Tunisia - Memorandum on review of agricultural projects and programs

RESTRICTED Report No. TO-618 This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION MEMORANDUM ON REVIEW OF AGRICULTURAL PROJECTS AND PROGRAMS TUNISIA December 28, 1967 Projects Department  CURRENCY EQUIVALENTS Since September 28, 1964 1 dinar = $1. 905 1 U.S. dollar = D 0. 525 1 million dinars = U.S. $1, 905, 000 1 million U. S. dollars = D 525, 000  TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ................... ................... 1 - v I. Introduction .......... .................................. 1 II. The Agricultural Sector in Tunisia's Economy . ........... 2 III. Recent Performance by the Agricultural Sector .... ....... 8 IV. Review of Projects ...................................... 11 A. Irrigation Projects (On--Going) .................... 13 B. Irrigation Projects (Proposed) ......... .. .......... 16 C. Agricultural Projects (On-Going) .................. . 18 D. Agricultural Projects (Proposed) ........ .. ......... 20 E. Forestry Project (On-Going) ..... ................... 21 F. Forestry Project (Proposed) ........... .. ........... 22 G. Fishery Project (Proposed) ........... .. ............ 23 H. Summary of Project Review ............ .. ............ 23 V. Technical Assistance Requirements ....................... 24 A. Planning and Project Preparation .............. 24 B. Research .................. ......................... 26 C. Extension and Training ............. .. .............. 27 VI. AgricJl.tural Inputs ....... .............................. 29 Tables: Production of Major Crops Fertilizer Imports Estimates of Phosphatic Fertilizer Use List of Agricultural Projects Acreage and Investment Costs of On-Going Irrigation Projects Estimates of Additional Agricultural Staff Requirements by 1971 Mission Suggestions on Project Priorities Map: Economic Map of Tunisia  ANME,ES 1. Lower Medjerda Irrigation Development 2. Irrigation Projects - On-going 3. Irrigation Projects - Proposed 4. Agricultural Projects - On-going 5. Agricultural Projects - Proposed 6. Forestry Project - On-going 7. Forestry - Proposed 8. Fishery Project - Proposed 9. Estimates of Bilateral Assistance to Tunisia 10. Terms of Reference  BEVIEW OF AGRICULTURAL PROJECTS AND PROGRAMS TUNISIA SUMMARY AND CONCLUSIONS i. In order to provide basic information for the meeting of a special Working Party on Agriculture established by the Consultative Group for Tunisia, a review of Tunisia's agricultural projects and programs has been prepared by an IBRD mission which visited Tunisia in late August and September 1967. The review is intended to assist the Working Party focus on the priorities and inter-related needs of the agricultural sector in a more detailed way than has been done in the past, and in being prefaced for this particular purpose it was not intended to provide any comprehensive sectoral study or detailed assessment or preparation of projects. The review which has resulted is therefore presented as a working memorandum to be used as the basis for discussions, rather than as a more thorough-going study of agri- cultural development in Tunisia. ii. Because of its importance to the economy, agriculture receives prominent attention in the Tunisian Plan Quadriennal, 1965-1968, and in recent years the agricultural sector has been receiving allocations of resources roughly commensurate with the relative contribution it makes to the Gross Domestic Product. Despite the efforts made to carry out agriculture plans and programs, the sector has not shown significant growth. Adverse weather conditions have caused large fluctuations in annual production, but in addition to this there has been little improve- ment in the quantities of modern agricultural inputs which Tunisia's farmers have employed. Fertilizers, mechanized cultivation, pesticides, and improved husbandry techniques all appear to have remained at levels which have changed very little. Several factors have contributed to cause this, but an important one has been a pervasive lack of experienced farm managers to stimulate and guide the mass of traditional farmers in new production methods and the use of modern inputs. iii. It is against this background that the review has sought to examine available projects for the purpose of identifying rough orders of priority, with potential attractiveness for foreign financing primarily in mind. The Government presented a total of 23 projects for examination, a large number of which deal with irrigation because a project approach has been applied more frequently in this sub-sector than in the others. Because projects constitute the most tangible building blocks in a development program, and as such would be of major interest to the Working Party, they have been the element of most emphasized in the review. Not all development activities are reflected in the projects, however, and for this reason the review also attempts to examine other areas and other means by which outside assistance might be utilized to promote development. These are included in the somewhat shorter treatment of technical assist- ance requirements and program aid to provide agricultural inputs. The major conclusions concerning projects and programs are summarized in the paragraphs which follow.  - ii - iv. Turning first to the projects, a number of possible develop- ments concern the region of the Oued Medjerda, which is the largest potential source of surface irrigation in the country. Major steps have already been talken to develop the region of the Lower Medjerda, where work is under the direction of the semi-autonomous Office de la Mise en Valeur de la Vallee de la Medjerda (OMVVM). Exploratory studies have also been undertaken in parts of the middle and upper reaches of the Oued Medjerda, and on tributaries leading into the main river. Since developments in one part of the Medjerda Basin could have adverse effects on future agricultural development in other regions of the Basin, the first recommendation calls for a comprehensive study of the Basin as a whole in order to determine the most economic use of the water resources which are available there. It does not seem desirable to delay further work in the OMVVM area until the Basin-wide study is completed, but any additional work there would have to be limited to that which is safe to do in light of the uncertainties about future development. The review therefore recommends that an IBRD mission be sent at an early date to analyze the extensive data already available and define and appraise a suitable project for possible IBRD lending. The same mission could also prepare terms of reference for the longer-term study of the Basin. v. There are also eight on-going irrigation projects expected to be completed by 1968 or 1969. All but one of these projects (e.g., Oued Chiba) are already receiving foreign assistance. With the exception of two projects which rely on groundwater supplies, all on-going projects have very high estimated costs per hectare. Despite this, it would be desirable to complete these projects as rapidly as possible because they are so well-advanced in the construction stage. Additions to irrigated acreage from these projects total slightly more than 30,000 hectares. vi. Among six irrigation projects proposed for future development, three are located in the upper reaches of the Oued Medjerda, and would therefore become part of the Basin-wide study recommended earlier. A fourth project, which proposes to rehabilitate the irrigated agriculture of the oases in the Southern part of the country, is interesting because of the possibilities there to raise early fruits and vegetables for export. Further study of the hydrologic and economic aspects is required, but as presently conceived the project merits a high priority so that project preparations can be completed soon. vii. Two proposed water projects -- Lake Ichkeul (irrigation) and Oued Zeroud (flood control) -- have been given lower priority, largely on the basis of the economic evaluations indicated by the studies made to date. The Lake Ichkeul project, however, is complicated by the fact that it has multi-purpose objectives, and is potentially linked with developments in the Medjerda Basin. viii. There are two on-going projects falling in the broad category of agriculture, and both involve cooperative development. One is a project to form Production Cooperatives (UCP) in the Northern Region, which is being financed by the IBRD and IDA. This financing is to provide a variety of agricultural inputs needed to alter the present cropping  patterns, largely by adding a livestock component to replace the fallow period which currently follows cereal crops. The project will also introduce some limited irrigation activity on the cooperatives. Technical assistance to the cooperative program will come from a Bureau of Control, especially established for this purpose, and staffed by Tunisian and expatriate tech- nical personnel. This project has been given a high priority because it can provide a good test of the viability of this type of cooperative approach to agricultural development in Tunisia, it has substantial foreign assist- ance already, and the lessons derived from exDerience under it will provide invaluable guides for future projects of this kind. ix. The second on-going agricultural project is a Polycultural Coop- erative located in the Central Region. Cooperative units under this project would be established to provide more controlled and assured grazing facilities for livestock through the introduction of limited irrigation and reserve forage areas, in addition to providing certain service and ectension functions. This project has been given a somewhat lower priority, largely because it is less well-advanced than the Production Cooperatives project, and because experienced farm managerial personnel remain scarce. Cooperative projects are unavoidably in competition for such scarce services, and under these circumstances the relative priority has been given to the better financed and better organized Production Coop- eratives of the Northern Region. x. In addition to the two on-going projects in agriculture, the Government has provided project descriptions for three proposed projects -- a cooperative project which would be an expansion of the Production Cooperative project which is on-going (and described above), a Service Cooperative for the Sahel region, and a technical assistance project (submitted for UNDP assistance) to train cooperators and cooperative managers, and provide planning help for cooperatives in the Central region. A fourth proposed project, for a service Cooperative to be located in the Northern Region, is under preparation, but details were not yet available. xi. The technical assistance project merits a high priority because it would be directed toward overcoming the lack of practical managerial experience, and as such fills a very critical need in the agricultural sector. The remaining cooperative projects have been placed in the category of a second priority, mainly for the reasons advanced in the case of the on-going polycultural Cooperative project in the Central Region -- i.e., the existing scarcity of experienced managerial and supervisory personnel for cooperatives will limit the rate at which new cooperative projects can proceed. Where a choice of this kind has to be made, it seems preferable to restrain the implementation of new projects, or in the case of the Polycultural Cooperative project one vhich is barely started, in order to ensure adequate leadership for the on-going Production Cooperative (UCP) project. As experienced personnel become available in large numbers, this restraint should be eased.  - iv - xii. Two forestry projects were presented by the Government -- one proposed (Forest Exploitation), and one on-going (Reafforestation). The Reafforestation project is a plantation scheme for production of pulp to be used in paper manufacture, and is expected to include 40,000 hectares by 1975. Further economic studies are required to resolve questions about its ultimate economic contribution. The Forest Exploitation scheme would exploit timber areas already grown, and is more promising on the basis of present information. A study of the project's technical and economic justification should receive high priority. xiii. A fisheries project to modernize the coastal fishing fleet has been drawn up. While there appears to be a basis for assuming that coastal fisheries can be utilized to increase domestic food sources and provide export earnings, the project requires considerable preparatory work before it could be considered for external financing. On the basis of this state of readiness for implementation, it has been ranked below projects in the first priority. xiv. In looking beyond the available projects, the review has attempted a general examination of technical assistance efforts and requirements. One important activity requiring assistance is in the preparation of projects particularly in the economic evaluations. This need became clear in the course of reviewing the projects which were presented for consideration. Besides project preparation in the narrow sense, technical assistance could help to improve overall planning activities, and thus bring benefits in terms of better coordination of development programs as well as better bases from which to attract foreign assistance. xv. A number of important research problems require attention -- irrigation agronomy, sugar beet production, and improved forages among others -- and technical assistance for research should reduce the time required to obtain useful results to be implemented under the agricultural programs. The review does not contain any estimates of research needs, but the importance of research to increase productivity makes it vital that this activity receive adequate support. xvi. The review makes frequent reference to the critical constraint imposed by the shortage of experienced managerial and supervisory personnel to direct the cooperatives and work with farmers in the traditional sector. The Government has begun to take steps to reduce this constraint, but helping to remove this inexperience offers wide opportunities for technical assistance from abroad in matters such as management, equipment maintenance, improved husbandry techniques, and livestock care. The training of extension per- sonnel, and the eventual field work of those who would be trained, could also benefit from more and better equipment for practical demonstrations, and more transport facilities to increase the mobility of field staff.  xvii. Because technical assistance activities tend to cut across the entire range of agricultural interests, and receive support from a variety of sources, it is difficult to coordinate them effectively. A more rational and economic use of technical assistance resources would probably result from a thorough study at this time of the needs and availabilities. xviii. Foreign exchange is required to maintain a flow of modern agricultural inputs, and commodity loans and project aid currently provide an important component of input needs. It is not clear whether a lack of foreign exchange is responsible for inhibiting the growth of input use in any respect, but as standards of husbandry rise the demand for modern inputs should rise correspondingly. This assumes that the structure of incentives to agriculture will encourage the use of modern inputs. As this occurs, lack of foreign exchange should not be allowed to become a bottle- neck restricting use of inputs.  RDVEIWT OF AGRICULTURAQ PROJECTS AND PROGRM24S TUNISIA I. INTRODUCTION 1.01 The Consultative Group for Tunisia recently established a Working Party on Agriculture to consider various aspects of the agri- cultural sector of the Tunisian economy. The Consultative Group also requested the IBRD to review the Tunisian agricultural sector programs and projects, and to submit a report on that review to the Working Party. This review would provide a basis for discussions to be held by the Working Party sometime prior to a meeting of the full Consultative Group scheduled for early 1968. The report which follows contains the findings and views of an IBRD mission sent in response to that request. Members of the mission were in Tunisia from August 24 to September 27, 1967, and included Messrs. J.B. Hendry, P.Z. Kirpich, H. Kordik, C. Brochu (FAO), and C. McMeekan (Consultant). 1.02 The appointment of a Working Party to deal specifically with a single sector -- in this case the agricultural sector -- is a new and experimental step for the Consultative Group. It results from a desire to focus the Consultative Group's attention on the priorities and inter- related needs of a sector in a more detailed way than has been done in the past, and thereby determine whether this approach fosters a more effective coordination of the financial assistance offered by member countries of the Consultative Group. For its part, the Bank mission was asked to examine the Tunisian Government's program for agricultural development and the projects which form a part of that program, and to offer suggestions on project priorities and the requirements for both technical assistance and the supply of agricultural inputs. The complete terms of reference for the mission are attached hereto as Annex 10. 1.03 The main body of the report starts with a brief description of the background for agricultural development in Tunisia and a summary view of recent sectoral performance. This is followed by discussion of the agricultural projects which have been prepared by the Government, some estimates of technical assistance requirements, and a review of the supply situation for agricultural inputs. Project descriptions, with somewhat more detail than given in the main part of the report, are provided in Annexes 1 through 8. 1.04 The description of project possibilities and future developmental prospects in the Basin of the Oued Medjerda is presented more fully than the other projects because the Basin provides the single most important surface irrigation opportunity in the country. Substantial investments in irrigation and flood control have already been made in the valley of the Lower Medjerda, and technical studies covering potential continuations of these works have been carried out. The Basin as a whole, however, presents several complicated problems which are discussed in both the main report and in Annex 1.  - 2 - 1.05 Annex 9 summarizes the types of foreign assistance made avail- able to Tunisia in two recent years (i.e., in 1965 and 1966). This annex shows (by country) the amounts available in loans and credits, the amounts available in forms other than loans and credits, and the numbers of expatriate personnel working in the agricultural sector. II. THE AGRICULTURAL SECTOR IN TUNISIA'S ECONOMCY 2.01 Under any of the usual criteria, agriculture makes an important contribution to Tunisia's economic well-being. Although not blessed with a rich endowment of natural resources suited to a highly productive agri- culture, the agricultural sector has been providing a substantial base for the national economy. Slightly more than half the working population is employed in agriculture, and thus directly affected by either improve- ment or deterioration in sectoral performance. Agricultural produce is also currently providing nearly half of the total value of exports of Tunisian merchandise, or about one-third if the total export values of both goods and services are combined. The agricultural proportion of Gross Domestic Product (GDP) has averaged 21 percent on an adjusted trend basis over the period 1962-1966, and this proportion rises to 27.5 percent if the contribution of food industries is added to that of agriculture. Finally, investments in Tunisian agriculture have been taking place at a rate of about one-fifth of all investment. 2.02 Government estimates currently place the area considered agri- culturally productive at around 9 million hectares, or a bit more than half the total area of the country. In turn, only half of this (4.5 million hectares) is arable land. Another 40 percent (3.6 million hectares) is in range land and esparto grass, and the remaining 10 per- cent (0.9 million hectares) is forest land. The pattern of rainfall in Tunisia is such that it is adequate to support a highly productive agriculture in only a relatively small part of the country along the northern coastal portion, while a major part of the total area of the country lies witlhin arid or semi-arid zones. The combination of rain- fall and topographical features in Tunisia permits one to identify at least six different agricultural regions: (a) The region of Tunis and Cap Bon -- richest agricultural region, in the Northeastern part of the country, with good soil and rainfall that varies between 400 and 600 mm annually. Production is diversified, and includes citrus, vegetables, wine grapes, and dairy products. (b) The plains of Northern Tunisia -- the second richest agricultural area, with variable rainfall in the range of 400 to 600 mm annually. The region includes part of the Medjerda Basin and the hills along the Tell. Major agricultural production is in cereals, with some livestock as well.  (c) The mountainous area of Kroumirie and Mogods -- a watershed area of the Oued Medjerda with valuable forest resources, and the drier areas of the Tell mountains which are partly cultivated. Future prospects appear best if development can be generated in forestry production and forest grazing. (d) The Sahel region -- a region stretching along the eastern coast from Cap Bon to Zarzis, with low rain- fall of 200 to 300 mm annually. It is an important area for olive production, some almonds, and some rainfed cereals. Coastal oases in the southern portion produce dates. (e) The central region -- a semi-arid steppe region largely used for grazing sheep. Olive production has been growing in recent years, and esparto grass grown here is being used for paper production in a factory located at Kasserine. (f) The southern desert region -- an arid area where agri- cultural opportunities are limited to the scattered oases which produce dates, vegetables, and some grazing for camels and goats. 2.03 Tunisia's major agricultural export commodity is olive oil, and Tunisia is, in fact, the world's second largest exporter of olive oil. Former preferential market opportunities for wine exports to France were terminated in 1964, reducing the degree to which continued reliance could be placed on finding export outlets for wine, but France opened a small quota again in 1966 and some exports were moving to Africa and Europe in 1966 and 1967. Tunisia has exported hard wheat in the past because this commodity commanded a premium over soft wheat in world markets, and the Tunisian qualities are well-known and well-accepted in some importing countries. Since Tunisia has not been self-sufficient in cereal product- ion, the export of hard wheat has required equLivalent imports of soft wheat, plus whatever additional quantities were necessary to meet domestic needs in particular years. Exports of citrus have shown a rising trend in recent years, with oranges enjoying a favored position in European markets because of consumer preferences for the particular variety grown in Tunisia. There has also been some export of vegetables, but the main advantage of this export crop rests with the limited areas which can produce early-maturing varieties. Exports of animal and vegetal origin tended to fluctuate betwreen 30 and 36 million dinars during the year 1962-1965. 2.04 Despite the export contribution of agriculture, it should be noted that Tunisia also imports agricultural products in substantial amounts. Imports of soya bean oil, grains, and other foodstuffs totalled D 24.5 million in 1966. This was admittedly a poor crop year, and the import of foodgrains was particularly heavy, but agricultural products did constitute about one-fifth of all imports for that year. Other than food- ,grains and oil, important categories of agricultural imports for the same year included approximately D 2 million of dairy products and nearly D 3 r-d1lion for suga; and sugar produ.cts.  - 4 - 2.05 Given the importance of agriculture to the Tunisian economy, and to the large proportion of the population directly dependent on farming, it is not surprising that the sector has received considerable attention in the Government's planning efforts. The basic planning document is currently the Plan Quadriennal (referred to hereinafter as the "Plan"), which covers the period 1965-1968 and was originally drawn up in the context of a perspective plan covering the ten-year period 1961-1971. One of the three volumes making up the Plan (Volume II) is devoted to the agricultural sector, which is further divided into nine sub-sectors, or chapters in the Plan document: Forestry, Conservation of Water and Soils (CES), Agricultural Hydraulics, Major Crops (e.g., cereals, legumes), Tree Crops, Market Vegetables, Live- stock and Forage Production, Support Activities, (Research, Extension, and Technical Studies), and Fisheries. In general terms, the Plan contains estimates of current (i.e., pre-Plan) crop production and cultivated area, crop production targets to be achieved by certain years (by region), estimates of total costs and value to be added by development, overall changes in the areas given to different crops, references to studies carried out or intended, changes to be made in cropping methods, and estimates of input needs. With the exception of the section dealing with Agricultural Hydraulics, the Plan is not broken down further into specific projects. In other words, while the goals of developmental efforts are given in the Plan, there is no reference to the year-by-year, project-by-project details which would bring achievement of the goals. It is also difficult to determine the extent to which some of the targets may be mutually exclusive because the total requirements are not summed up, either by year or Plan period. Since scarce resources (and particularly experienced technical personnel) are probably not sufficient to carry out all the proposed programs at the estimated rate of implementation, this is a serious deficiency when attempting to estimate the effectiveness of the Plan. 2.06 The targets which have been set, and the methods which have been used to achieve them, reflect some of the major considerations which Government planners have had uppermost in mind. A brief listing of several of them indicates something of the strategy for agricultural development which is being pursued: (a) The Government would like to make the cooperative form of organization the pre-eminent agricultural institution in Tunisia, but the type of cooperative to be established is being tailored to meet differing circumstances. For example, Production Cooperatives (UCP) are being formed in the Northern Region, where they will replace the farm units formerly owned by French and Italian colons. Land reform objectives call for transfer of these lands to farmers from the traditional sector. Instead of distri- buting this land in small individual plots, however, the Government is providing new owners with shares in the Production Cooperatives. It is expected that the cooperative units will operate as single large-scale farms, essentially retaining the production methods and scale of operation typical of the colon farms before.  - 5 - A different type of cooperative, the Polycutural Cooperative, is being installed in the Central Region. Agricultural and land-ownership conditions there are quite unlike the North. The Polycultural Cooperatives are designed to operate as a single large unit to promote rotational grazing of livestock, instead of the scattered, uncoordinated over-grazing as at present. They would also have a small irrigated area for each, where reserves of pasturage could be grown for use in dry years. Livestock and olive trees would remain privately owned on these cooperatives. Cooper- atives to be formed in the oases of the arid Southern Region would attempt to rationalize land use in the small irrigated areas, and in some cases would try to increase the local employment opportunities. Finally, there are to be Service Cooperatives. These are being established to provide marketing services, credit, and agricultural inputs to medium and large scale private farms. Service Cooperatives may also be organized around common activities on private farms, such as irrigation or olive growing. (b) Whatever the social and other non-economic objectives to be accomplished through an emphasis on cooperatives, this particular institutional form also offers certain advantages in promoting agricultural development. For one thing, it retains a scale of operation which has apparently worked well under colon management - especially true in the case of the UCPs in the Northern Region. Secondly, in theory Cooperatives offer a means by which extension staff can more readily introduce modern farming practices and techniques to traditional agriculturists, since the cooperative members are under the direction of cooperative managers who are expected to work closely with extension personnel. Service Cooperatives are designed to help private farmers obtain necessary agricultural inputs such as fertilizers, pesticides, and farm machinery (through rental of machinery services), and this would also work toward increasing agricultural productivity. Cooperatives of all the different types are thus regarded as institutions through which productivity-promoting activities can be channeled readily -- more efficient in this respect than would be attempts to increase the productivity of a traditional agriculturist population scattered on small- scale farms or conducting unrestricted grazing on the limited available forage. It should be noted, however, that the viability of this institutional innovation remains to be established by future performance.  -6- (c) The emphasis on cooperatives as institutions to promote agricultural productivity is understandable when it is realized that further increases in total output must come largely from productivity increases, rather than from increases in the area under cultivation. The best agricultural land in Tunisia is already under cultivation, and no significant opportunities exist to add large areas to it. There would be shifts in cropping patterns such that more of some crops would be grown and less of others, all taking place within roughly the same cultivated area as at present. In this context, of course, production of some crops could increase if cultivated acreage under that crop increases, but this is not inconsistent with the main point -- e.g., total cultivated area in Tunisia is not expected to increase by any significant amount. (d) Some of the major changes in cropping pattern include an anticipated reduction of about 20 percent in the area under cereals, and a substitution of forage production for fallow over large areas as part of a livestock improvement program. The loss of preferential wine markets in France is expected to bring a shift out of wine grape production and into crops such as citrus (where soils permit), almonds, or olives. Other cropping pattern shifts include increases in early fruits and vegetables, citrus, and pistachios, all for expanded export to foreign markets. It is important to note, however, that only a relatively small part of Tunisia's arable land is in a warm enough climatic zone to produce fruits and vegetables significantly earlier than southern European producers. While some early production is possible, such opportunities are quite limited. (e) Irrigation is expected to make a critical contribution to production in certain respects, particularly where market vegetables, citrus, and livestock (forage) will provide high value outputs, but the scale of this contribution is relatively modest. The Plan estimates that pre-Plan irrigated area was about 78,800 hectares to which all on-going irrigation projects (excluding the Lower M4edjerda Valley as a currently on-going project in this sense) would add only to 30,000 hectares by 1969. Some estimates, however, place the pre-Plan irrigated area at less than the figure given. With a total arable area of 4.5 million hectares, this is a modest irri- gation effort in terms of area to be included. Surface irrigation is to be provided in several locations, but the major source of surface irrigation would be the  -.7- Basin of the Oued Medjerda. Irrigation elsewhere is to come primarily from wells, and would provide fairly restricted opportunities for expanding irrigated acreage. Some limited expansion of the cultivated acreage is expected to be possible in the South, where deep wells could add new oases in the desert region. (f) Livestock production is an important potential source of agricultural growth, and it is provided for within the general planning for cooperative development. Expanded meat and milk production could reduce some of the current import expenditures (e.g., for dairy products), and would also contribute to an improvement of the average Tunisian diet. Different approaches are being tried -- in the Northern Region, a change in cropping pattern from the cereals/fallow/cereals rotation of the colon farms would substitute forage for the intervening fallow in the rotation. In the variable rainfall area of the Central Region, where inadequate rainfall in the past has brought heavy stock losses, the Polycultural Cooperatives will enforce rotational grazing coupled with access to irrigated pasturage and forage (from a variety of spineless cactus) when natural forage sources are affected by drought conditions. Natural milkshed areas near the urban centers (e.g. Tunis and Bizerte) would rely on irrigated pasturage for dairy herds, and this dairy production would be closely tied to gathering and processing facilities to improve the marketing opportunities for milk. (g) The Government is anxious to expand employment opportunities in the Tunisian economy, but it is not looking to agriculture to increase the numbers employed in that sector. Government also wants to maintain the population balance between regions, and in this respect it does look to agriculture for assistance by discouraging migration, particularly by providing livelihoods for people in the Central and Southern regions. The Cooperative program for those regions is an expression of this employment objective. Finally, Government does hope that the population now engaged in agriculture can find more chances to increase the amount of time spent in agricultural employment, and thereby increase incomes by additional productive work. This is an understandable and desirable objective, but some of the planning for cooperative activity, such as the retention of large-scale units and the continued use of farm machinery and extensive farm operations, may conflict with the objective of providing additional on-farm employment for the existing work force in agriculture.  - 8 - (h) Government continues to exercise a very strong influence over agricultural development by retaining price and marketing controls on the major crops, preferring to provide production incentives through subsidies on important inputs rather than relaxation of the price control on marketed crops. A large part of the rationale for this type of policy is the desire to stabilize the food prices for non-agricultural consumers, but this type of policy also has obvious weaknesses with respect to its effects on the incentives to produce and on the allocation of resources between alternative types of crop production. III. RECENT PERFORMANCE BY THE AGRICULTURAL SECTOR 3.01 The available evidence suggests that Tunisia's agriculture has remained essentially unchanged over the past few years. Production data for the major crops reveal wide fluctuations in output from year to year -- fluctuations which have been due primarily to climatic factors. These variations make it difficult to assess the underlying trend with accuracy, but it seems clear that the situation in the agricultural sector has not been one of vigorous growth. The IBRD mission, reporting on the current economic position and prospects in March 1967, 1/ noted a 2.0 percent sectoral growth rate for 1960-1965, but the poor harvests of 1966 would lower this estimate. However, given the large annual variations, and the small number of years covered, such estimates of trend growth rates are not too meaningful. It is necessary for purposes of this report to observe only that there are few signs to date indicating basic change in the capacity to sustain agricultural growth. Table 1 presents the production figures for major crops, 1960 to 1966. 3.02 These data show there is no pronounced growth trend for foodgrains, and apparently none for olives. In fact, the latter seem to have been declining steadily since 1963. This reflects both the poor rainfall of recent years and the low stages of the production cycle for olive trees, and therefore may not actually indicate a reduced growth trend. Wine grape production may reflect Government efforts to gradually decrease the acreage devoted to this crop, but recent acreage data were not available to show the extent to which this is taking place. Production capacity for citrus is slightly expanded, largely as a result of increased acreage under oranges. The output of vegetables (e.g., artichokes, potatoes, peppers, and tomatoes) shows a rising trend, and while this may have future significance because of the high value of these crops, at present they occupy only about one percent of the area under cultivation. 1/ Citations hereafter to the work of this mission are made to the ("1967 Economic Report").  3.03 Only fragmentary data were available on yields, but these show that yields of foodgrains (e.g. hard and soft wheat and barley) were lower in 1965 than they were in 1962 and 1963, both of -which were comparable years of good rainfall. The same is true in the case of vegetables, with the exception of artichokes. In fact, yields of potatoes, peppers, and tomatoes were lower in 1965 than they were in 1960, although total production was higher in all cases. 3.04 There are several possible explanations why the growth in agriculture has been so limited, but failure to provide financial resources is not among them. It was noted earlier that Government has been allocating to agriculture a proportion of total investment under the Plan roughly equal to the proportion of Gross Domestic Product (GDP) supplied by agriculture, e.g., about 20 percent. Projections of planned investment made in the 1967 Economic Report for the four years, 1967 through 1970, even call for a rise in the proportion of the total going to agriculture (to slightly more than 26 percent over the entire period), while agriculture's proportion of GDP is expected to decline further below the present level. Some of the recent investment in agriculture has undoubtedly been a replacement of worn-out agricultural equipment, but some of it was net new investment designed to increase agricultural productivity. 3.05 A look at the recent pattern of input use tells something of the reasons why agricultural growth has remained sluggish. Data were available only for domestic production and imports of fertilizers, rather than for actual application, but on this basis there does not seem to have been any notable increase in domestic use of fertilizers over recent years. This is certainly true in the case of nitrogenous fertilizers, all of which are imported into Tunisia. Imports in 1966 were lower than either 1963 or 1964, even after good harvests in 1965. The reasons for this are not clear - whether lack of foreign exchange, slowness in placing orders, or lack of demand by farmers - but the use of nitrogen is obviously not rising. Potassic fertilizers, also imported, show the same pattern, but here the reason is because ample notash is already available in most Tunisian soils. Production of phosphates in Tunisia has growm steadily, but so have exports. To estimate domestic use in recent years one can deduct exports from production, and assume the balance is being used by Tunisian farms. This method of estimation neglects any change in stocks from year to year, but in the absence of any better data it is a crude approxi- mation of annual use. Using this basis for estimation, domestic use of phosphates has moved upward, but only slightly, from the levels of application existing in 1962. Fertilizer data are shown in Tables 2 and 3. 3.06 Other inputs include machinery and spare parts for mechni- zation of agriculture, and materials for the protection of plants against insects and diseases. One measure of the relative role of farm mechanization is the availability of tractors and other mechanized equipment. Receipts of tractors of different kinds during 1960 through  - 10 - 1966 were running at an average rate of around 1000 per year. Some of these were replacement of worn-out equipment, but some represented net additions to stocks. A new tractor assembly plant was opened in Tunis in 1966, and in that first year it assembled 750 tractors. A stock of around 300 tractors still remained in mid-1967, although there was no new assembly by the plant in 1967. While this appears to show increasing mechanization of agriculture, acquisition figures alone are not very conclusive. For one thing, the utilization made of tractors and other equipment is as important in assessing the impact of mechanization as the size and nature of the stock, and no data have beeni collected on such utilization. From observation in the field, however, it seems probable that less efficient operation of the existing stock in recent years may have offset any apparent advantage due to the buildup of that stock over previous levels. Spare parts have been imported in 1966 and 1967 under foreign loan, but lack of maintenance personnel has been an important bottleneck, and the cost of equipment repairs in the private sector is extremely expensive. On balance, it is unlikely that mechanization efforts have raised productivity much above levels achieved earlier, although more efficient utilization should begin to bring good results in such activites as preparing fallow land for forage production. 3.07 Officers of the plant protection service report that the rate of application of pesticides and other plant protection materials has not been increasing in recent years. The one exception to this was the protection of citrus crops, which is being done directly by the plant protection service for all citrus acreage. Technical assistance from Austria has provided aerial spraying facilities for this citrus program. The plant protection service is also responsible for assistance to farmers at times of major problems, such as locust attacks, but there is no general program at present to expand the normal use of plant protection materials on either cooperatives or private farms. 3.08 There remains the question of whether there have been significant improvements in the quality of husbandry practiced on Tunisian farms, and in this respect it seems clear that the standards of cultivation practice are an extremely weak element in the agricultural input program. The departure of the expatriate farmers left a major gap in terms of knowledge of, and experience with, modern agricultural techniques and equipment. To bring about a transition whereby traditional agriculturists become modern farmers will require supervision and guidance by people with more training and experience in modern farm operations than are presently available in Tunisia. Moreover, it will take time to acquire an experienced cadre of trainers and supervisors, although the Government has made good progress in providing the initial training of such a cadre. The operational standards of some cooperatives have obviously declined in effeciency relative to the earlier period -- a view based in part by observation of actual farm operations -- and the lack of experienced man- power must be a factor in the limited use of modern inputs and the ineffi- cient operation of agricultural equipment described above. In short, while the general strategy for the agricultural sector may be suited to the conditions in Tunisia, farm operations have not yet begun to match up to the standards required by the strategy.  - 11 - 3.09 The preceding abbreviated view of both development policy and recent agricultural performance is presented as background to the project and program review which follows. Because of this background, the review tends to comment favorably on activities which have the effect of improving the qualitative, or increasing the quantitative, contribution of modern farm inputs, including managerial skills among them. Conversely, the high development cost per hectare and the relatively long gestation periods involved in irrigation works suggest it would be appropriate to adopt a more cautious approach toward future irrigation development. Further, it was noted earlier that although resources for agricultural development have been generally available, there are few signs of significant growth to date. This indication of possible under-utilization of facilities has underlain recommendations in this review that development efforts should be consol- idated, and a somewhat slower pace of implementation should be followed than originally planned. IV. REVIEW OF PROJECTS 4.01 The agricultural projects included here for review are those which can be categorized as falling within fairly well-defined limits with respect to: (a) the area to be covered; (b) the nature of the activities to be carried out; and (c) the time schedule to be followed in achieving project objectives. With the exception of the irrigation sector, however, the Plar. does not contain projects in this same sense. The Government has provided, on request, project information for all cases where this was already available and could be assembled in an appropriate project description. As a result, descriptions are available for 15 projects in irrigation (of which nine were on-going), five projects in agriculture (of which two were on-going), two projects in forestry (of which one was on-going), and one fishery project. Only these projects have been included in this project review. 4.02 The project position is summarized in Table 4. Since the working definition of a "project" used here is somewhat restrictive, the projects in the list cover much less than the full range of developmental activity in the agricultural sector. Many activities, and several sub-sectors, are omitted because information on them could not be easily assembled in a project description. Thus, for example, the list in Table 4 contains no horticulture, soil conservation, or livestock projects. Some activities under these headings are carried out under the cooperative projects which are listed (both on-going and proposed), but some are not. No project descriptions were received for research, extension or technical studies, but it is unlikely that activities in these fields are included in any of the projects listed in Table 4. 4.03 Just as the projects under review do not cover all developmental activity in agriculture, they do not include all agricultural activities which receive foreign assistance. Tables are provided in Annex 9 which show foreign assistance to agriculture during 1965 and 1966, by country and by program, and these provide more detail than Table 4 on what various  - 12 - countries have done. In addition to projects which are listed, therefore, assistance may have been given to complete a feasibility study, to support research personnel at experimental stations, to purchase cattle abroad, or to make a survey of underground water conditions. These types of activities make important contributions to agricultural development, and later sections of this report will indicate where these should be continued. 4.04 It should be evident from the foregoing that the Government of Tunisia has not made much use of a project approach to planning, either for its own purposes or to obtain foreign assistance. Because most activity takes place under broad program headings, plans for agricultural development have not been prepared in specific terms and implementation has tended to be poorly coordinated. There are exceptions to this Judgement, but for the most part the acquisition of inputs has not been directly related to expected production increases, proposed production methods are not always the most economical, projected output is not always consistent with estimates of future demand, and scheduling of total developmental activities does not reflect a realistic appraisal of abilities to carry them out. One important advantage of planning should be that it imposes a discipline to force a comparison of alternative uses for scarce resources. Planning around a substantial core of specific projects should enhance this disciplinary aspect of planning, and thereby the effectiveness of planning. Since planning will continue to be a major element in Tunisia's developmental efforts, more project formulation and better project preparation should bring benefits -- both in greater impact on future production, and better bases on which to attract assistance from abroad. Planning needs are discussed further in the section dealing with technical assistance, but it seems appropriate to raise these planning problems at the outset of the project review. 4.05 Some effort is made in the review to indicate an order of priority for the projects which were presented by the Government. It is important that these priorities be regarded as no more than rough indications, because there has been no opportunity to study any of the projects in detail and there is thus no solid basis for making judgements. Mloreover, and for the same reason, the assignment of a high priority does not imply approval of a project as such. Within this general framework, projects have been assigned one of three priority ratings -- first, second, or low. The three factors considered in deciding these priorities included (a) the general readiness of the project for implementation, (b) the probable impact the project would have on production, and (c) the relative ease in completing the project and bringing it to the stage of successful operation. Of the three criteria, readiness for implementation and the ability to complete the project were the important elements in deciding on the priority. In some cases, however, a first priority has referred only to the start of feasibility studies on a project, since the project appears promising from the standpoint of potential increases in production but requires more thorough study before it becomes ready for implementation. Under the circumstances, these are obviously highly subjective judgements, offered primarily as a basis for discussions within the Working Party.  - 13 - A. Irrigation Projects (On-Going) 4.o6 Information is available for nine on-going irrigation projects, the largest and most important of which is the development of the lower valley of the Oued Medjerda. The scope of this project depends, however, on activities which may take place elsewhere within the entire stretch of the Oued Medjerda lying inside the boundaries of Tunisia, and this fact creates problems of great complexity. A more extensive discussion of development of the Oued Medjerda Basin is given in Annex 1, but the main elements of the recommendations may be repeated here. 4.07 Work on the Lower Medjerda has thus far been carried out by an autonomous agency, the Office de la Mise en Valeur de la Vallee de la M4edjerda (OMVVM). By 1959, investment (in major structures) had reached a total of D 17.2 million, and a net irrigable area of 12,178 hectares had been developed. The OMVVM is currently proposing a further investment of D 12.4 million for the Plan period 1965-1968, of which only D 5.2 million is directly related to irrigation of new areas (10,967 hectares net irrigable). It is the latter amount which has been included in requests for foreign assistance. 4.08 Any developmental work carried out in one part of the Oued Medjerda Basin could have an adverse effect on agricultural prospects in other parts of the Basin. For this reason no region can be considered in isolation. On the other hand, it is not desirable to suspend all further developmental activity in the Oued Medjerda Basin until all out- standing questions are resolved. In order to minimize delays in continuing the development already started in the Lower Medjerda, and still deal effectively with the problems of inter-relationship between different parts of the Basin, will require a comprehensive approach to project planning. 4.09 An overall study of the Medjerda Basin is necessary to guide future development of all regions of the Basin. Growing demands on the Basin resources for both drinking water and irrigation will increasingly raise questions of availability of future supplies and increasing salinity. A Basin-wide study should cover hydrologic, agricultural, and economic aspects, and should also consider the type of organization needed to operate a complex mixture of facilities (e.g., storage dams, tubewell fields, trans-basin diversions) and install the necessary monitoring devices. A study of this kind could take about three years, but the ultimate cost of the study will depend on such things as the availability of counterpart personnel and the present status of various studies and investigations. Costs could range between D 250,000 and D 500,000, but a more reliable cost estimate and more specific terms of reference must be prepared at a later stage. 4.10 While a study of the Oued Medjerda Basin is in progress, it should be possible to continue some developmental work on the basis of the start already made in the OMVVM project area. The African Development Bank is considering financing part (e.g., around 3,000 hectares) of the proposed further development area of 10,967 hectares noted above. The IBRD also plans to send a mission to define and appraise a project in the  - 14 - proposed development area for consideration for IBRD lending. A large amount of data has been collected, but further analyses appear necessary to resolve problems relating to adequacy of water supplies, the salt content of the Medjerda water, and the appropriate scope for financing. A technical mission is required to examine the existing data which bear on these problems, and to also look carefully into the proposed cropping patterns, the marketing prospects, management capacities, and the methods of construction to be applied. This mission could also draw up the terms of reference for the study of the entire Medjerda Basin, and prepare estimates of the cost of such a study. If sound development plans for the next stage of work in the OMVVM project area are to be made, the Government must be willing to restrict development of the upper and middle valleys of the Basin to a rate and type of development which neither jeopardizes that next stage of OMVVM project continuation nor prejudices any recommendations to be forthcoming from the Basin-wide study. 4.11 A high priority should be given to the selection of qualified technical personnel to carry out the study of the Oued Medjerda Basin and the requirements for its integrated development for agricultural and other purposes. There are no technical reasons why the two studies cannot be launched quickly. 4.12 There are eight other on-going irrigation projects besides the OMVVM, and these are expected to add 30,281 hectares of gross irrigable acreage. Several of these have been under construction for some time, but two-thirds are currently scheduled for completion by 1968. The rest should be finished during 1969. With the exception of the Oued Chiba project, which is relatively small, and the OMVVM project described above, all on-going irrigation projects currently receive some financial assistance from abroad. The Oued Chiba project has been financed solely by the Government of Tunisia; the OMVVM project has had some foreign financing in the past, but does not have such assistance at present. The list of these eight on-going projects, together with their gross irrigable acreage, total investment costs, and average cost per hectare, is presented in Table 5. 4.13 The most striking thing about these data, aside from the observation that they involve relatively small areas of commanded acreage, is the very high gross costs per hectare. Only in the case of the shallow and deep wells do the costs per hectare begin to fall within a range which could be economical, although the total costs shown for the deep wells do not actually include costs of agricultural development as do estimates for the shallow wells. In any event, this body of experience suggests that on-going efforts at surface irrigation tend to reach cost levels where the resulting increases in agricultural production appear insufficient to recoup the additional costs. By comparison, groundwater development may be the more promising approach to irrigation in Tunisia. This is a tentative conclusion, however, since the cost of groundwater projects can also be affected by the extent to which plans incorporate costly elements such as elaborate pipe and sprinkler systems, or pre-cast, pre-stressed canals. Nevertheless, if such high cost aspects are minimized, the use of water drawn from groundwater resources seems to offer distinct economic advantages in Tunisia.  - 15 - 4.14 These eight projects should receive sufficient priority to be completed as presently scheduled, i.e., all tc be finished by 1969. This recommendation is largely because all of the eight (again excepting Oued Chiba) are receiving assistance from abroad, and all are well advanced in construction. Oued Chiba itself is about 80 percent completed at the present time. While this recommendation would be different if these projects were at the start of construction, the fact that they have gone so far toward completion is persuasive they should now be completed as quickly and as economically as possible. No estimates were furnished on the annual costs required to finish these projects over the next two years, but a rough guess would be that this could require around D 5 million in 1968 and D 3 million in 1969. 4.15 A number of general impressions and observations on irrigation are relevant to this brief review of the projects: (a) Although irrigation looms large in the developmental program, in terms of the number of projects underway, irrigation opportunities apparently do not exist on a major scale in terms of acreage covered. Irrigation can make important contributions in a limited number of areas, particularly in promoting the production of high-valued crops, but the main burden of the develop- mental effort in agriculture will fall on areas dependent on rainfall. (b) There has been a tendency to use very expensive irrigation facilities in Tunisia, including some that are as technically advanced as anywhere in the world. One result of this has been irrigation costs per hectare which are extemely high, and economically unjustifiable in light of the production expected to result from the investment. Much could be done to reduce the costs of irrigation, including a greater use of local materials and local farmers' labor. Some plans for inexpensive installations using local materials have actually been drawn up by Government engineers, but the actual projects have incorporated more costly designs. (c) The technical implementation of the projects, i.e., the construction work on dams, well digging, canalization, and other works, appears quite good, but the facilities will generally be ready on these projects long before the farmers will be trained and organized to use the water properly. (d) A related point, implicit in what has been said earlier, is that despite good technical planning and implementation, the economic aspects of the projects seem to have been badly neglected in the planning and approval stages. Cropping patterns may have to be reconsidered in order  - 16 - to take best advantage of the irrigation facilities. The expected increase in citrus production is a case in point. On-going irrigation projects are expected to increase citrus output by about 100,000 tons annually when all projects are fully developed, or an amount about equal to current production. FAO market projects for 1975 estimate that total citrus production by Mediterranean cuntries will be approximately 8.6 million tons against an expected demand in European markets of only 6 million tons. Tunisia is in an admittedly advantageous position because its oranges are a preferred variety, but under expected conditions it is clear that increases in citrus output will make marketing an increasingly critical factor, and that marketing surveys and quality control improvements will be necessary to minimize such problems. (e) The indications are presently that development of groundwater may be a more economical irrigation method than surface water development. More information should be ready by the end of 1967, for a study of groundwater resources financed by US AID will have completed a "pre-feasibility" study stage at that time. This should produce reliable hydrologic data for all regions of Tunisia, and subsequent analyses should reveal whether the proposed expanded deep well program is technically feasible. (f) Extension activities to teach farmers the proper use of irrigation water suffer from the general lack of experienced personnel. Estimates of the personnel requirements and suggested staffing patterns are discussed at a later stage in this report, but it should be noted that irrigated areas require a higher density of extension staff than do non-irrigated areas. B. Irrigation Projects (Proposed) 4.16 The assessment of proposed irrigation projects reflects this past experience with irrigation in Tunisia, as well as the information which could be derived from the available project descriptions. Brief project descriptions are given in Annex 3 to this report, while observations and suggested priorities are summarized in the paragraphs which follow. 4.17 The irrigation project which offers the most interesting prospects, from a developmental standpoint, is the planned rehabilitation of oases located in the southern part of the country, and designed to build on an irrigated agriculture which has been carried on in the oases for centuries. The project's attractiveness stems from the fact that it would expand the production of early vegetables, which would have a ready export market in Europe, and production of vegetables and livestock products to supply the  - 17 - rapidly expanding tourist industry in Tunisia. The marketing aspects are thus more promising than in other projects, and the economic contribution of the project appears somewhat more assured. Topographic studies, some detailed soil studies, and some hydrological studies have been carried out, but more hydrological studies are required. Such studies should be coordinated with the analyses being prepared under the deep well survey. Because no studies of economic feasibility (including market surveys) have been carried out as yet, completion of these necessary studies warrants a high priority. If the studies bear out the promise which this project now seems to offer, the project can be prepared fairly quickly for consideration for financing. 4.18 Three of the proposed projects are located in different parts of the Upper Medjerda Basin -- Oued El Abid, Souk El Khemis-Souk El Arba, and the Ghardimaou Plains. The recommendation was made in para 4.09 above that the rate of development in the Upper and Middle Medjerda should be restricted to a rate which would neither jeopardize the continuation of the OMVVM project in the Lower Medjerda, nor incorporate premature judgments on the outcome of the Basin-wide study. Priorities for these projects are implicitly incorporated in this earlier recommendation. 4.19 The surface irrigation project connected with development of Lake Ichkeul deserves a low priority from the standpoint of its agricultural impact. A detailed feasibility study of the project indicates that the most promising alternative would cost about D 2,500 per hectare, but this would not include provision for drainage. Economic justification is highly doubtful where development costs reach levels as high as this. The feasib- ility study also notes, however, that aquifers with good quality groundwater have been discovered underneath previously known groundwater resources. It would appear preferable to explore such groundwater irrigation possib- ilities before making any start on surface irrigation in the Lake Ichkeul project area. The alternative recommended by the feasibility study calls for multipurpose development, including some hydroelectric generating capacity, and the supply of potable water for Tunis and industry in the Menzel Bourguiba area. Whatever the feasibility of the project may be in terms of these additional purposes, from the standpoint of agriculture it appears to be an expensive project whose contribution to irrigation could possibly be duplicated from groundwater at much lower costs per unit of area developed. 4.20 The Government did not provide project descriptions for drainage projects. Drainage activities are currently being carried on by the Under Secretariat of Agriculture under a series of small projects scattered throughout the country, at total costs of around D 1.4 million. The Govern- ment is apparently not seeking any foreign assistance for drainage projects, and there is inadequate information on which to assign any priority to this activity. Also omitted are irrigation investments included under the cooperative programs. These are not irrigation "projects" in the same sense as others discussed here, but the contribution of irrigation is taken into account in the discussions of cooperatives below.  - 18 - 4.21 Only one project description concerns flood control, and this calls for a barrage on the Oued Zeroud. A feasibility study has been prepared for this barrage, but the study does not contain an economic evaluation of the project. On these grounds the project is not ready for consideration at this time. An initial impression, based on the data which are included in the study, is that it would be a high cost project. From the standpoint of the preliminary cost estimates, it is doubtful that the project merits further consideration for implementation in the near future. C. Agricultural Projects (On-going) 4.22 There are only two on-going projects under the general heading of agricultural development, and both are cooperative projects. The Pro- duction Cooperative Units (UCP) project for the Northern Region has just begun (1967) with the help of an IBRD loan of US$ 12 million and an IDA credit of US$ 6 million. The Polycultural Cooperative project for the Central Region has been under implementation for a slightly longer period (starting in 1966). It has benefitted from UN activities in the Central Region, but it does not have direct foreign assistance as yet for the project itself. The UCP project expects to develop a total area of 345,000 hectares, with the initial organizational phase to be completed by the end of 1968. The Polycultural Cooperative project anticipates 1.4 million hectares will be organized into cooperatives over the period 1968-1971, and all investments to be completed by 1976. 4.23 These two on-going projects appear well-designed on technical grounds to take advantage of the opportunities inherent in the soil and water conditions found in each of the two regions. Both projects are based on technical agricultural studies which have been well prepared. The economic aspects of the UCP project have been estimated to yield an internal rate of return to the economy of about ten percent. On the other hand, the Polycultural Cooperative project gives an important role to pistachio and olive production, and this raises some questions about the economic feasibility of the proposed cropping pattern. 4.24 Experience thus far on the UCP project reveals that new water sources will be needed for the projected livestock development. There is also need to explore alternative sources of forage besides the "oat and vetch" hay which is currently used. Market studies for livestock production seem indicated, since there are few reliable estimates of the quantities of milk, milk products, and meat (both sheep and beef) which can be marketed, and little guidance on the kinds of improvements in marketing facilities which are required to expand the market opportunities. The most pervasive problem, however, concerns the lack of experienced managerial and extension personnel. The Bureau of Control, established to supervise and assist in the organization and implementation of cooperatives under the UCP project, includes expatriate technicians to provide an important source of add- itional support to the managers and extension staff on the cooperatives.  - 19 - The Bank, in extending financing to the UCP project, set the rate at which the project can be implemented to be consistent with estimates of what could be done with the expatriate and Tunisian personnel likely to be available. Unless changes occur in the amounts of managerial experience on hand to direct cooperative growth and development, there would be no reason to change that original estimate. 4.25 The prospects for trained staff at different levels, and the requirements for different types of personnel, are summarized in Table 6. Different densities of agricultural officers, agricultural assistants, extension workers, and cooperative managers have been assumed for the different types of agricultural projects currently underway. The latter three technician categories receive about five years of training, albeit different kinds of training; the agricultural officers receive six years of schooling after the baccalaureate. Thus, categories of personnel with about the same length of training have been grouped together (in the totals showqn at the bottom of the table) to make a comparison between expected requirements and expected availability. As the table indicates, the number of persons trained to the level of agricultural assistant, extension worker, or cooperative manager should about match the requirements of the projects shown. The number of persons trained to the level of agricultural officer would actually exceed the number required by the projects. The table makes no allowance for needs other than the projects (e.g., forestry, research, veterinary practice, private employment, and so on), and no allowance for attrition in the staff over time, so the excess availability over require- ments may actually be less than the table shows. More important, however, is the lack of personnel who have had much real experience in agriculture, and the fact that training alone will not provide a substitute for experience. Such experience is most valuable when acquired under the direction of an experienced supervisor. It may be desirable to increase the density at which agricultural officers are assigned upon completion of their formal training, the actual density to be determined by the numbers of officers available and the rate at which new cooperatives and irrigation projects become operable. This increase in the density of assignment may not be a substitute for experience, but it will reduce the scope of responsibility for the new officers and allow them to acquire a more concentrated experience in the early years. 4.26 The on-going UCP project clearly deserves a high priority. It already has financial assistance, and it should be brought to completion as planned. The experience gained in the process of completing this project will be invaluable in guiding the preparation and implementation of succeeding cooperative projects. Unless this project can be successfully implemented, there seems little point in considering further efforts of a similar type. As mentioned earlier, the availability of experienced managerial and supervisory skills is likely to be a critical problem, and for this reason it may be advisable to assign a lowier priority to the Polycultural Cooperative project. It is difficult to state any precise rate of implementation which might be feasible, but the Polycultural Cooperative project should not proceed at a rate which would draw personnel from the high priority UCP project before the latter becomes well established. The Government will obviously proceed with some development in the Central Region in any case, but such efforts should probably not exceed one-half  - 20 - the implementation rate called for in the Polycultural Cooperative project. A target of 700,000 hectares under Polycultural Cooperatives by 1971 seems the maximum likely to be achieved without impeding development of the UCP project. D. Agricultural Projects (Proposed) 4.27 Project descriptions were received for three agricultural projects proposed for future implementation, and as in the case of the on-going projects these all involve cooperative organizations. Two of the projects would expand the number of cooperatives in operation, while the third is a technical assistance project in support of cooperative development. Descriptions of all three projects are provided in Annex 5 of this report. 4.28 The largest, in terms of both acreage and cost, is the further expansion of Production Cooperatives (UCP) in the Northern Region. This project is about equal in size to the on-going UCP project, and is scheduled to begin at the end of 1968 after the initial organization of cooperatives under the on-going project has been completed. The justification for the project, i.e., the assumptions concerning costs and benefits, closely follows that used for the on-going project, as do the organization and management features and the basic plan of operation. The obvious factor about this project is that it stands to benefit enormously from experience gained under the on-going project in the same region. Since the latter has gotten underway later than orginally planned, it is unlikely that it will have completed the organization stage by the end of 1968, and therefore the proposed timing for the new project would probably be delayed accordingly. If the on-going project seems to be malting the progress expected of it during 1968, there will be time to start preparing the expansion project for financial consideration shortly thereafter. The expansion project would probably not be able to start before 1969, and possibly not until 1970, because experienced managerial and supervisory personnel will continue to be scarce in relation to project needs. Actual project preparation should present no problems when the appropriate time comes because the experience under the on-going project should provide ample information for any project presentation. The project thus rates high because it can be readily prepared and is based on a similar on-going effort. Its timing is more doubtful because of personnel deficiencies. 4.29 The second proposed cooperative project calls for organization of Service Cooperatives in the Sahel region to provide extension advice on new cropping patterns, along with credit and marketing assistance. Unlike the UCP cooperatives, farmers would continue to cultivate and harvest their own lands. Major changes would include the introduction of a program of olive tree pruning in order to increase production from existing groves, and a shift from cereal production to more livestock and more fruit trees. The objectives of the project are relatively modest, as are the costs, and the foreign exchange component is only about eight percent of total costs. Detailed studies have been completed for 20 cooperatives, along with an inventory of olive groves, and studies of an additional 70 cooperatives are  - 21 - under way. These studies include pedology, hydrogeology, soil conservation, and agronomy, and are expected to be completed by the end of 1968 or early 1969. Preliminary indications are that the recommended changes in cropping pattern and cultivation techniques would be technically feasible, although the large increase in olive production may create serious marketing problems because the future prospects for increasing exports of olive oil are relatively poor. The relatively modest foreign exchange requirement makes this an attractive small project for foreign financing. As in the case of the UCP expansion project, increases in the number of cooperatives under this project should be held to a rate which does not draw scarce managerial and supervisory personnel from the on-going UCP project in the Northern Region, where large resources are already committed. Again, any increase in overall availability of these scarce personnel would ease this basis for restricting the rate of implementation. The Government is also planning a Service Cooperative for the Northern Region but a project description and details of the program were still not available by the time this review was being prepared. From discussions with Under-Secretariat officials, its economic justification and readiness for implementation are comparable to the Service Cooperatives proposed for the Sahel Region. 4.30 The third project is a technical assistance project which has been submitted to the UNDP for consideration. Although other technical assistance suggestions are discussed in a subsequent section of this report, the close tie between this project and the cooperative projects permits special mention of it under this heading. As a general statement, the project calls for the provision of expatriates to assist in planning for the Polycultural Cooperatives in the Central Region, the training of cooperators and cooperative managers in various modern farming techniques, and general support to the agronomists and extension workers in the Central Region. A project of this kind deserves a high priority because it is urgently needed where lack of extensive modern farming experience is such a critical constraint on the rate of future development of the cooperatives. E. Forestry Project (On-going) 4.31 A project to develop plantation of fast-growing species of trees in the governorat of Bizerte is already on-going, and by 1964, 8,000 hectares planted in trees had replaced formerly unproductive bush. The ultimate objective is to include 40,000 hectares within the project, and to accom- plish this with a planting rate over a seven-year period (1968-1975) which approaches an average of 3,200 hectares per year. Annual production, which starts from the 12th year of development, would be 3,200 hectares at an average yield of 70 m3 per hectare, or a total output of slightly more than 200,000 m3 per year. A more detailed description of the project is provided in Annex 6. 4.32 The economic justification for the project has been based on the demand from a proposed pulp mill with an annual capacity of 30,000 tons although a mill of this size requires only about 100,000 m3 of wood as raw material. Moreover, the expected increases in Tunisian demands for paper products (in excess of existing capacities to produce paper) are about  - 22 - 15,000 tons per year by 1971, and these are equally divided between Kraft, printing, and writing papers. The pulp to be produced by the on-going project may not be suited for production of all these different varieties of paper. There is the further question whether the proposed average planting rate (e.g., 3,200 hectares per year) can be achieved with the staff and equipment likely to be available. 4.33 This project seems to be of low priority at this time because the economic justification for the project, as presently conceived in terms of size and nature of operation, is doubtful. There is apparently adequate documentation for the technical aspects of the project, but determination of the economic size (particularly as related to investment in the mill capacity to use the raw material) requires a much more thorough study than has been made thus far. Before this project is given serious consideration for financing, there should be an economic study to accompany a modified version of the present project. F. Forestry Project (Proposed) 4.34 The Government prepared one new project description in the forestry sector -- a proposal to improve the exploitation of existing forest resources within an area of 190,000 hectares in Central Tunisia. Although the Forestry Service has started some investigations to improve the exploitation of timber, the proposed project would require more studies of various kinds, plus feeder roads and other infrastructure investments, and equipment to undertake a semi-mechanized exploitation system. The project would initially be under the Forestry Service, but the ultimate objective is to turn over the activities to a special organization or a cooperative body. The training of forestry personnel has been assisted by Finnish and German funds and staff, and a forestry research institute is financed through UNDP funds. The project is further described in Annex 7. 4.35 Present output of timber in the project area is about 20,000 m3 per year, and the project anticipates increasing this to 65,000 m3 the first year, and to over 130,000 m3 by the third year of development. Market prospects for this volume of timber appear good. Costs of exploitation and investment would total around D 650,000 over a five-year period. The project can benefit from studies already made by FAQ on forest exploitation and forest economy in Tunisia, a report on exploitation by a Finnish forestry officer, and a forest management study in the project area covering 80,000 hectares. Studies of the additional 110,000 hectares are already underway, and are due to be completed by the end of 1969. The latter studies are being carried out by SCET and by other French technicians. 4.36 This should be a high priority project, and the necessary supporting studies should be completed as soon as possible. In this connection, marketing studies and an investigation of the economic justif- ication must be provided for in the future program of studies. Because the project would continue to exploit areas already being inefficiently exploited  - 23 - to some extent, there would probably be some increase in annual production in any case. The proposed rate of exploitation under the project may be too rapid, particularly in view of the heavy use made of forestry service personnel in the "Lutte Contre le Sous-Developpement" (LCSD) programs of terracing and afforestation of hillsides and roadside plantings. However, this is a question to be resolved in the course of the further studies of technical and economic feasibility. G. Fishery Project (Proposed) 4.37 One fishery project description was received, which proposes that the coastal fishing fleet be converted from one composed predominantly of sail and row boats to one consisting of plastic-hulled, motorized vessels of six, eight, and ten meters in length. The project envisages that coastal fishing will ultimately be carried on by 3,000 of these motorized vessels, and that modernizing the fleet would permit larger catches at higher average catches per man. By fishing in coastal waters 60 miles or more from Tunisia, the type of catch would be largely high-valued fish for both export and domestic consumption. The project is further described in Annex 8. 4.38 Although some studies have been carried out to determine the size and nature of the fishery resources near the coastal waters of Tunisia, the project for converting the fleet to motorized vessels requires much additional study and preparation before it could be considered for foreign financing. As it is now presented, the vessels would be constructed by the Office de la Peche, and would be sold to fishermen by the Office under arrangements whereby installments would be deducted from the value of fish sold to the Office. The economic viability of this arrangement, as well as the technical points relating to the design of vessels and equipment, require further study. The project does not showr a time schedule in its present form, and it is not clear whether it would be necessary to have a training program to teach fishermen how to operate the vessels and equipment. If a training program is required, there is no indication shown of the availability of personnel to carry out such training, or how long it would take to complete. 4.39 This project has been placed in the second priority category, primarily because it is not ready for early implementation and requires much preparation work. On the other hand, it touches an area where further development seems generally feasible, and could lead to increased protein food production and additional foreign exchange earnings if implemented successfully. H. Summary of Project Review 4.40 The above review of the 23 projects prepared by the Government of Tunisia, both on-going and proposed, has included a preliminary assignment of priorities. These are presented in Table 7. Of the total projects received, 16 have been designated as of "high"' priority, and implementation in some fashion could be started quickly. This is a large proportion to be placed in this top ranking, but eight of these are already on-going  - 24 - irrigation projects. In those cases the ranking simply reflects the judgment that they should be brought to completion at the earliest feasible date. A high priority is given to the definition and appraisal by IBRD of a further development project in the Lower Medjerda project area (OMVVM) which is required to bring it to a stage where it can be considered for financing. The companion recommendation, i.e., to conduct a long-term study of the entire Medjerda Basin, would include three of the proposed irrigation projects in the Upper Medjerda as part of the program to be studied. Four other projects are of high priority, and include one proposed irrigation project (Reconversion of Oases), the on-going Production Cooperatives (UCP) in the Northern Region, one proposed training program for cooperators and cooperative managers, and one proposed forest project (Forest Exploitation). All of these seem to offer promising economic returns on the basis of limited available information. The first and last of these four projects still require some studies before all feasibility questions can be resolved, and the high priority applies to completion of the necessary studies rather than actual project implementation. 4.41 Four projects -- the on-going Polycultural Cooperative Project, the proposed Service Cooperative Project, a proposed fishing project, and the proposed expansion of Production Cooperatives (UCP) in the Northern Region -- seem technically feasible, but the economic prospects have not been fully studied in the first three. Early implementation of all the cooperative projects would probably place some strain on existing scarce managerial and advisory resources. It therefore seems prudent to introduce the qualification that these projects be scheduled for further attention only if it is determined that the personnel requirements of the high priority projects are being fully met. The proposed fishery project requires further project preparation studies. V. TECHNICAL ASSISTANCE REQUIREIIENTS A. Planning and Project Preparation 5.01 A review of documentation supporting on-going and proposed projects, as well as the agricultural development program generally indicates that technical assistance is needed in the planning and project preparation stages. This need emerges in several different contexts, and despite the fact that expatriate consultants and advisors are already being used in certain planning activities. Much of the technical planning, e.g., the engineering and agro- nomical work, appears very well done, but the economic justification given a project or program is frequently very weak, or even entirely omitted from consideration. This results in Government acceptance of projects which may function perfectly well, but which are completely unsuited economically to the situation in which they would be applied. For example, there are severd instances (in projects and in the Plan) where agricultural revenues are projected on the basis of highly doubtful estimates of crop sales. The cases of citrus production (in on-going irrigation projects) and pistachio production  - 25 - (in the Polycultural Cooperatives) have been mentioned earlier in this report. A similar over-production seems likely for artichokes -- FAO estimates Tunisian exports must reach 14,000 tons by 1970 to make use of the excess of production over domestic consumption. Since world trade in a specialized crop like this is quite small, greater production will encounter increasing marketing hazards. Estimates made by OECD indicate tomatoes, another potential export crop, will encounter market resistance abroad because European production by 1970 will be surplus compared to Europe's needs. Unfortunately, the bulk of Tunisia's potential production is not of the early varieties. Technical assistance thus seems necessary both to help improve the market evaluations and to introduce more advanced marketing practices in association with project implementation. 5.02 But more is needed than better economic evaluations and market projections, because Government planners also need assistance in preparing projects. For example, with the exception of the Lower Medjerda project, which has been prepared with the help of expatriate consultants, none of the projects presented were at a stage where they could be readily considered for external financing. Technical assistance in planning is not recommended only to improve the presentation of projects to potential foreign lenders, however9 for there is imprecision in much of the planning for agriculture. The Plan contains many useful observations and much technical data, but the failure to convert the welter of ideas to discrete, manageable projects covering the major elements of the developmental strategy makes it difficult to trace the relationship between proposed investments and the production targets to be attained. More precise planning, built around a project - oriented basic developmental program, requires more experienced technical assistance than has been available. Such planning should provide a more readily understandable basis on which to allocate available resources, both foreign and domestic. 5.03 Despite the presence of some technical assistance for planning already attached to the Under-Secretariat of Agriculture, it thus appears desirable to strengthen the planning effort at this level, particularly with respect to project planning and preparation. A related activity, which is also essential to any improvement in the effectiveness of planning, concerns the collection and analysis of agricultural statistics. At present. for example, different official sources offer different estimates of crop production and acreage, it is difficult to get regional breakdowns, and there are gaps in the data. Technical assistance could be helpful in improving the methods of collecting basic agricultural data, in deciding on which measures and which levels of detail would be most useful for planning and research purposes, in processing the data, in devising new ways to present the data and reduce the time required to make it available, and finally in analyzing it.  - 26 - B. Research 5.o4 Agricultural research in Tunisia has begun to be concerned with problems which farmers and cooperative managers are currently facing, and less engrossed in research activities which appear to have little immediate practical application. This practical orientation is badly needed, and its emergence is very welcome. Some of the problem areas where further research is needed include studies of irrigation agronomy (e.g., the proper timing of water applications, proper land preparation for irrigation), the possibilities of expanding sugar beet production, with and without irrigation (sugar imports incur heavy foreign exchange costs), experimentation to identify which improved forages are best suited to local conditions, tobacco production possibilities, and local adaptations of improved varieties of cereals, particularly wheat. This is not intended to be an exhaustive list, but rather an indicative one illustrating the kinds of problems which have already arisen. 5.05 Although information was not readily available with which to quantify research needs in Tunisia -- e.g., how much equipment is needed, how many technicians and research personnel can be used, what kinds, and so on -- it seems unlikely that too much research capacity is being introduced into Tunisia. Since productivity increases in agriculture depend, in part, on accurate, research-based knowledge of the environmental factors affecting production, technical assistance in support of such research clearly deserves a high priority. There are several research institutions under the Under-Secretariat of Agriculture -- the Institut National de Recherche Agronomique (INRAT), the Centre de Genie Rurale (CGR), the Institut de Reboisement, and with UTIESCO assistance, the Centre de Recherche de Utilization des Eaux Salinees pour Irrigation (CRUESI). There are also research institutes for livestock and fisheries operating under the aegis of the respective Offices established for those sub-sectors of agriculture. France is currently the most important source of technical assistance to agricultural research in Tunisia, although other countries have taken part as indicated under the broad heading of research shown in Table 3 of Annex 9. A list of projects being carried out by the research institutions cited above (but not reproduced in this review) indicates that their research activities cover a wide range of practical problems, but there has been no opportunity to examine the extent to which research may be hampered by the need for more trained personnel, research equipment, or other facilities. Beyond the obvious comment that there probably are needs of these kinds, two further observations appear relevant to possible further technical assistance to research. One is that an important need at the present time is to test in Tunisia research findings developed elsewhere in the world, in order to adapt such findings to Tunisian conditions. This view is offered as a caution against the assumption, which sometimes underlies technical assistance in research fields, that research results can be transferred readily without further testing their suitability or applic- ability in different areas. A second point, related to this first one, is that the technical assistance personnel selected to serve in Tunisia should be research workers who have had appropriate experience under conditions similar to the Tunisian environment.  - 27 - C. Extension and Training 5.06 The topics of extension and training are considered together because they are so closely related in the context of Tunisian agri- cultural development. This report has stressed at numerous points that lack of experienced managerial and supervisory personnel imposes a significant constraint on development at the present time. This is not the same as saying there is, or will be, a lack of trained personnel, for the report has also shown that the number of people expected to complete formal training will probably be adequate to staff the positions now contemplated. It does mean, though, that until trained people obtain experience, and preferably under the guidance of supervisors who are experienced themselves, and constraint will continue to be in effect. Clearly, to gain proper experience requires time, but technical assistance to provide experienced supervisors and trainers could also reduce the amount of time required. 5.07 The Government is aware of the serious deficiencies with respect to experienced manpower resources, and has already begun to take steps to overcome them. Two crash programs are scheduled to begin in 1968 -- one would be a program to provide additional training to extension personnel through two-week courses to be given at least twice a year; the second is a program designed to provide farmers with training in practical, elementary skills needed to improve both crop and animal husbandry. The latter program would be conducted at 20 different training centers, with each center training about 15 farmers for a two-week period. The current plans anticipate that farmer training could be carried out a rate which would include about 7,000 farmers per year, but it is too early to judge either the impact of such training on actual farm practices or whether the rate of training can actually be sustained. In any event, at a rate of 7,000 farmers trained per year it would require two and one-half years to give this minimum level of training to the existing cooperative members in the on-going Production Cooperatives project (UCP) in the Northern Region. Similar types of training for farmers, both young and old, is already being provided by the OMVIM, and in the case of its training centers for youths the participating students are drawn from parts of Tunisia outside of the OMIVVM project area, as well as from the OMVVI'4 area itself. 5.08 There are also plans to improve the quality of education given at the highest level by adding new laboratories and other facilities at the Ecole Nationale Superieure d'Agriculture de Tunis (ENSAT). During the academic year 1967/1968 there were 204 students enrolled in the 4-year course leading to the Diplome d'Ingenieur in the field of agriculture, which may be compared with a total of 47 students enrolled in 1960. In the same academic year, a second cycle was begun which would provide a fifth and sixth year beyond the existing training period. A program leading to the doctorate level has been in effect since 1964, and is conducted in close association with the Faculties of Science at Tunis and Paris. At all these levels, therefore, Govern-ment is already proceeding with both plans and on-going activities to improve the training and the practical experience of those involved with Tunisian agriculture.  - 28 - 5.09 The proposed UNDP project to train cooperators and cooperative managers also fits well into these efforts. Another kind of approach has been incorporated into the IBRD-financed Production Cooperatives (UCP), where expatriate technicians and Tunisian counterparts screen cooperative production plans and provide supporting technical advice through a Bureau of Control. Both of these methods of providing technical assistance could probably be expanded with benefit to Tunisia's agricultural develop- ment programs. While existing foreign technical assistance efforts in the training schools, universities, and research labs are important and necessary, and should be continued at least at the present levels, there should also be increased efforts to provide technical assistance to the cooperative managers and extension workers as they work on their jobs, i.e., providing in-service training and close supervision. 5.10 It is also difficult for agricultural officers, assistants, and extension workers to do full justice to their assignments because they are hampered by lack of working equipment. It is hard for them to cover the areas assigned without rapid transport of some kind, at least to the point of a motor scooter or bicycle. Demonstrations may be hampered at times by lack of materials necessary for the demonstration (fertilizers, seeds, simple tools, modern equipment). Technical assistance could provide the equipment necessary for field staff to perform the jobs expected of them. The costs of such assistance would probably be relatively small, but the strategic impact should be among the highest of any investment which could be made in agricultural development. Technical assistance to improve the repair and maintenance of farm equipment, vehicles, and machinery is another area of high strategic importance. The Canadian Government will provide mechanics to teach and help in the repair of hydraulic equipment, and will also supply mechanics to work with the Office de Motoculture. Such assistance is greatly needed to raise the efficiency of the existing stock of mechanized equipment, and serious consideration should be given to expanding this particular type of technical assistance. 5.11 In concluding this brief series of observations on technical assistance, one final suggestion is that a thorough study of technical assistance needs and technical assistance availabilities be made. The result could lead to a more rational and economic use of technical assistance resources by concentrating them on the most urgent needs, avoiding duplication of effort, and drawing experienced personnel in accordance with each country's ability to provide skills most relevant to the Tunisian agricultural environment. VI. AGRICULTURAL INPUTS 6.01 Review of the agricultural sector's requirements did not reveal any obvious deficiencies in the provision of agricultural inputs. Questioning of agricultural officers in the field, or officials in Tunis, elicited the response that supplies of the important inputs were adequate relative to the farmers' willingness to use them. In short, there were no complaints about shortages. This does not mean that the use of modern inputs such as fertilizers, pesticides, mechanized cultivation, and the  - 29 - like is in any sense optimal. On the contrary, earlier discussion of the slow growrth in Tunisia's agriculture pointed to the fact that the use of modern inputs was not expanding very rapidly. Overcoming this is, of course, the essence of agricultural development. Factors influencing the use of modern inputs include the availability of foreign exchange for inputs which must be imported from abroad, and an incentive structure (in terms of costs of inputs and returns from agricultural output) which strongly encourages both private farmers and cooperatives to use more of the modern inputs. Since the Government currently exercises controls on both input prices and the prices of farm output, it should be possible to insure that incentives operate to encourage input use. On the other hand, if the overriding objective becomes one of keeping agricultural output prices low for the benefit of urban consumers, there is danger that the incentives for farmers may be seriously diminished. 6.02 An important part of the current input requirements is being met by the latest U.S. commodity loan (664-H-033), which will provide foreign exchange for such needs for the period ending in late 1968. The loan provides US$ 1 million for agricultural equipment, US$ 250,000 for pesticides, US$ 1.5 million for spare parts (some of which would be for agricultural equipment), and US$ 1 million for lubricants (some of which would also be for agricultural machinery and equipment). Some funds remain to be disbursed under a previous commodity loan (664-H-026), including about US$ 650,000 for agricultural equipment. Other sources include Germany (fertilizers, seeds, livestock), Yugoslavia (tractors, pumps), Netherlands (livestock), and Austria (plant protection). Agri- cultrual inputs are also received as parts of foreign assistance given to projects (e.g., farm equipment and livestock), as in the IBRD loan to cooperatives, or in conjunction with foreign technical assistance activities (e.g., improved seed stock). 6.03 While it has not been possible for purposes of this working memorandum to identify with any degree of precision the levels or nature of the input needs over the next few years, certain potential developments should be noted. The current average applications of fertilizers in Tunisia are extremely low, and given the expected expansion in cooperatives (under the on-going programs alone) there should be a large increase in demand for fertilizers. This should follow the gradual improvement in farming practices resulting from the extension efforts which play such an important role in the cooperative programs. The introduction of new wheat varieties based on the Mexican dwarf wheats can be successful only if accompanied by a number of improved farming practices, including the application of relatively large quantities of fertilizers. The improved response to fertilizers generally found to accompany irrigated agriculture implies an increased demand associated with the larger acreage to be brought under irrigation within the next few years. As new varieties of crops are added, there may also be need for new kinds of equipment for seeding, for applying fertilizers, for levelling land to be irrigated, and the like.  - 30 - 6.o4 From the standpoint of potential foreign assistance, it is therefore important that foreign exchange be available for the key inputs as the needs arise. It requires careful study to determine whether there still remain shortages of needed foreign exchange under the existing commodity loans, or whether the comments of officials cited above accurately reflect the present situation. The main point, however, is that lack of foreign exchange should not be allowed to become the bottleneck restricting increased use of modern inputs. As the general standards of husbandry begin to improve, in response to the efforts of increasingly experienced managers and extension persoinel, the demand for modern inputs should begin to rise correspondingly. This assumes comparable success in creating incentives for farmers to use the inputs. Altogether, it could also bring an expanding role for commodity assistance from abroad. Source: IBRD  Table 1 Production of Ma.jor Crops -- 1960-1966 (Thousand tons) Crops 1960 1961 1962 1963 1964 1965 1966 Hard Wheat 360 201 321 529 350 429 300 Soft Wheat 79 42 72 123 81 100 49 Barley 137 50 103 261 130 180 80 Sub-total 567 293 496 913 561 709 429 Olives 554 189 221 443 430 272 92 Citrus 96 93 62 88 94 82 110 WIine Grapes 203 164 240 253 239 241 190 Artichokes 11 11 10 14 15 18 19 Potatoes 40 43 41 64 54 60 68 Peppers 33 46 50 52 49 56 67 Tomatoes 62 58 93 93 102 124 149 Sub-total 146 158 194 223 220 258 303 Source: Under-Secretariat of Agriculture  Table 2 Fertilizer Imports (Metric Tons) Type 1960 1961 1962 1963 1964 1965 1966 Nitrogenous Fertilizers 12,016 12,798 13,511 26,284 25,008 16,513 20.1:2 Phosphatic Fertilizers 240 69 - 351 71 - 1/ - i/ Potassic Fertilizers 4,292 2,517 ,o498 5,145 6,513 1,750 35547 Other Fertilizers 641 1,418 1,987 2,727 2,153 110 _-/ Sub-total Imports 17,009 16,802 19,996 34,507 33,745 18,373 23,679 / NIegligible quantity Source: Under-Secretariat of Agriculture  Table 3 Estimates of Phosphatic Fertilizer Use 1960 - 1965 (metric tons) Type 1960 1961 1962 1963 1964 1965 Phosphate Rock Productio:u 2,101,000 1,982,000 2,097,000 293659000 2,751,000 390b0O000 Less: Phosphate Rock Exports 1,636,000 1,627,000 1,833,70" 1,971,X00 2,21b,700 2,2609200 Estimate of lomestic Use 465o000 355~,00 263,300 393,1S0 536,300 779,f00f Superphosphate Production 150,000 160,000 173,000 18h, 000 199,000 320,000 Less: Superphosphate Expcrts 111,900 156,7CO 115,1CD 147,200 12h,800 2579100 Estimate of lomestic Use 38,100 3,300 57,900 36,800 74,200 62,900 SOURCES: Production - Under-Secretariat cf Agriculture Exports - Bank Economic Report, March 1967, Vol. II, Table 39.  Table 4 TUNISIA: List of Agricultural Projects Foreign Projects Estimated Total Investment Costs Financial On-Going Proposed Assistance Projects Projects As of Aug./67 (in 1000 dinars) Irrigation and Flood Control: OMVVM (Lower Medjerda) 5,165 None Nebhana 20,000 USA Lacs CoUinaires 400 W. Ger. Cued Chiba 2,100 None Oued Lakhmes 2,600 W. Ger. Oued Masri 2,200 W. Ger. El Haouaria 1,300 USA Shallow Wells 3,300 W. Ger. Deep Wells 8,400 W. Ger. Reconversion of Oases 12,700 W. Ger. Oued El Abid (Upper Medjerda) n.a. None Souk El Khemis-Souk El Arba (Upper Medjerda) 13,000 None Ghardimadu (Upper Medjerda) 14,000 None Lake Ichkeul 33, 134 USSR (Fea.- sibility study only) Oued Zeroud 1,200 None Agriculture: Production Cooperatives (UCP) 17,200 IBRD Production Cooperatives (UCP) 77,200 None Polycultural Cooperatives 12,234 None Service Cooperatives 6,970 None Training for Cooperatives 1,078 None Forestry: Reafforestation 2,566 None Forest Exploitation 648 None fisheries: Modernization of Coastal Fisheries 6,o50 None Source: Under-Secretariat of Agriculture  Table 5 TUNISIA: Acreage and Investment Costs of On-going Irrigation Projects (Excluding the Lower Mejerda) Gross Total Investment Average Investment Project Acreage Cost Cost per ha (ha) (in D Nillion) (in D) Nebhana 5,153 20.0 3,881 El- Haouria 770 1.3 1,688 Oued Chiba 975 2.1 2,154 Oued Masri 2,500 2.2 880 Oued Lakhmes 1,640 2.6 1,585 Lacs Collinaires 300 0.4 1,333 Shallow Wells 4,460 3.3 740 Deep Wells 14,483 8.4 573 30,281 Source: Computed from data supplied by Under-Secretariat of Agriculture  Table 6 TUNISIA: Estimates of Additional Agricultural Staff Requirements by 1971 - On-going Projects Agri. Agri. Extension Coop. Irrigation Officers Assistants Workers M4anagers Lower Medjerda (approx 10,000 ha) 8 10 20 On-going Projects (approx 20,000 ha) 16 20 40 Oases (approx 5,000 ha) 4 5 10 Cooperatives UCP (Northern Region) (approx 400,000 ha) 24 60 10o 400 Polycultural (Central Region) (approx 1,400,000 ha) 16 32 140 400 Service Coops (Sahel) (approx 300,000 ha) 4 10 90 90 Total Requirements 72 137 400 890 1,427 Additions to Present Staff 280 1,400 N. B. Estimates of staff availability subject to variation Source: Prepared by IBRD Mission from data supplied by Under-Secretariat of Agriculture.  TABLE 7 TUNISI.: MISSION SUJGGESTIONS ON PROJECT PRIORITIES aTATUS FINANCING REP4ARKS 1. First Priority Irrigation: OMVVM (Lower Medjerda) On-going Tunisia Study reccamended Nebhana " USA On-going project - to be ccmpleted by 1968 Lac collinaires " Germany t 1968 ;ued Ch-ba " Tunisia " 1969 u.: d Lakhmes Germany " 1969 *O'ed Masri Germany 1969 El Haouaria USA 1969 Shallow Wells Germany 1968 Deep wells Germany 1968 Reconversion of cases Proposed Not financed Requires economic feasibility studies Upper Medjerda--Oued El Abid " " To be studied as part of Medjerda Basin survey Upper Medjerda--Souk El Khemnis - Souk El Arba it Upper Medjerda--Ghardimaou Agriculture: Production cooperatives (UCP) On-going IBRD On-going project - organization phase tc be- '.tei 69 Training for cooDeratives Prooosed Not financed Currently under discussion for UNDP financing Forestry: Forest exploitation Proposed Not financed Requires technical and economicas studies at this stage r econd ?riority Agriculture: Polycultural cooperatives On-going Tunisia Rate of implementation depernis on availability of technical personnel Service Cooperatives Proposed Not financed " ,roduction cooperatives (tlCP) Availability of technical personnel a questin. Start of project may have to he deferred until completion of on-going UCP project Fisheries: K:odernization of Coastal Fisheries Requires po ject preparation studies ITI. Low Priority Irrigati on: Laxe Ichkeul Prooosed IISSR High cost irrigation juied Leroud Not financed High cost flood protecticn --res try: hafforestation .n-going .1unisia Foor eccroognic prospects as presently projected Source: Status and Financing data provided by Under-Secretariat of Agriculture.  ( S, S '~~~~~~~~~~~~~~~~~~~~~~~ SOAI'' .1< < *.' ~ - U40 erd Modes o ~ ~ ~ ~ ~ ~ ~~- -; - -- -S2 et , = EDbdD u8 tg OerShirr t .. ii- ,j., --~~~~~~~~~~~~~~~~ANGAIVESE \,,IM \ I BenCi#CSlUM eI LEAD TeZIGardne3 ECONOMIC MAP / - OF TUNISIAI/ - * Roa ds . --'---- ,---| Railways |I1di /