in this first stage of the program will be able to increase production by about 58,000 tons of beef (liveweight), 63,000 tons of milk or its equivalent in milk products, and 400 tons of fine wool, with a gross value equivalent to $32 million. Assuming that half the increased beef production will be exported and that the fine wool will be an import substitution, the net contribution to Colombia's foreign exchange earn- ings, after allowing for the foreign exchange component of production costs and • debt service, would amount to some $10 million annually. The project will be organized and administered by the Caja de Credito Agrario, Industrial y Minero, an autonomous credit institution which is essentially engaged in agricultural lending. A specicl livestock development department, headed by a technical director with a small staff of experts, will be set up for this purpose within the Caja. This department will be responsible for assisting farmers in pre- paring individual development plans, for recommending these to the Caja for lending, and for supervising th~ execution of plans for which loans are made. The Government will make the proceeds of the Bank loan available to the Caja which, in turn, will extend credits to participants in the project. The project calls for an investment equivalent to about $28 million during the three years. The Bank loan will cover 601 of the total; the balance will be pro- vided by the Caja (221), participating farmers and dairy cooperatives (18%). About 901 of the total will be for farm development; the balance will cover the costs of ~  - 3 - • contractors' machinery, equipment and supplies for dairy cooperatives and technical services. Domestic and imported goods required will be procured by the ultimate beneficiaries through normal trade channels. The Bank loan will be for a tenn of 18 years and bear interest at the rate of 6% per annum. Amortization will begin September 15, 1972. The Government will re-lend the proceeds to the Caja for 18 years charging an additional 2% interest for assuming the foreign exchange risk. Two earlier Bank loans of $5 million each were made to the Caja for the import of agricultural machinery, spare parts and tools and other maintenance equipment. Both have been fully repaid • • •