Announcement of Nine Million US Dollars Loan in Colombia for Agriculture on June 28, 1967

I l'JTERf\.JATIONAL ,:. RECONSTRlJC~TI AN E\/ELOPrv1ENT 181-8 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 ~-) Bank Press Release No. 67/32 Subject: $9 million loan in Colombia June 28, 1967 for agriculture .The World Bank has approved a loan equivalent to $9 million to assist in I financing a project fio~ the development of agricultural production in the Depart- f ment '!of Atlantico in northern Colombia. The project involves irrigation and flo.od ~ontrol works .for 24 ,sop acres and is the first stage of a program to irri- gate a substantially larget:., area in the Game vicinity. The irrigated area will be inten~ively cultivated, mainly with high-value crops for export. The projectc will contribute toward the attainment of a primary goal of Colombian economic ~;::::;; policy -- diversification o-f agriculture to lessen the dependence on coffee 1:~ 1 • . 11 · 1/ to increase expo~t earnings. \\ \l, ,lt 18. 7 million depends almost enti;ily Half of Colombia's population of abo,., 1 on agriculture for its liv~lihood. Agriculture accounts for almost a third of the gross national product and produces nearly three quarters of the country's exports. Yet the production of the country's basic food crops -- maize, wheat, rice, beans, potatoes, fruits and vegetables -- has barely kept pa~~Ea with the growth of population, now increasing at the rate of ~bout 3s2% a year. Modern \\ agricultural practices have not been introduced on a\~cale wide enough to br}ng \\ about a general improvement in yields. In the a:tif;ncict> project area, modern agricultural techniques will be introduced i~ both the section under irrigation and,, in that dependent upon rainfall. At full production, the net value of agri- cultural produ~tion in the area should reach the equivalent of $4 million annually. Furthermore, the .project will create einployment and provide valuable experience ~ in the production and export of fruit and vegetables.  \ - 2 - The project area is located in the south~ast part of the Department of • Atlantico on the Magdalena River where the soils a,nd climate are well suited to agriculture. The area has good communications by land and water with Barranquillj and Cartagena, which are not only important seaports, but also rapidly growing centers for agricultural processing and trade. The project will consist of two parts: Part I - the development of 9,640 acres for irri"." gation, and Part II - flood protection works for an area of 14,800 acres. Part I will include the construction of a complete irrigation and drainage system and the execution of on-farm works needed for intensive cropping; the purchase of agricultural equipment; the establishment of perennial crops; the setting up of marketing facilities, including an orange packing plant; the establishment of field trial farms; the provision of agricultural management, including technical assis~ance to farme.rs accompanied by credit facilitia:;-; the training abroad of Colomb'ian personnel; and the preparation of feasibility ,. studies foi~ further irrigation development. In .this area the main crops are expected to be o.ranges, pineapples , tomatoes , ,guavas ~ papaya, tobacco, peanuts, b~~ns and grain sorghum~ .. ,Part II will consist of the construction of an interceptor channel to pro- tect from flooding an area of 14,800 acres of cultivable land·, of which 7, ?OO acres are presently under tr;tditional cul~iva~ion; th!! construction of auxiliary civil works; and the introduction of improved crop.ping pract!c~~-~ f_QJ.:___~ai_I!:-J~.~ agriculture. Instituto ColombianQ de la Reforma Agraria will have overall re- sponsibility for' the project. It will acquire most of__ ~he land in the. project area and settle farmers on it in small holdings. ~- \, An expert from the Food and Agriculture Organizat:Lon of the United Nations • (FAO) assisted in the appraisal of the project under the joint Ba1',k/FAO.Coopera- tive Program. The loan will be made to Instituto Colombiano· de la Reforma Agraria 1 (INCORA), which was established in 1961_ · to implement the agrarian reform,// law. It has since become a major Government agency for agricultural develop- ment and is active in developing land to increase agricultural production, as well as in land distribution. Since the Atlantico project is technically com- plicated and requires a high degree of experience and skill not· now available in Colombia, INCORA will engage consultants for the planning, operation and management of the project throughout the construction period and for at least five years thereafter. I) The total estimated investment cost O! the pro.1ect amount• to the equiva- lent of $15. 7 million. The Bank loan wilf' provide 571. of the total and will 0 cover the px-esently estimated foreign exchange costs of the civil works, the purchase of machinery, equiP111ent and materials, the fees ef foreign consult.ants, and the foreign cost of training Colombian technicians abroad. The remaining costs, 8.Jllounting to the equivalent of about $6.7,million, will be met by Govern- ment budgetary contributions to INCORA. INCORA is making .,a~s,,Eudy t~ determine the capitcity of farmers to repay'\, part of the investment costs~""' '/ :1 The loan will be for a term of 25 years e.nd bear interest at the rate of 641 per annum. Amortization will, beg:l.n in October 1973. The loan will be guaranteid by the Republic of Coiombia. •