Tanzania - Cashew and Coconut Treecrops Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 16359 IMPLEMENTATION COMPLETION REPORT TANZANIA CASHEW AND COCONUT TREECROPS PROJECT (CREDIT 2050-TA) March 6, 1997 Agriculture and Environment Operations Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Jun.-96 USS 1.00 = T Sh623.3 Jun.-95 USSI .00 = T Sh604.8 Jun.-94 US$1.00 = T Sh516.2 Jun.-93 US$1.00 = T Sh395.0 Jun.-92 US$1.00 = T Sh300.0 Jun.-91 US$ 1.00 = T Sh227.0 Jun.-90 US$1.00 = T Shl93.2 Jun.-89 US$1.00 = T ShI45.0 FISCAL YEAR OF BORROWER Government of Tanzania July I -June 30 ABBREVIATIONS AND ACRONYMS AERP Agricultural Export Rehabilitation Project ARI Agricultural Research Institute CBT Cashew Board of Tanzania CCTP Cashew and Coconuts Treecrops Project CDC Cashew Development Centres CIP Cashew Improvement Program CRDB Cooperative and Rural Development Bank CRF Cashew Research Fund CSu Commercial Service Unit DANIDA Danish International Development Agency EAT East African Tall GTZ German Agency for Technical Cooperation ICR Implementation Completion Report IDA International Development Agency IPM Integrated Pest Management LD Lethal Disease MCLO mycoplasma-like organism MOAC Ministry of Agriculture and Cooperatives NAEP National Agricultural Extension Project NCDP National Coconut Development Program ODA Overseas Development Administration (U.K.) PMD Powdery Mildew Disease RIF Regional Input Funds SACCO Savings and Credit Cooperative SPU Special Program Unit VEO Village Extension Officer ZSTC Zanzibar State Trading Company Vice President C. Madavo Country Director J. Adams Technical Manager S. Ganguly Task Team Leader S. Kumar  FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT TANZANJA CASHEW AND COCONUT TREECROPS PROJECT (Cr. 2050-TA) CONTENTS Preface ......................................................... i Evaluation Summary ........................................................ ii PART I: PROJECT IMPLEMENTATION ASSESSMENT .................... ...................... 1 A. STATEMENT/EVALUATION OF OBJECTIVES ................... ...................... 1 B. ACHIEVEMENT OF OBJECTIVES ........................................................ 2 C. MAJOR FACTORS AFFECTING THE PROJECT .................. ...................... 8 D. PROJECT SUSTAINABILITY ........................................................ 9 E. BANK PERFORMANCE ........................................................ 10 F. BORROWER PERFORMANCE ........................................................ 11 G. FUTURE OPERATIONS ........................................................ 11 H. ASSESSMENT OF OUTCOME ........................................................ 12 I. KEY LESSONS LEARNED ........................................................ 12 PART II: STATISTICAL TABLES .........................................................1 Table 1: Summary of AssessmeDts ...........................................1............. Table 2: Related Bank Loans/Credits ........................................................ 3 Table 3: Project Timetable ........................................................ 3 Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual ................... 4 Table 5: Key Indicators for Project Implementation ............................................ 4 Table 6: Key Indicators for Project Operation .............................................. .... 5 Table 7: Studies Included in Project ........................................................ 6 Table 8A: Project Cost (US$ '000s) . ........................................................ 7 Table 8B: Project Financing ........................................................ 8 Table 9: Economic and Financial Costs and Benefits .................... ...................... 9 Table 10 Status of Legal Covenants ........................................................ 21 Table 11: Compliance with Operational Manual Statements ............. ..................... 12 Table 12: Bank Resources: Staff Inputs ........................................................ 12 Table 13: Bank Resources: Missions ........................................................ 13 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  APPENDICES A. Aide M6moire B. Borrower's Contribution to the ICR C. Cofmancer's Contribution to the ICR D. Tables Map - Distribution of Major Cashew and Coconut Project Activities 2  IMPLEMENTATION COMPLETION REPORT TANZAN1A CASHEW AND COCONUT TREECROPS PROJECT (Cr. 2050-TA) Preface This is the Implementation Completion Report (ICR) for the Cashew and Coconut Treecrops Project (CCTP) in Tanzania, for which an IDA Credit (2050-TA) in the amount of SDR 19.4 million (US$25.1 million equivalent) was signed on 28 July 1989, and became effective on 28 January, 1990. The Mid-Term Review (MTR) took place in March/April, 1993 and the last disbursement was made on November 18, 1996 after which the credit was closed with a balance of SDR 5.75 million. This amount was canceled and total expenditures under the project were SDR 13.65 million. This ICR was prepared by a mission' from the FAO/World Bank Cooperative Program, on behalf of the Africa Agriculture Operations Group 1 (AFTA1) of the World Bank. Preparation of the ICR commenced with the mission's visit to Tanzania from 25 August to 14 September 1996. This report is based on material gathered from the project files and supervision reports, as well as discussions with Bank and Government of Tanzania (GOT) staff associated with the project. In addition, in conjunction with representatives of the British Overseas Development Administration (ODA) and the German technical cooperation agency, GTZ, co-financiers of the project, the mission undertook intensive discussions and field investigations with staff of research stations, research sub- stations, Cashew Development Centres (CDCs), coconut nurseries and seed gardens, on-farm trials, and farmers in Zanzibar and on the mainland. Contributions to the report were made by Satish Kumar, AFMKE, Fred King, Jeri Larson and Jim Coates, AFTA 1, anac it was reviewed by Sushma Ganguly, Technical Manager, AFTAI The borrower contributed to the preparation of the ICR through the arrangements for field visits and meetings, and provided useful comments on the mission's Aide-Memoire. In addition, a "Project Completion Report" was prepared by the borrower and a summary, also prepared by the borrower, is attached as appendix B. ODA prepared a report on its cofinanced part of the project and its executive summary is included in appendix C. No comments or input was received from the other cofinancer. 'he mission comprised rim Lamrock (FAO TCIR - Economist/Mission Leader) and Nick Richards (Treecrops Specialist - Consultnt). lbe ICR for the Agricultural Export Rehabilitation Project (Cr 1891-TA) was prepared during the same mission. i   IMPLEMENTATION COMPLETTON REPORT TANZANIA CASHEW AND COCONUT TREECROPS PROJECT (Cr. 2050-TA) Evaluation Summary Introduction 1. The Cashew And Coconut Treecrops Project (CCTP) evolved from two preceding pilot projects in cashew and coconut development. The National Coconut Development Program (NCDP), established in 1979 and financed by the Federal Republic of Germany, examined pest and disease measures in coconut production systems, began looking at the potential for introducing improved varieties for drought and disease tolerance, and supported training in extension and field advisory services. IDA's involvement commenced in 1981 with support for the "Coconut Pilot Project" amounting to SDR 5.2 million under Cr 1070-TA. In May, 1987, a proposal was prepared by Government for a follow-up phase. A similar pilot project for cashew development was financed under the undisbursed balance of the Second Cashew Development Project (Cr 801 -TA) to analyze the main causes of the decline in cashew production and to recommend agronomic methods to reverse this decline. A proposal for a follow-up phase was prepared in March 1988 to be jointly financed by ODA. The two proposals were appraised as one Cashew and Coconut Treecrops Project in October, 1988. 2. The project formed part of the World Bank's development assistance strategy for Tanzania in supporting the Government's efforts to reform, rehabilitate, modernize and expand the country's research, extension, input supply, marketing and credit systems. 3. The project was signed in July, 1989 and became effective in January, 1990. Project Objectives and Components 4. The objectives of the project were to achieve long-term growth by increasing the national production of cashewnuts for export, and the production of coconuts for the domestic oil market. At the time of the mid-term review, the development objective for coconuts was expanded to include increased production for domestic raw nut consumption. 5. To achieve this, the project was to provide financing and technical assistance in support of research, production development, planting materials and management and coordination. In addition, for cashew, the project included a component for input supply and marketing support, and a pilot credit scheme. 6. The project was to build on the research programs supported by ODA under the Cashew Improvement Program and GTZ under the National Coconut Development Program, with the ii  research components of the project to be cofinanced by ODA and GTZ for cashew and coconut respectively. Implementation Experience and Results 7. The project commenced in January 1990, and a MTR was completed in April 1993. Project performance up to the MTR was generally below expectations with the exception of research activities, as a consequence of poor project planning and administration, and the inability of GOT to provide counterpart funds. The pilot credit scheme was not functioning well as a consequence of lack of restructuring of the component and the need for improved management of the Cooperative and Rural Development Bank (CRDB). 8. The MTR, although completed late, outlined a clear plan for the project to be realigned with project objectives and outcomes. The 3 year plan formulated at that time included revised procurement, civil works, and training plans, redefinition of roles for extension, credit and Cashew Development Centres, and the formulation of a new CCTP management structure for the project, aimed to better co-ordinate both cashew and coconut activities. 9. Since the MTR, project implementation has generally been satisfactory, although the continued shortage of GOT counterpart funds has caused some delays and modifications to activities. The flow of funds from IDA and counterpart funds through government agencies was unsatisfactory. Lengthy delays were experienced with the Central Tender Board in approving bids for civil works programs. Achievement of Objectives 10. During the project's life, Tanzania's cashew production has increased rapidly, rising from 19,275 tons in 1988/9 to 81,729 tons in 1995/6 and, whilst there were other positive extemal factors that contributed, particularly progress with marketing reforms, the project has made a significant contribution to this increase. Foreign exchange earnings have increased from US$ 12.9 million in 1989/90 to US$ 79.5 million in 1995/96 and farmgate earnings have gone from US$ 7.5 million to US$ 44.1 million. Cashew research and extension activities have been co-ordinated through a network of 7 Cashew Development Centres (CDCs). Research and extension capacity for cashew has been built, and input supply, particularly the availability of sulfur and motorized blowers has increased. Therefore, the main development objectives of the project have been met. However, the objective of the development of higher yielding, Powdery Mildew Disease (PMD) resistant varieties has not yet been fully met. The cashew breeding program has identified five potentially PMD tolerant clones but these have not been fully evaluated and are not available for growers. 11. Surveys for coconut production point to an increase in the area of plantings and increased nut production per palm, together with increased income derived from coconuts. Research and extension activities were located in all coastal and island regions, with a good distribution of major efforts such as variety trials and verification plots. Thus the project objectives have been achieved on the production side, leading to higher farmer incomes. However, the poor performance of introduced dwarfs and hybrids has not resulted in higher yielding, Lethal Disease (LD)-resistant palms obtained from commercial seed gardens as expected. On the processing side, progress iii  towards reduction in vegetable oil imports by increased domestic coconut oil production has been marginal. There has been some effort in disseminating information and equipment for small-scale processing, especially to village women's groups. Project Costs 12. The costs of the project were expected to be US$ 42.4 million with a foreign exchange content of US$ 30.2 million. Actual project costs were below these levels, with an estimated total cost of US$ 32.2 million with a foreign exchange content of US$ 22.5 million. IDA's contribution to project costs amounted to US$ 18.3 million. This was mainly due to the scaling down of project activities in line with the shortfalls in Government budgetary allocations to project activities. Major Factors Affecting the Project 13. Initially, there were difficulties in running two project management units, the Cashew Improvement Program (CIP) and National Coconut Development Program (NCDP), under the one project with different planning and reporting procedures. This was corrected at mid-term review by integrating the management into the Cashew and Coconut Treecrops Project. 14. The project was adversely affected by the inability of Government to provide its share of counterpart funds throughout the project life. The mechanism for the flow of funds was considered by the project's management to be unsatisfactory, particularly the flow of both IDA funds and counterpart funds through Government agencies. These difficulties were caused mainly by project management's lack of understanding of IDA procurement and disbursement rules and procedures 15. The lack of progress with the restructuring and strengthening of the capacity of CRDB had a serious effect on the implementation and success of the pilot credit scheme, even though this component was only intended to disburse about eleven percent of the total project funding. 16. The emergence of research results was slower than expected. However, this is more a reflection on the assumptions and expectations at the design stage, rather than attributable to project activities. Breeding programs for tree crops require a minimum of 10 years and whilst the project was to support ongoing research activities, there were not sufficient positive indications at the commencement of the project to have reasonably expected the results to have been achieved during the project's life. Sustainability 17. The extension activities following the CCTP project will be assisted by IDA through the National Agricultural Extension Project II, (NAEP II), for the period 1996 to 2001. This will cover all Tanzanian agriculture including cashew and coconut. Coconut research will continue to be funded by GTZ until 2000, maintaining the continuity of and commitment to this activity. At the time of these project's termination, sustainability will depend on future funding sources, both public and private, for extension and research activities. Efforts have already begun in this area with the collection of levies from cashew farmers. iv  18. Under the recently imposed levy on cashew exports, funds of nearly one million dollars were collected by the fund collection agency, Cashew Board of Tanzania (CBT), to be credited to a separate "Cashew Research Fund (CRF)" to be administered by a Board of Trustees. This process has proved unreliable in the first year of operation, having forwarded for research less than 25% of payments due. The arrangement in place for the collection and administration of the levy needs to be improved to guarantee sustainable cashew research; otherwise the future of cashew research would remain uncertain. Overall the project's sustainablity is rated likely. Bank Performance 19. It is considered that IDA performance has been satisfactory. The project was well designed to complement the research efforts in critical areas. However, it proved to be over- optimistic in terms of the time required to achieve and promulgate research results. After a slow start, overall supervision was also satisfactory, as demonstrated by the effectiveness of the alterations made at mid-term review, and the frequent and close contact that the supervision teams have kept with the project. Borrower Performance. 20. The performance of the Borrower has also been satisfactory. Obligations on reports, accounts and legal covenants have generally been satisfactory. The Government's obligations to provide counterpart funds for project activities was not fully met and this contributed to reduced and delayed project activities. This was based on overall budget constraints that has affected all projects in the country. The Borrower completed its contribution to the ICR process by the preparation of the "Project Completion Report", and participated in the ICR mission. Project Outcome 21. The major project development objectives of increasing production have been achieved for cashew, and less spectacularly for coconut production. The upgrading of cashew and coconut research and extension programs, and their co-ordination under CCTP was achieved, as was considerable development of staff through training programs. The reform of cashew marketing and increased benefits to the farmer were also achieved but domestic cashew processing remains at a low level. 22. Against the positive outcomes of the project, the research objectives were not achieved, as there remain the unsolved problems of Lethal Disease and drought tolerance in coconut, and Powdery Mildew Disease in Cashew. 23. The project outcome overall has been rated as satisfactory. v  Summary of Findings, Future Operations and Key Lessons Learned 24. Findings. The main findings from the implementation of the CCTP project were: (i) research and development projects in treecrops require a long time frame for the breeding, testing, propagation and promulgation of the materials being developed, and large investments are involved which do not necessarily see demonstrable returns in the short or even medium term; (ii) reforms in the marketing systems for cashews have made a significant impact on the rehabilitation of the production areas and on the resultant production levels and foreign exchange earnings; (iii) counterpart commitments to project funding are essential for the project progress to remain on track; (iv) assured mechanisms for sustaining funding for continuing research are crucial if the results of past efforts and investment are not to be lost. 25. Future Operations. ODA support for cashew research has been completed and future research is to be funded through the export levy on cashew to be channeled to the Agricultural Research Institute (ARI). GTZ have an agreement to continue support to coconut research until 2000. All extension programs and activities will be handled through National Agricultural Extension Project II (NAEP II). Three CDCs will be maintained under public sector control with the other four being placed into the private sector. Seedling production will be continued on the established private nurseries. The project has prepared a plan for the redeployment of professional staff that have been trained and gained experience under the project, as well as a plan for the deployment, continued use and maintenance of the assets. 26. Key Lessons Learned. The key lessons learned were as follows: (i) flexibility (consistent with overall objectives) is important in project activities, to allow for changing circumstances, priorities and initial project assumptions that prove to be invalid; (ii) reservations concerning the cost effectiveness of the dual management structure of the project (CIP and NCDP) were justified; a single CCTP management unit was more effective; (iii) mechanisms for procurement and disbursement were consistently problematical for project implementors; (iv) more time is needed to complete research objectives in plant breeding aspects, and greater allowance for failure of improved plant materials should be factored into project appraisals, especially in climates distinctly different from where the materials are known to perform well, or where disease resistance is thought to be a limitation; (v) building upon or scaling up previous pilot operations can help assure a greater degree of success; and (vi) an effective mid-term review can help in restructuring or putting a project onto a solid basis. vi   TANZANIA CASHEW AND COCONUT TREECROPS PROJECT (Cr. 2050-TA) PART I: PROJECT IMPLEMENTATION ASSESSMENT A. STATEMENT/EVALUATION OF OBJECTIVES 27. The objectives of the project were to achieve long-term growth by increasing the national production of cashewnuts for export, and the production of coconuts for the domestic oil market. At the time of the mid-term review, the development objective for coconut was expanded to include increased production for domestic raw nut consumption. 28. To achieve this, the project was to provide financing and technical assistance in support of: (i) expanded cashew and coconut research breeding and selection to develop higher yielding, more disease and drought tolerant varieties/hybrids; (ii) the development and operations of seven Cashew Development Centres and three coconut seed farms for the propagation and dissemination of quality planting materials; (iii) the production development through the training of extension and research staff, and the dissemination of cashew and coconut production packages; (iv) the management and coordination of the cashew improvement and coconut development programs; (v) the cashew input supply and local marketing support; (vi) strengthening credit facilities in the southern cashewnut production areas in the form of a pilot credit scheme managed by the Cooperative and Rural Development Bank (CRDB); (vii) promotion of edible oil production from coconuts. 29. The project formed part of the World Bank's development assistance strategy for Tanzania in supporting the Government's efforts to reform, rehabilitate, modernize and expand the country's research, extension, input supply, marketing and credit systems. The project was to build on the research programs supported by ODA under the Cashew Improvement Program and GTZ under the National Coconut Development Program, with the research components of the project continuing to be cofinanced by ODA and GTZ for cashew and coconut respectively. Therefore, IDA's involvement came at an appropriate time to support research and extension development by financing infrastructure, equipment and training. The project's research objectives were squarely  aimed at the principal agronomic constraints that were facing these two treecrops - lethal disease and drought resistance in coconut, and powdery mildew in cashew. 30. The project was active in all of the major cashew production areas of Tanzania, which are mainly found in the southern regions of Mtwara and Lindi, but include Coast and Tanga regions. Project activities on coconuts were in Coast and Tanga regions and the islands of Mafia, Zanzibar and Pemba (see Map). B. ACHIEVEMENT OF OBJECTIVES Cashew Rehabilitation 31. There has been significant progress in cashew grove rehabilitation/rejuvenation in all districts, which has included undergrowth removal, weeding, removal of unproductive trees, replanting, infilling, top working and sulfur usage. Over 9 million cashew trees planted in groves were rehabilitated, and replaced in some cases. Farmers' awareness of the concepts of tree productivity and the need to maintain groves has been realized. Cashew trees are no longer treated as bush crops in the main growing areas. Following the extension and research program, farmers now have a choice of alternative rehabilitation programs which they can choose according to cost considerations. Sulfur dusting was extended to 20% of trees and 24% of farmers. Assistance provided under the CRDB credit scheme fell well short of the targeted 10,000 farmers, with less than 1,000 receiving loans. Input supply, particularly the availability of sulfur and motorized blowers has increased greatly (Appendix C, Table 5) and approximately 25% of farmers were able to obtain blowers, sulfur and other inputs to control PMD. Cashew Development Centres 32. Seven CDCs were established during the project and distributed appropriately in all cashew districts. The distribution of cashew research and extension efforts (Appendix B, Table 3) has been logical and quite well related to the actual distribution of production. The CDCs act as a source of seed and scion wood, and provide technical and extension assistance. The planting of cashew seedlings and grafted rootstocks fell slightly short of the targeted 1.5 million plants. The number of demonstration plots established on farms almost doubled the planned target. 33. There have been significant improvements in the capacity and efficiency of extension and research staff following the training program that was available to all levels of staff, even though actual levels of staff training and courses fell short of targets. Table 6 of Appendix C details training activities achieved during the project. The mass production of training materials, and greater involvement in courses and workshops for both staff and farmers was achieved. All positions in the Agricultural Research Institute (ARI) at Naliendele associated with the project activities are now localized. 2  Production and Earnings 34. During the project's life, cashew production has increased rapidly, rising from 19,275 tons in 1988/9 to 81,729 tons in 1995/6, representing an annual increase of 29% (Appendix C, Table 1). Whilst there were other positive external factors that contributed, particularly progress with marketing reforrns, the project has made a significant contribution to this increase. With liberalization of marketing, the farmgate share of the export price increased from 42% in 1988/89 to 66% in 1994/95. This has fallen back to 56% in 1995/96 (Appendix C, Table 2), due to fewer nut traders operating in the market limiting competition at the farm gate. Foreign exchange earnings have increased from US$ 12.9 million in 1989/90 to US$ 79.5 million in 1995/96 with the value reaching the farmers going from US$ 7.5 million to US$ 44.1 million over the same period. Research Results 35. The main research results on cashews to date have recently been published by the project'. Whilst the main development objectives of the project on the cashew side have been met, there remains the problem of PMD control. The cashew breeding program has identified five potentially PMD-tolerant clones but these have not been fully evaluated and are not generally available for growers. PMD control is still achieved by sulfur dusting. This is not sustainable and may lead to soil acidification. Alternative systemic fungicides have been tested at Naliendele and registration applications made, but these require water for usage, which is often in very short supply, and therefore makes this approach unworkable in the short term for widespread use. 36. There are no hybrid seed gardens operating due to incomplete selection of clones for PMD screening. CDCs are releasing mainly seed from polyclonal seed gardens. The variability of progeny is thus likely to be high, which could lead to a significant percentage of lower productivity trees. There have been no trials to test the variability of hybrid seed progeny. More effort should have been placed on releasing clonal material, and assisting nurseries to promote them. 37. Cashew research is now substantially dependent upon funding derived through the export levy. There is no continuing external assistance. Cashew research is under threat of funding due to failure of funds to be released from Cashew Board of Tanzania (CBT) to Cashew Research Fund (CRF); to date for 1996/97 only 25% of export levy funds have been received by the CRF for the 1995/96 season. Unless this problem of release of funds is dealt with, a major shortfall will exist to continue the research program. 38. The issue of soil fertility has only partially been investigated, and fertilizer response trials are in progress in some districts. Greater consideration to reducing nutrient removal via harvesting and the ability of soils to supply nitrogen, potassium and phosphorous needs to be evaluated. Research station trials should include some annual soil and leaf sampling and interpretation. Cashew Research Project - Summary of Achievements' DRT/ODA Cashew Research Project, May 1996. 3  Input Supply 39. The major inputs imported were sulfur and blowers. A total of 12,131 tons of sulfur was imported against a target of 16,812 tons. A total of 3,529 blowers were imported against a target of 4,945. By 1996 sulfur was available through the Tanzania Fertilizer Company, and adequate supplies of blowers were on hand from previous years. T he responsibility for the control and organization of supply of inputs to be used to boost cashew production rested with the Commercial Services Unit (CSU) of the project. Initially the project was set up with funds (US$ 2.2 million) provided to CRDB, to create a three tier system of importers, stockists and farmers. The primary recipients of funds were importers, who took advantage of the funding in the first two years. However, repayment rates were poor, as was the case with the stockists. The CRDB in 1994 decided to tighten its credit policy by demanding land titles for loans. This proved difficult to implement and CRDB stopped advancing credit for these purposes. Farmers were used to receiving inputs from the government, and thus believed they were not required to repay the cost of cashew inputs set up under a government organized project. Overall, the CRDB phase of the input supply project failed as the remaining stockists were not able to sell all stocks and, as further credit was refused, the stockists set up informal credit arrangements with farmers. 40. From 1994 on, Regional Input Funds (RIFs) were created, funded by a levy of TSh 10 per kg of nuts sold by each farmer. A great deal of management and organizational problems were experienced with the RIFs, together with the actual use of funds levied. By 1996, however, it is estimated that TSh 750 million resides in the funds collectively, which is more than adequate for input requisitioning for the coming season, if the funds are used for that purpose. Pilot Credit Scheme 41. The Pilot Credit Scheme as designed was not successful. This was mainly as a result of the lack of progress in improving the capacity of CRDB in the early years. Repayment experience was poor due to lack of disciplined follow-up on the part of CRDB, a weak culture of repayment on the part of the primary societies and adverse seasonal conditions. Steps were taken to deal with these difficulties and at the time of the mid-term review, further support was diverted to boost the credit scheme both for farmers and rural stockists. 42. However, the major restructuring of CRDB initiated by the Banking and Financial Institutions Act (1991), and followed through with the involvement of the Danish International Development Agency, DANIDA, did not have a significant impact on its capacity until late 1995. CRDB was unable to provide new or additional lending to existing clients as a result of restrictions placed on it by the Bank of Tanzania and consequently no further project loans were provided. The recovery performance of the scheme was mixed mainly due to the lack of supervision capacity of CRDB. Overall, the implementation of the credit component was unsatisfactory. 43. However, the project has supported the development of eight Savings and Credit Cooperatives (SACCOs) in the major cashew producing areas. Moreover, due to the establishment and eventual working of the RIFs, the project's objective of securing inputs for cashew production were met, although the project's initiative of providing this through credit did not succeed. 4  Coconut Research 44. Research and extension activities and resources were located in all coastal and island regions, with a good distribution of major efforts such as variety trials and verification plots (Appendix C, Table 4). The Chambezi research station was overhauled and re-opened for breeding and disease screening trials. Variety trial testing at three distinct LD intensity and rainfall sites commenced in 1991, with survivors of the best imported hybrids crossed with selected East African Tall (EAT) palms, to try to identify LD resistant materials and drought tolerance. In agronomy research, limiting nutrients for a range of soil types were identified, benefits of hand weeding were established and preferred palm spacings were determined. In farming systems research, 88 on-farm trials were set up throughout the country to evaluate and demonstrate intercropping and returns. 45. However, a number of issues remain unresolved or were inadequately pursued. Despite the research efforts, there is no solution in sight to improve LD resistance and drought tolerance. Hybrids failed to perform as expected at the start of the project. With this, the focus of the research was diverted away from hybrid trials. The failure of hybrids also meant the abandonment of the two hybrid seed gardens. However, there are areas where hybrids have performed well, e.g. Ng'apa valley, but little work was done on identifying other potentially suitable areas. Whilst Zanzibar is at present LD free, the focus of coconut breeding in Zanzibar should reflect LD resistance work on the mainland. 46. Soil sampling and fertility evaluation has not received continuous assessment, thus the importance of nutrition issues is not clear. Earlier work had established limiting nutrients but was not followed up in the project. The approach now should be to evaluate a nutrient balance/auditing approach to farmers' blocks to determine the sustainability of zero fertilizer application practices. 5  Training 47. Farmers were trained in selecting mother palms for seednut collection and nursery practices for seedling production. Table 6 indicates the progress in training achieved during the project. Nurseries 48. Coconut nursery development outstripped the targeted 325 nurseries, however the output of these nurseries was well below that targeted. Private nurseries were established and these now supply all seednuts for planting, apart from farmers own selections. A total of 4.1 million seednuts/seedlings, 60% of which were to be hybrid, were planned for distribution; the project actually achieved 1.4 million seedlings of improved varieties and 1.2 million EAT seednuts for distribution. Of these planting materials, a very small percentage were actually hybrid materials, as these materials did not perform well in field evaluations. The contribution of backyard nurseries and farmers in producing nuts for planting remains unmeasurable but is thought to be significant, as mentioned in surveys. The numbers of new growers of coconuts and the number of growers advised on husbandry both were close to their respective targets, but these figures are almost impossible to verify. Integrated Pest Management 49. The development of an Integrated Pest Management (IPM) system for the Coreid bug (Pseudotheraptus wayi) was implemented and demonstrated to farmers. In disease control, LD mycoplasma-like organism (MLO) screening continued, and MLO was isolated from insects suggesting a possible insect vector (yet to be identified). Studies on the rate of LD spread in three districts were initiated. Molecular biology research to complement LD resistance screening commenced. The construction and operation of embryo culture facilities for coconut culture were set up. 50. Although IPM control of the Coreid bug was demonstrated, the necessity for farners to thin their palms for the planting of host trees reduces the uptake of these practices. There also remains the requirement to control antagonistic ants with ant attractant/insecticides. 6  Processing 51. There was little emphasis placed on coconut processing. There has been some effort in disseminating information and equipment for small-scale processing but it is generally not widespread. The promotion of small scale coconut oil and copra processing was initiated by the development and distribution of 35 rotary graters, 11 ram presses and 6 bridge presses, especially to village women's groups. The low levels of local processing may result in lost opportunities for foreign exchange savings and reduce the value of coconut products. Against this, however, are factors such as the current global oversupply of palm oil and its resulting low prices. It would not be appropriate to artificially protect coconut oil from competition and thereby increase the price that local consumers must pay. Production and Incomes 52. The lack of data on domestic and export coconut production volumes of fresh nuts, copra and coconut oil, both before and after the project, makes an accurate assessment of production performance difficult, other than by specific surveys such as completed by Ashimogo et al. (1996)1. This was a major, independent impact survey conducted by scientists from the University of Sokoine and a marketing advisor from the Marketing Development Bureau, Ministry of Agriculture and Cooperatives, (MOAC), and concluded that: (i) average production rose over the project period from 25-30 nuts to 30-40 nuts per palm. (ii) annual palm replanting rate over all districts was 2% following the project commencement. (iii) income from palm activities increased by about 20% relative to pre-project. Other Matters 53. Problems of administration and co-ordination were experienced in integrating the NCDP extension program into the national extension service. The effectiveness of Village Extension Officers (VEOs) was a particular cause of concern, especially in Zanzibar. 54. The marketing reforms experienced in the mainland have not taken place in Zanzibar, where the relative importance of coconut is higher. The operations of the Zanzibar State Trading Company (ZSTC), the sole official buyer and exporter of coconut products, have prevented free market prices and incentives to develop for coconut products. Economic and Financial Objectives 55. Since the project was essentially a research and development project, no overall economic rate of return was calculated at appraisal. The years in which the project was effective saw many factors operating that have led to increased production and farm incomes, most notably the liberalization of cashew marketing, and the upturn in local demand for fresh coconuts. As 'Coconut Impact Assessment Survey - Final Report" NCDP. June, 1996. 7  mentioned above, foreign exchange earnings for Tanzania from cashew production have increased from US$ 12.9 million in 1989/90 to US$ 79.5 million in 1995/96. The effect on incomes in rural areas has also been significant with the farmgate value going from US$ 7.5 million to US$ 44.1 million over the same period. Due to the informal nature of the coconut market, the true effects on farm incomes for coconuts are difficult to gauge, but are in the order of 20% in real terms. However, the research efforts that the project has supported are in themselves yet to yield any demonstrable, quantifiable benefits. It is therefore inappropriate to assess the economic rate of return ex-post for this project's support to research as there is no firm basis for the quantification and extrapolation of the expected level of benefits of the research efforts. These benefits are contingent on future levels of funding and the scientific progress made. 56. The costs of the project were expected to be US$ 42.4 million with a foreign exchange content of US$ 30.2 million. Actual project costs were below these levels, with an estimated total cost of US$ 32.2 million with a foreign exchange content of US$ 22.5 million. IDA's contribution to project costs amounted to US$ 18.3 million. This was mainly due to the non-performance of the credit component under the Pilot Credit Scheme. The implementing agency, CRDB, was being restructured and was not permitted to engage in new lending activities under conditions imposed by the Central Bank of Tanzania. Another major contributing factor was the scaling down of project activities in line with the shortfalls in Government budgetary allocations to project activities. C. MAJOR FACTORS AFFECTING THE PROJECT 57. Project performance up to the time of the mid-term review was mixed, but generally below expectations. This resulted from mainly poor project planning and management, and the inability of Government to provide its share of counterpart funds. There were difficulties in running two units, the CIP and NCDP, under the one project with different planning and reporting procedures. The comment was made by IDA at appraisal that the management costs associated with the dual approach were high. Also, up to that time, the lack of progress with the restructuring and strengthening of the capacity of CRDB had a serious effect on the implementation and success of the pilot credit scheme. 58. The mid-term review outlined a clear plan of action to steer the project back onto target. This 3 year plan included revised procurement, civil works and training plans, redefinition of roles in extension, credit, and CDCs, and the finalization of a new management structure for the project. Project scope was altered to reduce the Government's required contribution in view of the financial constraints faced by Government. Since the mid-term review, implementation has been satisfactory although some project activities have been delayed or scaled down in view of the continuing shortage of Government counterpart funds. 59. The mechanism for the flow of funds was considered by the project's management to be unsatisfactory, particularly the flow of both IDA funds and counterpart funds through Government agencies. These difficulties were caused mainly by project management's lack of understanding of IDA procurement and disbursement rules and procedures. In addition delays were experienced due to cumbersome procedures in the Central Tender Board. 60. The one major factor that affected the project was the slower than anticipated emergence of research results. However, this is more a reflection on the assumptions and expectations at the 8  design stage, rather than attributable to project activities. Breeding programs for tree crops require a minimum of 10 years and whilst the project was to support ongoing research activities, there were not sufficient positive indications at the commencement of the project to have reasonably expected the results to have been achieved during the project's life. 61. It is considered optimistic to have expected the coconut breeding objectives to be reached and the coconut hybrid seed gardens to be established, given the failure of imported palm materials. It appears that some failures were evident at the pre-project stage, and greater allowance in the risk analysis for palm failures in a dry/ disease stressed environment should have been made. The problem with LD resistance was underestimated as subsequently during the project, resistance to lethal yellow disease as inherent in the introduced dwarfs, was found to be different from LD resistance. However, CCTP staff did not sufficiently promote hybrid coconut in those areas suitable for growth. 62. On the cashew side, the successful screening for PMD resistance and higher yield, the establishment and evaluation of clones under different environments, the development of subsequent hybrids and their evaluation in progeny trials, all require much more than 6 years. A stated aim was to develop a resistant variety after I year, and after a further 4 years release a resistant, higher yielding clone for mass multiplication. It was further proposed to phase out clonal multiplication of improved clones and replace with hybrid seeds after year 5. The method to do this, the Accelerated Varietal Improvement System, failed to implement its very tight and compressed sequence of events. 63. The weaknesses in the capacity of CRDB to successfully manage a credit program were recognized at appraisal, but the activities under the Agricultural Export Rehabilitation Project (AERP) to restructure CRDB were relied on to minimize this risk. In the event, the AERP failed to have an impact on the capacity of CRDB to successfully manage this component. 64. To complement the expected increase in production in both cashew and coconut, the project design might have included some strategy and support for processing. For coconut oil, the global oversupply of palm oil and its cheap price work directly against encouraging large scale processing. However, the high, and increasing demand for fresh coconuts has still made increased production profitable. To date only a limited amount of small scale processing by women's village groups has made any progress. For cashew processing, possible opportunities for added value are being lost due to the direct export of raw nuts. The previous investment in the large-scale factories has proved to be mis-directed since all factories are now dormant. A re-examination of smaller- scale, perhaps village-level processing based on the experiences of India could be undertaken, but any investment should only be undertaken by the private sector based purely on commercial criteria without any subsidies or other assistance from Government. D. PROJECT SUSTAINABILITY 65. Extension activities following the CCTP project will be assisted by IDA through the National Agricultural Extension Project II (NAEP II), for the period 1996 to 2001. This will cover all Tanzanian agriculture including cashew and coconut. Coconut research will continue to be funded by GTZ until 2000, maintaining the continuity and commitment. Beyond this, and assuming GTZ will discontinue funding coconut research at that time, a levy from coconuts will have to be imposed or another source of funding found. Currently a levy could be difficult to implement as 9  very little exporting occurs, and marketing of coconuts is not controlled in respect of weights recorded and prices paid through domestic markets. 66. For funding future cashew research, a 3% ad valorem levy has been imposed on cashew exports: 2% to go to the Cashew Research Fund (CRF) to be administered by a Board of Trustees, and 1% to meet the expenses of regulatory activities carried out by the Cashew Board of Tanzania. In the first year, the CBT collected over TSh 735 million under this levy out of which only TSh 100 million was released for research. The remaining funds are reported to have been misused by CBT. The Government has taken administrative action against the wrong doers and, in a communication to the Bank, has committed to make good the losses suffered by the CRF. The share of the CRF of about TSh 550 million is more than adequate to meet the research costs of cashew currently met by the Government. The satisfactory workings of the mechanism to collect the levy and to credit the research share to the CRF is crucial in order that cashew research avoid funding problems witnessed in 1996. 67. The farngate share of the fob price has fallen in recent times. Whilst free and competitive market conditions should determine the farmgate price, the presence of few, powerful buyers tend to force down farmgate prices. 68. The proposed leasing of 4 CDCs has not eventuated, and progress is slow in this area. The lease agreements were to have been approved by MOAC and actual transfer accomplished by June 1996. The major problems include training of lessors in seed garden/clone production and quality control, and the question of lessors' ability to pay. The best outcome here would be to allow former ministry staff to develop the CDCs themselves for commercial operations. 69. The RIFs set up in each cashew region, are well funded to provide for additional inputs without further levy collection. The liability for the Pilot Credit Scheme and input supply credit is being transferred from CRDB to Ministry of Finance, but continued efforts by CRDB to recover outstanding loans is not guaranteed. 70. While some uncertainty about the project's future remains, on the whole production levels are expected to remain high, policies supporting a vigorous private sector are expected to remain in place and solutions to the difficulties give above are feasible. For these reasons the sustainability of the project has been rated likely. 10  E. BANK PERFORMANCE 71. It is considered that IDA performance has been satisfactory. With the reservations already noted, the project was well designed to complement the research efforts in critical areas. However, it did prove to be over-optimistic in terms of the time required to achieve and promulgate research results. Supervision was satisfactory, especially as demonstrated by the effectiveness of the alterations made at mid-term review, and the frequent and close contact that the supervision teams have kept with the project. Four supervision missions were carried out in the first two years of the project, but then none in the next fifteen months until right before the mid-term review. Since the mid-termn review in 1993, six supervision missions were conducted. In addition, the Resident Mission in Tanzania provided oversight of the project. F. BORROWER PERFORMANCE. 72. The performance of the Borrower has been mixed, but marginally satisfactory. Obligations on reports, accounts and legal covenants have generally been satisfactory. The Government's obligations to provide counterpart funds for project activities was not fully met and this contributed to reduced and delayed project activities. The Borrower completed its contribution to the ICR process by the preparation of the "Project Completion Report", and participated in the Implementation Completion Report (ICR) mission. The Government's Executive Summary of its Project Completion Report is attached as Annex B. G. FUTURE OPERATIONS 73. ODA support for cashew research has been completed and an internal review of the research activities was carried out in November, 1996. The review was quite positive about the results of the research undertaken and the capacity that had been built up in the country. Future research is to be funded through the export levy on cashew (CRF), to be channeled through to the Agricultural Research Institute (ARI). GTZ have an agreement to continue support to coconut research until 2000. All extension programs and activities will be handled through National Agricultural Extension Project II (NAEP II) supporting extension of all agricultural research and development in Tanzania. Three CDCs will be maintained under the Naliendele research station and ARI with the other four being placed into the private sector. Seedling production will be continued on the established private nurseries. The project has prepared a plan for the redeployment of professional staff that have been trained and gained experience under the project, as well as a plan for the deployment, continued use and maintenance of the assets. 74. Several important issues are noted that relate to future activities in coconut and cashew research and development, including: * the importance for continuing cashew research into PMD in the light of adverse economic and environmental effects of continued sulfur use, and limited alternative control methods in the absence of PMD tolerant materials; * the funding arrangements for cashew research. These are crucial. Mechanisms for the collection, accounting and allocation of research funds must be adhered to; 11  * the arrangements for the leasing of the remaining four CDCs, to ensure the continuing operation of the centers after divestiture; * the control and usage of funds collected by Regional Investment Funds to support inputs for cashew development; * the importance of maintaining a policy of free trade in the context of encouraging domestic processing of cashew; * the reduction in competition for cashew in the southern regions with the emergence of fewer buyers, which is resulting in lower farmgate prices; * the long term evaluation of soil fertility in the context of limited or no fertilizer usage; * the need for resources for treecrops under NAEP II; and * the lack of marketing reforms for the coconut sector in Zanzibar with the operations of ZSTC. H. ASSESSMENT OF OUTCOME 75. The major project objectives of increasing production have been very successfully achieved for cashew, and less spectacularly for coconut production. The reduction of imported edible vegetable oils has not been achieved as little progress in coconut oil processing has occurred. The upgrading of cashew and coconut research and extension programs, and their co-ordination under CCTP were achieved, as was considerable development of staff through training programs up to Ph.D. level. The reform of cashew marketing and increased benefits to the farmer were also achieved. Little progress has been made in coconut marketing which is unregulated and not documented accurately, thus making project impact difficult to gauge in terms of production changes. The establishment of a Tree Crops Institute has not occurred, and cashew processing remains at a very low level of output. Credit arrangements through CRDB were not successfully implemented with considerable doubt remaining on repayments of existing loans, however the desired objective of providing inputs was achieved. The project outcome overall has been rated as satisfactory. I. KEY LESSONS LEARNED 76. The key lessons learned are as follows: * Flexibility (consistent with overall objectives) is important in the implementation of project activities, to allow for changing circumstances, priorities and initial project assumptions that prove to be invalid; * Reservations concerning the cost effectiveness of the dual management structure of the project (CIP and NCDP) were justified; a single CCTP management unit agreed to during the MTR was more effective; * Mechanisms for procurement and disbursement were consistently problematical for project implementors; * More time is needed to complete research objectives in plant breeding aspects; 12  * Greater allowance for failure of improved plant materials should be factored into project appraisals, especially in climates distinctly different from where the materials are known to perform well, or where disease resistance is thought to be a limitation; * Building upon or scaling up previous pilot operations can help assure a greater degree of success; and * An effective mid-term review can help in restructuring or putting a project onto a solid basis. 13   PART II: STATISTICAL TABLES Table 1: Summary of Assessments A. Achievement of objecdves Substantial Partial Negligible Not Applicable Macro policies EV FI F Sector policies El El E Financial objectives E l El 0E0 Institutional development [Z E E E Physical objectives E W 0 0 Poverty reduction Fl 7 El L] Gender issues [1 0 0l Other social objectives E El E7 F Environmental objectives El El E E Public sector management [I El El Private sector development El El El Other (specify) - Research -l [ El El B. EWJetustainabiit] Likely nlik4 Ulnhcrain (1) (1) (F) w Ol O  C. Bnk. atformfnce satisfa ctory Saddf= Deiint () (e) () Identification [I ]3 Preparation assistance [I E] Cl Appraisal El El El Supervision nl [l D. Boffower pefmanc sadsfa=t SAfag T- Deficient (V) (1') (1) Preparation E El E Implementadon E E Cl Covenant compliance E E: E Operation (if applicable) El El FI] E. A Am fLoQutcome satisba=oz Safisfaczory r v 2  Table 2: Related Bank Loans/Credits F_r TM _ _ C Status PrwAding operatons 1014-TA Cashew Nuts 1974 Completed 801-TA Cashew Nuts II 1978 Completed 1070-TA Coconut Pilot 1980 Completed 1891-TA Ag. Export Rehabilitation 1988 Completed Project Foflowing operations 2899-TA National Extension Project 1996 Ongoing Phase II 2537-TA Ag. Sector Management 1993 Ongoing Project Table 3: Project Timetable Steps in Project Cycle Date Planned Date A l/l Identification (Executive Project Summary) Jan-88 Preparation /1 Apr-84 Pre-Appraisal Sept-88 Appraisal March-89 Negotiations May-89 Board presentation June-89 Signing 28-July-89 Effectiveness 1-Nov-89 22-Jan-90 Midterm review Jan-93 May-93 Project completion 30-June-96 30-June-96 Credit closing 30-June-96 30-June-96 Preparation was undertaken by Project Preparation and Monitoring Bureau of Ministry of Agriculture and Livestock Development and the National Coconut Development Program, assisted by IDA, FRG and ODA. 3  Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual (US$ millions) 1990 1991 1992 1993 1994 1995 199% A. Expressed in SDR Appraisal Estimate 1.9 5.2 8.95 15.7 19.9 28.5 19.4 Actual 1.8 4.3 6.9 9.3 11.4 13.0 13.3 Actual as % of estimate 94% 83% 78% 76% 74% 71% 69% B. Expressed in US$ Appraisal Estimate 2.5 6.7 11.5 15.7 19.9 23.9 25.1 Actual 2.4 5.8 9.5 12.8 15.9 18.3 18.8 Actual as % of estimate 97% 87% 83% 81% 80% 77% 76% Table 5: Key Indicators for Project Implementation Item Unit At Adjusted at T Actual I I Appraisal M[TR Cashew Cashew resistant seedlings no 1.5 million 1.2 million Reclaim neglected trees no 9 million 9.1 million Trees being dusted no 11 % of total 20% of total Farmers receiving credit no 10,000 691 from CRDB Traders receiving working no 70 178 capital from CRDB Cashew production to tons 67,000 by 1996 81,750 increase Coconut Nurseries established no 1,200 1,105 Improved seedlings no I m 1.386m Selected EAT seednuts no 1.3 m 1.3 m distributed New growers no 100,000 92,700 Growers advised on no 300,000 331,913 husbandry Note: These key indicators were established at the time of the mid-term review. The key performance indicators determined at appraisal, superseded by those above, tracked the number of civil works units, man months of technical assistance and numbers of training courses. 4  Table 6: Key Indicators for Project Operation I. Key operating indicators in SAR/President's Report Estimated Actual NA NA 5  Table 7: Studies Included in Project Purpose as defined at Study appraisal/redefied Status hnpact of Study Motor Vehicle Establish the status of the Completed Feb., 1994 Basis for future Utilization present fleet and identify procurement future requirements CCTP Management Devise appropriate MIS Completed June, 1994 Implemented Information Systems for PIU Prospects of Imposing Completed Jan, 1995 Basis of the CRF Levy on Export of research levy Cashewnut to Support Cashew Research Evaluation of the Completed Jan, 1995 None to date, system Cashewnut Marketing is in private sector System in Tanzania now. Evaluation of CDCs Completed August, Basis for proposal of and Arrangements for 1995 leasing CDCs; four Leasing have been leased. How to Establish Rural Completed Nov, 1995 Basis of supporting Savings and Credit eight SACCOs in the Cooperatives in the Southern region Cashewnut Growing Areas of Tanzania Coconut Impact Study Completed, May, Evaluate project 1996 impact on coconut development Study to Evaluate Not undertaken Alternative Cashewnut Processing Methods in Tanzania 6  Table 8A: Project Cost (USS 'OOOs) l I Appraisal Estimate Actual Item Local Foreign Total Local Foreign Total Investment Costs Civil Works Cashew 1592 1060 2652 985 422 1407 Coconut 795 201 996 467 116 583 Vehicles Cashew 151 2878 3029 144 2850 2994 Coconut 115 1812 1927 74 1308 1382 Consultancies Cashew 335 5254 5589 416 3823 4239 Coconut 219 4159 4378 284 5087 5371 Training Cashew 64 1216 1280 53 1263 1316 Coconut 78 1479 1557 68 1253 1321 Agricultural Inputs Cashew 50 322 372 504 504 Coconut 78 504 582 261 261 Cashew Pilot Credit Scheme 4767 4767 1895 1895 CRDB Sub-Loans 647 2587 3234 583 2332 2915 Agricultural Extension Services 1553 1553 313 313 Research Funds 485 Unallocated 2031 0 PPF - 571 181 0 Sub Total 5677 26239 31916 4152 20349 24501 Recurrent Costs Cashew 2618 2128 4746 3142 854 3996 Coconut 4076 1674 5750 2368 1370 3738 Sub Total 6694 3802 10496 5510 2224 7734 Total 12371 30041 42412 9662 22573 32235 7  Table 8B: Project Financing Appraisal Estmate (US$M) Actua/Latest Etimate (US$M) Source Foreign Local Total I Foreign Local Total IDA 20.1 5.0 25.1 12.89 5.41 18.3 Cofinancing Institutions (FRG/ODA) 10.1 1.9 12.0 10.14 1.76 11.9 Domestic Contribution (GOT) - 5.3 5.3 - 2.1 2.1 TOTAL 30.2 12.2 42.4 23.03 9.27 32.3 8  Table 9: Economic and Financial Costs and Benefits Since the project was essentially a research and development project, no overall economic rate of return was calculated at appraisal. The years in which the project was effective saw many factors operating that have led to increased production and farm incomes, most notably the liberalization of cashew marketing, and the upturn in local demand for fresh coconuts. As mentioned above, foreign exchange earnings for Tanzania from cashew production have increased from US$ 12.9 million in 1989/90 to US$ 79.5 million in 1995/96. The effect on incomes in rural areas has also been significant with the farmgate value going from US$ 7.5 million to US$ 44.1 million over the same period. Due to the informal nature of the coconut market, the true effects on farm incomes for coconuts are difficult to gauge, but are in the order of 20% in real terms. However, the research efforts that the project has supported are in themselves yet to yield any demonstrable, quantifiable benefits. It is therefore inappropriate to assess the economic rate of return ex-post for this project's support to research as there is no firm basis for the quantification and extrapolation of the expected level of benefits of the research efforts. These benefits are contingent on future levels of funding and the scientific progress made. The costs of the project were expected to be US$ 42.4 million with a foreign exchange content of US$ 30.2 million. Actual project costs were below these levels, with an estimated total cost of US$ 32.2 million with a foreign exchange content of US$ 22.5 million. IDA's contribution to project costs amounted to US$ 18.3 million. 9  Table 10: Status of Legal Covenants Agreement Section Covenant Original Revised Status Comments Description Type Fulfillment Fulfillment Date Date Credit 4.01(b) Accounts/audit - - C In (i) annual audit including compliance. special accounts; (ii) fumishing audited accounts and auditor's report within nine months of the close of accounts. Project 3.04 Management aspects - - C In CRDB to appoint a pilot credit compliance. scheme coordinator Project 4.01(b) Accounts/audit - - CD Completed (i) annual audit, including after delay. special account. (ii) fumishing audited accounts and auditor's report within nine months of the close of accounts. Project 4.02 Management 11/30/89 C In (a) announce increase in aspects - compliance. producer price for cashew nuts and (b) furnish association a plan of action for improvement of marketing system for cashew nuts. Prject Schedule 4, Management aspects - - C In Borrower to appoint Clause I - compliance. coordinators for CIP and NCDP and DCC for Mtwara ject Schedule 4, Management aspects - - CD Completed MALD's existing management Clause 2 - after delay. team to meet at least twice a year. Project Schedule 4, Monitoring & report.- - CP Complied Joint technical committee to Clause 3 - with partially. review cashew and coconut development programs annually and to meet at least once every six months. Project Schedule 4, Management aspects - - C In Borrower to continue to Clause 4 - compliance. maintain the cashew research coordinating committee under chairmanship of cashew research coordinator of MALD. Project Schedule 4, Management aspects - - C In Annual work plans shall be Clause 5 & 6 - compliance. prepared for both crops independently by coordinators and reviewed by MALD's management team and IDA Project Schedule 4, Monitoring & report.- - C In A joint mid-term review to be Clause 7 - compliance. undertaken not later than three and a half years after effective date of credit. Project Schedule 4, Management aspects - - C In Research at Naliendele's zonal Clause 8 - compliance. agriculture and livestock research and training center to be under four basic programs namely crop protection, varietal improvement, agronomy and socio-economic research. 10  Table 10 (continued) Agreenent Section Covenant Original Revised Status Comments Description Type Fulfillment Fulfillment Date Date Project Schedule 4, Management aspects * - C In To establish seven multi- Clause 9 - compliance. purpose cashew developmen centers for production of clones and scions initially, and latei polyclonal seeds Project Schedule 4, Management aspects - - C In Demonstration of integrated Clause 10 compliance. more diversified cashew production packages to be initiated in about 200 villages. Project Schedule 4, Management aspects - - C In The coconut research program Clause 11 - compliance. will be continued with updated approaches. The coconut station at Chambezi will be rehabilitated. The emphasis o research to be shifted to on farm testing and demonstrations with assistance of extensionists. Project Schedule 4, Management aspects - - C In (a) CRDB to open a credit line Clause 12(a) - compliance. for licensed importers/traders to procure and distribute sulfur dust, blowers and protective clothing in cashew areas. Project Schedule 4, Management aspects - - C In (b) a marketing and credi Clause 12(b) - compliance. specialist to be recruited to assist in establishing a pilo credit scheme in cashew production areas. Project Schedule 4, Management aspects - - CP Complied Pilot credit scheme to provide Clause 13 - with partially, resources to test altematives to improve effectiveness & efficiency of CRDB's credi delivery & management systems. CRDB is to: (a) increase coverage of credi system to smallholders; (b) improve policies, procedures, analytical capabilities; (c) establish closer linkages with primary cooperatives and the extension system; (d) increase participation in subloan approval; (e) separate credit fo supply and distribution o inputs from production credh for farmers. C - Covenant complied with CD - Complied with after delay CP - Complied with partially NC - Not complied with 11  Table 11: Compliance with Operational Manual Statements Basically, there was compliance with the applicable Bank Operational Manual Statements. Table 12: Bank Resources: Staff Inputs Stage of project cycle Planned Revised Actual /I Weeks US> Weeks | US$ I Weeks US$ Preparation to appraisal n/a n/a 28.3 63,100 Appraisal n/a n/a 35.3 79,500 Negotiations through Board approval n/a n/a 6.6 16,900 Supervision n/a n/a 146.7 372,700 Completion n/a n/a 12.0 44,800 TOTAL 228.9 577,000 /1 Includes travel costs n/a - Not available - not recorded on Cost Accounting System 12  Table 13: Bank Resources: Missions Performance Rating Nmnber Days in Spedalized Staff Implementation Development Stage of Project MontWYear of Field Skills Status Objectives Types of Cycle Persons Represented Problems Pre-appaisal 5/88 n/a n/a n/a - - - Apprisal 10/88 7 24 Ag. FA, Ec, Mkt, - - - Tree Supervision 1/90 2 13 Ag, Tree 2 2 PM 7/90 2 20 Ag, Tree 2 2 F 2/91 7 15 Ag, Tree, Soc, Sci 2 2 PM, F 11/91 4 25 Ser, Tree, Ag 2 2 PM, F 2/93 2 4 Ser 2 3 F (MTR) 3-4/93 5 15 Ser, Tree, Cr, FA 3 2 PM, F 1/94 2 8 Ser 2 2 F 5/94 2 9 Ser 2 2 F, CW 2/95 3 8 Ser, Proc 2 2 F. CW 6/95 3 8 Ser, Proc 2 3 F, CW 1/96 2 7 Ser 2 2 F 5/96 2 9 Ser 2 2 Completion / 9/95 2 17 Ec, Tree - - - Abbreviations: Ec = Econoist; A = Agronomist; FA = Financial Analyst; Mkt = Marketing Specialist; Tree = Tree Crops Specialist; Soc = Social Development Specialist; Sci = Plant Scientist Ser = Agricultural Services; Cr = Credit Specialist; Proc = Procurement Specialist PM = Project Management; F = Financing (due to shortage of counterpart contributions) CW = Civil Works Delays 1/ Carried out by FAO/CP 13   APPENDIX A IMPLEMENTATION COMPLETION MISSION AEDE MEMOIRE 14  : : | :  AIDE MEMOIRE CONTENTS Project Objectives and Components ........................... 16 Implementation Timing ........................... 17 Achievement of Objectives ........................... 17 Implementation Experience and Results ........................... 18 Project Design ........................... 22 Bank Performance ........................... 23 Borrower Performance ............................ 23 Plan for Future Operations ........................... 23 Sustainability ........................... 24 Lessons Learned ........................... 24 Issues for Future Operations ........................... 25 Follow-up ........................... 25 15   IMPLEMENTATION COMPLETION REPORT TANZANIA CASHEW AND COCONU TREECROPS PROJEC (Cr. 2050-TA) FAO/CP Mission Aide Memoire 1. A FAO/World Bank Cooperative Program (CP) mission' visited Tanzania from 25 August to 13 September, 1996 to prepare the Implementation Completion Report (ICR) for the above project. The Mission held discussions with relevant officials from the Ministry of Finance, Ministry of Agriculture and Co-operatives (MOAC) and the Cooperative and Rural Development Bank (CRDB). In Zanzibar, the mission was assisted by staff of the Ministry of Agriculture, Livestock and Natural Resources. In conjunction with representatives of ODA and GTZ, co- financiers of the project, the Mission worked closely with the Project Coordinator of CCTP, and visited research stations, research sub-stations, Cashew Development Centres (CDC's), coconut nurseries and seed gardens, on-farm trials, and farms in Zanzibar, and in Lindi, Mtwara, Tunduru, Dar es Salaam, Ruvuma and Tanga regions. A wrap-up meeting was held on 11 August, 1996. The FAO Representative, Tanzania, was briefed on the outcome of the Mission. 2. The Mission would like to express their appreciation for the assistance given by the officials of Government, and the cooperation of the management and staff of the project during the Mission. Project Objectives and Components 3. The objectives of the project were to achieve long-term growth by increasing the national production of cashewnuts for export, and the production of coconuts for the domestic oil market. At the time of the mid term review, the development objective for coconut was expanded to include increased production for domestic raw nut consumption. 4. To achieve this, the project was to provide financing and technical assistance in support of: (i) expanded cashew and coconut research breeding and selection to develop higher yielding, more disease and drought tolerant varieties/hybrids: The Mission comprisd Tim Lamrock (FAO TCIR - Economist/Mission Leader) and Nick Richards (rreecrops Specialist - Consulteat). Ihe ICR fbr the Agricultural Export Rehabilitaion Project (Cr 195-TA) was prepared during the same mission. 16  (ii) the development and operations of seven Cashew Development Centres and three coconut seed farms for the propagation and dissemination of quality planting materials; (iii) the production development through the training of extension and research staff, and the dissemination of cashew and coconut production packages; (iv) the management and coordination of the cashew improvement and coconut development programs; (v) the cashew input supply and local marketing support; (vi) strengthening credit facilities in the southern cashewnut production areas in the form of a pilot credit scheme managed by CRDB. 5. The project was to build on the research programs supported by ODA under the Cashew Improvement Program and GTZ under the National Coconut Development Program, with the research components of the project continuing to be cofinanced by ODA and GTZ for cashew and coconut respectively. The total cost of the project was estimated at US$ 42.2 million, as was to run for 6 years. Implementation Timing 6. The project was signed in July, 1989 and became effective in January, 1990. The mid- term review for the project was carried out in March/April, 1993. The project closed on 30 June, 1996 and, whilst the project accounts have not yet been finalized, it is estimated that approximately US$ 8.7 million of the original US$ 25.1 million (the equivalent of SDR 5.9 million of the original SDR 19.4 million) will be canceled. Achievement of Objectives Cashew 7. During the project's life, cashew production has experienced a rapidly increasing production profile, rising from 19,275 tons in 1988/9 to 81,729 tons in 1995/6, representing an annual increase of 29%. Whilst there were other positive external factors that contributed, particularly progress with marketing reforms, the project has made a significant contribution to this increase. With liberalization of marketing, the farmgate share of the export price increased from 42% in 1988/89 to 66% in 1994/95. This has fallen back to 56% in 1995/96, due to fewer but larger nut traders operating in the market and price fixing. Foreign exchange earnings have increased from US$ 12.9 m in 1989/90 to US$ 79.5 million in 1995/96 with the value reaching the farmers themselves going from US$ 7.5 to US$ 44.1 over the same period. Theiefore the main development objective of the project has been met. However, the objective of the development of higher yielding, powdery mildew disease (PMD) resistant varieties has not yet been fully met. The cashew breeding program 17  has identified five potentially PMD tolerant clones but these have not been fully evaluated and are not available for growers. This aspect requires continuing research. Coconut 8. The lack of data on domestic and export coconut production volumes of freshnuts, copra and coconut oil, both before and after project completion, makes assessment of production performance difficult to gauge, other than by specific surveys (see below) which have established an increase in the area of plantings and increased nut production per palm, together with increased income derived from coconuts, following the project completion. Thus the project objective has been achieved on the production side. However, the poor performance of introduced dwarfs and hybrids has not resulted in higher yielding, lethal disease (LD) resistant palms obtained from commercial seed gardens as expected. On the processing side, progress towards reduction in vegetable oil imports by increased domestic coconut oil production has been marginal, but other factors outside the project control have contributed to this, and are discussed later. Implementation Experience and Results General 9. Project performance up to the time of the mid-term review was mixed, but generally below expectations. This resulted from mainly poor project planning and management, and the inability of Government to provide its share of counterpart funds. There were difficulties in running two units, the CIP and NCDP, under the one project with different planning and reporting procedures. The comment was made at appraisal that the management costs associated with the dual approach were high. Also, up to that time, the lack of progress with the restructuring and strengthening of the capacity of CRDB had a serious effect on the implementation and success of the pilot credit scheme. However, good progress was being made with the research components although the results were not as expected. For cashew, the SAR assumption that research would have produced a PMD resistant variety in a six year period which would have been widely planted proved to be unrealistic. This had implications for the continued use of sulfur for mildew control. For coconuts, the hybrid trials indicated insufficient resistance to lethal disease and drought for this avenue to be pursued, and the research concentrated on selection of East African Tall (EAT) material with crossing for disease resistance, in a long term breeding approach. 10. The mid term review outlined a clear plan of action to progress the project back onto target. This 3 year plan included revised procurement, civil works and training plans, redefinition of roles in extension, credit, and CDC's, and the finalization of a new management structure for the project. Category items were altered to reduce the Government's required contribution in view of the financial constraints faced by Government. Since the mid term review, implementation has been satisfactory although some project activities have been delayed or scaled down in view of the continuing shortage of Government counterpart funds. I. The mechanism for the flow of funds was considered by the project's management to be unsatisfactory, particularly the flow of both IDA funds and counterpart funds through Government 18  agencies. In addition delays were experienced due to cumbersome procedures in the Central Tender Board. 12. One aspect of implementation that the mission notes is the flexibility of the project to change the approaches to problems in the light of changing circumstances. This flexibility indicated a working cooperation between the financing agencies, the Government and the project staff that has contributed to the project's success. 13. The project has made a significant contribution in building up the level of research expertise through the training provided by the different sponsors of the project. There now exists a capacity to handle current and future areas of research which remain incomplete at the end of this project. Cashew 14. The achievement of the project were many. Seven CDC's were established during the project and distributed appropriately in all cashew districts. These act as a source of seed and scion wood, and provide technical and extension assistance. There has been significant progress in cashew grove rehabilitation/rejuvenation in all districts, which has included undergrowth removal, weeding, removal of unproductive trees, replanting, infilling, top working and sulfur usage. Farmers' awareness of the concepts of tree productivity and the need to maintain groves has been realized. Cashew trees are no longer treated as bush crops in the main areas. Following the extension and research program, farmers now have a choice of alternative rehabilitation programs which they can choose according to cost considerations. There have been significant improvements in the capacity and efficiency of extension and research staff following the appropriate training access at all levels. The mass production of training materials, and greater involvement in courses and workshops for both staff and farners was achieved. All positions in the Agricultural Research Institute (ARI) at Naliendele associated with the project activities are now localized to continue on post-project efforts. The availability of input supplies has been boosted dramatically by the project and approximately 25% of farmers were able to obtain blowers, sulfur and other inputs to control PMD. 15. Against the satisfactory progress of the project, there remains the problem of PMD control. The cashew breeding program has identified five potentially PMD tolerant clones but these have not been fully evaluated and not generally available for growers. PMD control is still achieved by sulfur dusting. This is not sustainable and may lead soil acidification. Alternative systemic fungicides have been tested at Naliendele and registration applications made, but these require water for usage, which is often in very short supply. This makes this approach unworkable in the short term for widespread use. Therefore the PMD issue is not resolved and requires continuing investigation. The time frame for the development of appropriate varieties was always unrealistic, and the research efforts must continue to build on the work of the past. 16. There are no hybrid seed gardens operating due to incomplete selection of clones for PMD screening. CDC's are releasing mainly seed from polyclonal seed gardens. The variability of progeny is thus likely to be high, which could lead to a significant percentage of lower productivity trees. There have been no trials to test the variability of hybrid seed progeny. More effort should have been placed on releasing clonal material, and assisting nurseries to promote them. 19  17. Cashew research is now totally dependent funding derived through the export levy. There is no continuing external assistance. Cashew research is under threat of funding due to failure of funds to be released from Cashew Board of Tanzania (CBT) to Cashew Research Fund (CRF); to date for 1996/97 only 25% of export levy funds have been received by the CRF for the 1995/96 season. A major shortfall exists to continue the research program. The final disbursement for $500,000 of IDA funds, contingent upon the successful levy operation, is still pending. 18. The future of four CDC's up for leasing is uncertain due to lack of progress within MOAC. The lease agreements were to be approved by MOAC and actual transfer accomplished by June 1996. 19. The issue of soil fertility has only partially been investigated, and fertilizer response trials are in progress in some districts. Greater consideration to nutrient removal via harvesting and the ability of soils to supply N, P and K needs to be evaluated for farmers yield levels in a nutrient balance approach. Research station trials should include some annual soil and leaf sampling and interpretation. Input supply 20. The major inputs imported were sulfur and blowers. A total of 12,131t of sulfur was imported against a target of 16,812t. A total of 3529 blowers were imported against a target of 4945. By 1996 sulfur was available through the Tanzania Fertilizer Company, and adequate supplies of blowers were on hand from previous years. The responsibility for the control and organization of supply of inputs to be used to boost cashew production rested with the Commercial Services Unit (CSU) of the project. Initially the project was set up with funds (US$ 2.2 million) provided to CRDB, to create a three tier system of importers, stockists and farmers. The primary recipients of funds were importers, who took advantage of the funding in the first two years. However, repayment rates were poor, as was the case with the stockists. The CRDB in 1994 decided to tighten its credit policy by demanding land titles for loans. This proved difficult to implement and CRDB stopped advancing credit for these purposes. Farmers were used to receiving inputs from the government, and thus believed they were not required to repay the cost of cashew inputs set up under a government organized project. Overall, the CRDB phase of the input supply project failed as the remaining stockists were not able to sell all stocks and, as further credit was refused, the stockists set up informal credit arrangements with farmers. 21. From 1994 on, Regional Input Funds (RIFs) were created, funded by a levy of TShs 10 per kg of nuts sold by each farmer. A great deal of management and organizational problems were experienced with the RIFs, together with the actual fate of funds levied. Up to 1996 however, it is estimated that TShs 750 million resides in the funds collectively, vhich is more than adequate for input requisitioning for the coming season. Pilot Credit Scheme. 22. The Pilot Credit Scheme as designed was not successful. This was mainly as a result of the lack of progress in improving the capacity of CRDB in the early years. Repayment experience was poor due to lack of disciplined follow-up on the part of CRDB, a weak culture of repayment on the part of the primary societies and adverse seasonal conditions. At the time of the mid-term review, 20  this component was considered to be progressing well and further support was diverted to boost the scheme both for farmers and rural stockists. However, due to the major restructuring of CRDB in 1993/4, and its worsening financial position, no further loans were provided. 23. Whilst the mid-term review did allocate additional resources to this component, the major restructuring initiated by the Banking and Financial Institutions Act (1991), and followed through with the involvement of DANIDA, did not produce identifiable capacity strengthening until late 1995. CRDB was unable to provide new or additional lending to existing clients as a result of restrictions placed on it by the Bank of Tanzania. The recovery performance of the scheme was mixed. Overall, the implementation of the credit component was unsatisfactory. However, the mission notes the project's efforts in supporting the development of 8 Savings and Credit Cooperatives (SACCOs) in the major cashew producing areas. Coconut 24. The project had many achievements on the coconut side also. The Chambezi research station was overhauled and re-opened for breeding and disease screening trials. Variety trial testing at three distinct LD intensity and rainfall sites commenced in 1991, with survivors of the best imported hybrids crossed with selected EAT palms, to try to identify LD resistant materials and drought tolerance. In agronomy research, limiting nutrients for a range of soil types were identified, benefits of hand weeding were established and preferred palm spacings were determined. In farming systems research, 88 on-farm trials were set up throughout the country to evaluate and demonstrate intercropping and returns. Farmers were trained in selecting mother palms for seednut collection and nursery practices for seedling production. Private nurseries were established and these now supply all seednuts for planting, apart from farmers own selections. 25. The development of an integrated pest management (IPM) system for the Coreid bug (Pseudotheraptus wayi) was implemented and demonstrated to farmers. In disease control, LD mycoplasma-like organism (MLO) screening continued, and MLO was isolated from insects suggesting a possible insect vector (yet to be identified). Studies on the rate of LD spread in three districts were initiated. Molecular biology research to complement LD resistance screening commenced. The construction and operation of embryo culture facilities for coconut culture were set up. 26. The promotion of small scale coconut oil and copra processing was initiated by the development and distribution of 35 rotary graters, 11 ram presses and 6 bridge presses, especially to village women's groups. 27. A major, independent impact survey was conducted by Ashimogo et al.(1996) concluding: (i) average production rose over the project period from 25-30 nuts to 3040 nuts per palm. (ii) annual palm replanting rate over all districts was 2% following the project commencement. 21  (iii) income from palm activities increased by about 20% relative to pre-project. 28. Against a background of satisfactory project outcomes, a number of issues remain unresolved or were inadequately promoted. Despite the research efforts, there is no solution in sight to improve LD resistance and drought tolerance. Hybrids failed to perform as expected at the start of the project. With this, the focus of the research was diverted away from hybrid trials. The failure of hybrids also meant the abandonment of the two hybrid seed gardens. However, there are areas where hybrids have performed well, e.g. Ng'apa valley, but little work was done on identifying other potentially suitable areas. Whilst Zanzibar is at present LD free, the focus of coconut breeding in Zanzibar should reflect LD resistance work on the mainland. 29. There was little emphasis placed on coconut processing. There has been some effort in disseminating information and equipment for small-scale processing but it is generally not widespread. The low levels of local processing results in lost opportunities for foreign exchange savings and the reduced value of coconut products. Against this however are factors such as the current global oversupply of palm oil and its resulting low prices. 30. Although IPM control of the Coreid bug was demonstrated, the necessity for farmers to thin their palms for the planting of host trees reduces the uptake of these practices. There also remains the requirement to control antagonistic ants with ant attractantlinsecticides. 31. Problems of administration and co-ordination were experienced in integrating the NCDP extension program into the National extension service. The effectiveness of village extension officers (VEOs) was a particular cause of concern, especially in Zanzibar. 32. Soil sampling and fertility evaluation has not received continuous assessment, thus the importance of nutrition issues in other programs is not clear. Earlier work had established limiting nutrients but was not followed up in the project. The approach now should be to evaluate a nutrient balance/auditing approach to farmers' blocks to determine the sustainability of zero fertilizer application practices. 33. The marketing reforms experienced in the mainland have not taken place in Zanzibar, where the relative importance of coconut is higher. The operations of the Zanzibar State Trading Company, the sole buyer and exporter of coconut products, have prevented free market prices and incentives to develop for coconut products. Project Design 34. The mission feels that the design of the project was satisfactory at the time of appraisal and, as mentioned above, was altered both formally at mid term review and during the regular supervision of the project during the last three years. However, the period required to achieve the expected results of the research were underestimated. Research programs for treecrops are long term and mechanisms for sustaining research efforts following donor-supported projects are crucial. 22  35. Breeding programs for tree crops require a minimum of 10 years. The mission feels that it was optimistic to expect the breeding objectives to be reached and the hybrid seed gardens to be established, given the failure of imported palm materials. Whilst it appears that failures were not manifest at the pre-project stage, however some allowance for palm failures in a dry environment should have been made. On the cashew side, the assumption of successful screening for PMD resistance and higher yield, the establishment and evaluation of clones under different environments and the development of subsequent hybrids together with their evaluation as progeny trials all require very much more than 6 years. The project proposed Accelerated Varietal Improvement System failed to implement its very tight and compressed sequence of events. 36. The weaknesses in the capacity of CRDB to successfully manage a credit program were recognized at appraisal, but the activities under the Agricultural Export Rehabilitation Project (AERP) to restructure CRDB were relied on to minimize this risk. In the event, the AERP failed to have an impact on the capacity of CRDB to successfully manage this component. The mission also feels that, complementary to the expected increase in production in both cashew and coconut, the design should have included a strategy and support for processing. Bank Performance 37. The mission feels that IDA performance has been satisfactory at design, appraisal and supervision, as demonstrated by the effectiveness of the alterations made at mid term review, and the frequent and close contact that the supervision teams have kept with the project. Borrower Performance. 38. The perforrnance of the Borrower has also been satisfactory. Apart from the difficulties in providing counterpart funds for project activities, obligations on reports, accounts and legal covenants have generally been satisfactory. The Borrower also completed its contribution to the ICR process by the preparation of the "Project Completion Report", and participated in the ICR mission. Plan for Future Operations 39. ODA support for cashew research has been completed and an internal review of the research activities will be carried out in November, 1996. Future research is to be funded through the export levy on cashew (CRF), to be channeled through the Agricultural Research Institute (ARI). GTZ have an agreement to continue support to coconut research until 2000. All extension programs and activities will be handled through National Agricultural Extension Project II (NAEP II), a US$ 33 million IDA- supported project to commence in 1996, to cover extension of all agricultural research and development in Tanzania. Three CDCs will be maintained under Naliendele and ARI with the other four being placed into the private sector. Seedling production will be continued on the established private nurseries. 23  40. The project has prepared a plan for the redeployment of professional staff that have been trained and gained experience under the project, as well as a plan for the deployment, continued use and maintenance of the assets. Sustainability 41. In the light of the above, support to treecrops extension and coconut research will be continued. The sustainability of cashew research is dependent on the mechanisms established and the financial accountability necessary for the collection and direction of export levy funds for this purpose. The amount of levy collected is more than sufficient to fund in full the estimated annual research costs. However, the current status of the research funding is of crucial concern. In the short term, the efforts of some three years of trials may be lost if funding is not received at Naliendele within the next few months. In the longer term, the capacity built during the current and preceding cashew projects, and the considerable effort and investment on the part of all financiers of this project is at risk of being lost. The experience with funding cashew research will have flow-on effects into other agricultural research areas. 42. Providing revenues are sufficient, seedling production among private farmer nurseries and polyclonal seed and scion production on the leased CDCs should be sustainable. 43. As regards, the credit component, the liability for the PCS and input supply credit is being transferred from CRDB to the Ministry of Finance, but further efforts on the part of CRDB to recover outstanding loans is unclear. The outlook for the survival and development of SACCOs is promising at this stage. Lessons Learned 44. The key lessons learned from the project were as follows: * It was important to allow some flexibility in the activities of the project, consistent with the overall themes and objectives, to address changing circumstances and priorities. Close supervision plays an important role; * The reservation expressed at appraisal conceming the cost effectiveness of the dual management structure for the project was justified; * The mechanisms for procurement and disbursement continue to cause problems for project implementors; * The project was not long enough to achieve the research objectives. Research projects, especially for treecrops, are of much longer time horizon than 6 years, especially where plant breeding is involved. Greater evaluation of pre-project results and greater allowance for the risk of poor performance of imported plant materials should be incorporated into the design. 24  Issues for Future Operations 45. The mission sees several important issues that relate to future activities in coconut and cashew research and development, which need to be addressed to ensure that the efforts and progress of the past six years are not lost. These were discussed at the wrap-up meeting and there was general agreement on their importance for future development for treecrops extension and research. They are: * the importance for continuing cashew research into PMD in the light of adverse economic and enviromnental effects of continued sulfur use, and limited alternative control methods in the absence of PMD tolerant materials; * the funding arrangements for cashew research. These are crucial. Mechanisms for the collection, accounting and allocation of research funds must be adhered to; * the arrangements for the leasing of the remaining four CDCs, to ensure the continuing operation of the centres after divestiture; 3 the control and usage of funds collected by Regional Investment Funds to support inputs for cashew development; ? the future opportunities for cashew and coconut processing, and the need to provide initial incentives to stimulate processing; - the importance of maintaining a policy of free trade in the context of encouraging domestic processing of cashew; - the reduction in competition for cashew in the southern regions with the emergence of fewer buyers, which is resulting in lower farmgate prices; * the long term evaluation of soil fertility in the context of limited or no fertilizer usage; * the allocation of priorities for treecrops under NAEP II; and * the lack of marketing reforms for the coconut sector in Zanzibar with the operations of ZSTC. Follow-up 46. The mission understands that all transactions will be finalized, the accounts closed and reports prepared by the required date of 31 st October, 1996. 47. On return to Rome, the mission will prepare a draft ICR to be forwarded to IDA by mid- October, 1995. 25  APPENDIX B GOVERNMENT CONTRIBUTION TO THE IMPLEMENTATION COMPLETION REPORT 26   CCTP - CR 2050-TA: PROJECT COMPLETION REPORT EXECUTIVE SUMNMARY 1.0 Project Objectives and Major Achievements The project objectives were to achieve long term growth by increasing cashewnuts production for export and coconuts for domestic consumption and internal vegetable oil market. In order to achieve the above objectives, the following targets were set for projects A & B: A Cashewnut Improvement Program (CIP) * Plant cashew resistant varieties - 1.5 million seedlings * Reclaim neglected cashew trees - 9.0 million D Cashew trees being dusted - 11% of total