Announcement of Bank and IDA Assistance for Agriculture in Tunisia on February 17, 1967

,, INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT • 1 81 8 H INTERNA'l.,IONAL DEV:ELOPl\f.ENT ASSOCIATION STREET, N W WASHINGTON D.C.20433 TELEPHONE. EXECUTIVE 3-6360 Bank Press Release No. 67/6 Subject: Bank/IDA Assistance for Agri- IDA Press Release No. 67/2 culture in Tunisia February 17, 1967 The World Bank and its affiliate, the International Development Association (IDA), in a joint operation, are providing the equivalent of $18 million to assist in financing a cooperative farming project in Tunisia. The Bank loan that has been approved will amount to $12 million, and the IDA credit, $6 million. These funds will assist the Tunisian Government in carrying out its land reform pro- gram under which traditional subsistence smallholdings, which offer little or no • scope for effective development, are being merged into good quality land owned by the Government to form large production cooperative units. This system should raise production to much higher levels and thereby increase the supply of food for domestic consumption, expand agricultural export earnings, and increase the income of Tunisian farmers. Chemical Bank New York Trust Company will participate in the loan,without the World Bank's guarantee, to the extent of $200,000, representing part of the first maturity which falls due in April 1972. Agricultural production represents about a quarter of Tunisia's gross national product and agricultural products account for about two-thirds of total exports. Over half the labor force is employed in agriculture, many of them living on sub- sistence level smallholdings. Cooperative farming in Tunisia connnenced in 1961, and there are now 213 cooperatives on about 457,000 acres. ,The Government in- • tends to extend this system of land use as rapidly as it can and over the next  • - 2 - ten years plans t~ establish cooperatives on about 2,470,000 acres in northern Tunisia. The good climate and soils of the north make it the most productive ZCJae; it is also served by an extensive network of paved roads and gravel feeder roads, while a railroad co~nects the main towns. The project being assisted by the Bank and IDA financing is part of the Government's 10-year program for the expansion of cooperative farming and an important element in the country's 1965-68 development plan. It provides for the establishment of 160 new cooperatives on about 2,470 acres each, over an area of 395,000 acres, the consolidation of the 213 existing cooperatives, and the provision of additional farm machinery and agricultural equipment to main- tain productivity on state farms in the project area, which cover sume 741,300 acres, and will eventually be absorbed into the cooperative movement. Investments to be financed under the project include farm buildings, mainly £er centralized livestock production; farm machinery for large-scale mechanized grain production and harvesting and for forage harvesting; small-scale irriga- • tion equipment to pUt~p underground water for spray irrigation; the establish- ment of tree crops; the regeneration of range pastureland; soil and water con- servation; the purchase of cattle and sheep; and managerial and technical assistance and feasibility studies. Experts from the Food and Agriculture Organization of the United Nations (FAQ) assisted in the preparation of the project under the Bank/FAO Coopera- tive Program. Hard and soft wheat and olives will be the major crops in the coopera- tives, supplemented by forage crops and the raising of livestock. Replace- • ment of fallow by forage crop production for the feeding of animals represents a significant change in the traditional land-use pattern in the project area. • - 3 - Most livestock in Tunisia hAs tended to be scavengers subsisting on the fringe of a cropping economy. The large output of forages under the new cropping system will make available ample supplies of suitable food for improved animal production. Livestock production will be implemented by the establishment in cooperatives of small herds which will serve as the nucleus for milk p~oduction and/or the fattening of sheep and cattle. Tunisia now imports large quantities of meat and dairy products and domestic output should reduce these expenditures. Tree crops, including olives, almonds, citrus aoq other fruits, will be grown on selected areas of some cnoperatives, and vegetables will be grown where suit· able. The Government recognizes that the successful performance of the coopera- tives will be highly dependent on organization, management and supel"vision and • has taken steps to improve existing arrangements for their operation. Over-all policy control for the cuoperatives will be vested in a·new National Commission for Agricultural Cooperation, representing at a high level all major interested ministries and organizations. The execution of the policy will be the respon- sibility of a new management unit, the Bureau of Control. In view of the present shortage of Tunisian personnel, it is expected that the Bureau will initially be partially staffed by expatriate specialists, with local counter- parts. The Banque Nationale Agricole will act as financial agent for the Com- mission and the Government. The project should be completed in four years at a total en.st estimated at the equivalent of $32.6 million. Government grants will cover the cost of social services, and development costs will be covered by loans from the Banque Nationale • Agricole from funds derived .from the Government and from the Bank loan and IDA credit.  - 4 - Both the Bank loan and the IDA credit will be made to the Republic of Tunisia. The Bank loan will be for a term of 18 years and bear interest at the rate of 6% • per annum. The IDA credit will be for a term of 50 years. Repayment of the prin- cipal will begin on April 15, 1977, after a 10-year period of grace. Thereafter, 1% of the principal will be repayable annually for 10 years and 3% will be repay- able annually for the remaining 30 years. The c.redit will be free of interest, but a service charge of 3/4 of 1% per annum on the amount withdrawn and outstand- ing will be made to meet IDA's administrative costs. The proceeds of the Bank loan and IDA credit will be re-lent for terms averaging 13 j'ears to cooperatives and for a term of five years to the Office des Terres Domaniales, the agency re- sponsible for the operatfon of the state farms; interest will be at the rate of 6% per annum. • •