Announcement of Fifteen Million Three Hundred Thousand US Dollars Loan for Livestock Development Program in Argentina on July 19, 1967

•••• 18 18 H STREET, N . W. , WASH I N GT ON D. C. 2 0 4 3 3 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 67/34 Subject: $15.3 million ioan for live- July 19, 1967 \·::stock development program in Argentina The World Bank has approved a loan equivalent to $15.3 million to Argentina to hel? finance a livestock development program. The funds will be used mainly to pro- vide credit to cattle i::anchers and farm mach.~nery contractors for ranch development plans and 1·elated1 technical services. '\\ The project is in effect a pilot undertaking whose purpose \:::-::::, is to demonstrate . that increased ranch productivity i~ tec·hnically 1 'JC. feasible and financially rewarding. If successful, it will set a pattern ~or similar livestock projects in other parts of the country. In the proje'ct area the net in- ,j come of participating ranchers'·, expected to number about 700, should triple or even quadruple by the tenth year of development, at which time additional exports of meat will benefit the Argentine economy by about $20 million in foreign exchange ~arnings. Twelve conunercial banks have agreed to participate in the loan for a total amount of $1,105,000, representing the first three maturities and part of the fourth maturity which fall due between August 1, 1972 and February 1, 1974. The partici- pants will be Mellon National Bank & Trust Company, Pittsburgh; Chemical Bank New York Trust Company; First National City Bank, New York; Bah~ of America National \\ ,'.;/ !rust and Savings Association, San Francisco; Bank of Montreal, New York Agency; Crocker-Citizens, National Bank, San.Francisco; First Wisconsin National Bank of Milwaukee; National Bank of North America, New York; Wells Fargo Bank, San Fran- cisco; The Bank of To~yo Trust CompaC), New York; The First National Ba~k of Chicago; and The First Pennsylvania Banking an4 Trust Company, Philadelphia. • Argentina, wit;h a land area of more than a million square miles, has a popula- tion of 22 million, mainly urban •. Although the agricultural secto~ employs only a  {) - 2 - ' . ~ fif~h of the labor_ force, i~ generates more than 90%. o~ Argentina's exports. The , '~I Pampas, located within th~ fertile crescent of a 400-mile radius around Buenos Aires, account for two-thirds of the 1crops and three-quarters of Argentina•..- live- \L, stock production. ' \1. Meat. and livestock products are of foremost·importance; beef • production totals some ewo million tons annually and it alone accounts for more than 40% of export revenues. Meat packing and processing of farm products lead all other industries in value of production and number of workers employed. Although the.Government has tried repeatedly to -stimulate expansion and \! modernization of the cattle industry, the(~:i'ational cattle herd has expande~ only \1 slowly. With better grassland and herd management, modern processing and mar- 0 keting techniques, greater availability of long and medium-term credit and appro- priate Government policy, production could be expanded and contribute significantly to an improvement in Argentina's economic position. res and covers The project area lies to the st>uth and southwest of Buenos A~1 /''-l nearly 30 million acres. Part's of the area consist of hills, sand''dunes and de- pressions with drainage problems, but half the land is a solid'grassy plain well suited to cultivation and livestock grazittg. The project inv(?lves raising the· cattle carrying capacity of the land through improved pasture and herd management and r~,ising production in this manner rather than by expanding acreage under pas- ·' ture at the expense of wheat and corn. About 544,000 acres will be improved on approximately 700 farm units. Criteria for selection of participating ranchers will be (a) suitability of their farms; (b) ability and willingness of ranchers to manage them properly; and (c) their creditworthiness. ;~) The ranchers will ob- tain credits to pay for pasture impro.vement, machinery, fencing, and livestock watering and handling facilities. In addition, farm machinery C?ntractors will avail themselves of the credit program to buy machinery and equip~ent with ~hich to work on ranches too small to justify the purc:}ase of machinery by the ranchers themselves. Project technicians of the National Institute for Agricultural Tech- ,,, ,.. nology (INTA), under the guidance of a Project Director, will be responsible for  () •.. • assisttng farmers and ,ranchers in preparing farm development plans, for r,econmending • thes.e to the lending agencie~, for supervising the execution of the plans for which loans are made, and for rendering) techni_cal assistance to the farmers and ranchers \~-/ _, as ne:eded. The ;Bank loan . will also help to finance drainage and soil· studies to be car- ried out by INTA with. the help of consultants, and beef marketing studies to be undertaken by the National Development Council, also assisted by consultants. The drainage and soil studies are prerequisites to further-farm development in problem sections of the project area. The results of the marketing studies should enable the Government to determine the scope and location of future livestock projects and II any changes which might be needed in beef processing and marketing. , "flte total cost ot the project is estimated at the equ.~valent of $39.1 million including contributions by ranchers and machinery contractors, by plirticipating banks· ' and by the Government. The Bank loan of $15.3 mUlion will be ch~nneled through the • Central Bank to participating banks. Initially, the Banco d€-"f;;;acion Argentina will be the ·only agency lending to' producers ~tnd h contractor~. Additional banks may participate once they are qualified by the C;ntral Banli in agreement with the World Bank. Th~ participating banks will obtain half their funds for loans from the World Bank loan -and will furnish the remainder from their own resources. Ranchers and contractors. will borrow 80% and 60% of their needs, respectively";,,\ The proceeas of . ~\ ~' ' the Bank loan will also meet half the foreign exchange co_st of techn"1c,al services frilrnished by INTA and half the cost of tP:ie studies, the rest being paid by the Government of Argentina. The Bank loan will be for a term of 20 years and bear interest at the rate of 67. per annum. Amortization will begin in August 1972. Loans to ranchers will be for 9 years including 4 .years of grace and to machinery contractors for up to 5 years including one year of 11race, both with interest at 16% a year. Repayments to the 1( ,:~- ', I "\/ _,-::-"")\ . Centrlil, Bank ex;:;eding amortizaticin of the .War,~ Bank loan will be relent for the • program. \: \\ '\ \\ The \livestock development project was inltial'ly developed in 196S by a project ~ ~ preparat:ion mlssi9n from the Food and Agriculture Organizat'ion of the United Nations 1 (PAO) under the joint Bank/PAO Cooperative Program.