Announcement of Thirteen Million US Dollars Loan to Uruguay for Livestock Development on October 25, 1973

FOR IMMEDIATE RELEASE 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 • Bank Press Release No. 73/71 Subject: $13.5 million loan to Uruguay October 25, 1973 for livestock development The World Ban~ has approved a loan of $13.5 million to help finance the second stage of a fourth Livestock development project that it is assisting in Uruguay. The loan brings Bank lending for livestock development in Uruguay to $54. 7 million. This amount includes a loan of $11.:2 million approved by the Bank in April 1972 for the first stage of the fourth project. The se~ond stage project includes the livestock development program of Plan Agropecuario for 1973 and 19_74. Under the second stage, sub-loans will be made to about 7,750 fann ranchers and farmers for the development • of beef cattle, sheep, dairy beef, pig and mixed livestock/crop production • In this second stage, funds will also be provided for importation of rock phosphate., phosphorite, fertilizers and pasture seeds; procurement of technical and consultant services and related equipment; and the training of local technicians abroad. The total cost of the second stage is estimated at $41.1 million, of which $20.6 million represents the foreign exchange costs. The lives tock sector has an ovel'Whel-ming importance in Uruguay as a source of foreign exch~ge. Exports of livestock products accounted for about 8?% ~f export earnings in 1970 and 90% of export earnings in 1971 and 1972. About 90% of Uruguay's 40.8 million acres of agricultural land is used for pasture which supports about 9 million beef cattle, 600,000 dairy cattle. and 19. 8 million sheep. In addition, the growing pig industry has over 400,000 animals. Livestock production practices have been based historically on extensive systems of land use. Traditional management attitudes, which tend toward low investment and.managerial input in the ranch enterprise, are still widespread • in the livestock sector. Over the past decade, however, and largely as a Note: Money figur~s are expressed in US dollar equivalents. /more  Bank P.R. No. 73/71 -- Uruguay -- livestock development - 2 - result of the impetus provided by the Bank-financed program of the Plan Agropecuario, there have been important advances made in the adoption of • a more intensive livestoc technology. Improved pastures have increased ten times since the early 1960s, reaching over 3 million acres by 1972, and • are now responsible for 20 to 25% of total annual beef output. Nevertheless, improved pastures still represent only about 8% of total pasture land, and as all land suitable for livestock production is already being utilized, wider application of intensive techniques will be crucial to the long-run expansion of livestock production. The Fourth Livestock Development Project (two stages) started in 1972, is helping to implement the needed changes. The number of loans to participants in the program in 1972 reached 4,226 which was close to the 1971 level and exceeded the estimate of 3,650 made at the time of the appraisal of the Fourth Livestock Development Project. The Livestock Fund of the Central Bank established under the Third Livestock Project will channel the proceeds of the new $13.5 million loan • through Banco de la Republica Oriental del Uruguay to the sub-borrowers. Banco Central will make fully indexed loans to Banco de la Republica at interest rates depending on interest rates to be charged to sub-borrowers. Banco de la Republica will re-lend to sub-borrowers on a fully indexed basis at interest rates varying between 3% and 8% depending on fann size. The World Bank loan will be for a term of 14 years, including four years of grace, with interest at 7!(h per annum. - 0 - I· • • October 25, 1973 TECJllUCAL DATA PBDJEcr: Fourth li~stock development project (Second stage) <X>UNTRY: Republic of Uruguay TOl'AL COST: Estimated at $41.1 million BANK nNANCING: $20.6 million: $7 .1 million - balance from 816-UR first stage; second stage loan, $13.5 million - 14 years, 4 years of grace, 7~ interest per annum. OTHER FINANCING: Internal sources, including the Govemment, Central ~ank of Uruguay. Bank of the Republic, participating ranchers and • farmers . IMPLEMENTING ORGANIZATION: Honorary Livestock Commission, Ministry of Livestock and Agriculture (Plan Agropecuarlo of the M:l.nisterio de Ganaderia y Agriculture), Montevideo, Uruguay. PBOJECl DESCRIPTION: There will be some 7, 750 ranch development loans made through the <State-owned Bank of the Republic to project ranchers and farmers to -assist in financfng a credit program to increase beef, cattle, pig, dairy, and mixed beef/crop production through loans for ranch/farm development; importation of rock phosphate, phosphorite, fertilizers, and pasture s~eds; procurement of technical and consultant services and related equipment; and, the training of local technicians abroad. PROCUREMENT: Bulk procurement of pasture seeds and fertilizers, equipment for technical services, and machinery for seed producers and contractors will be made on the basis of the Bank's Guidelines for international competitive bidding. International bidding for rock phosphate for local grinding and direct application would be restrieted to those sources agronomically tested under Uruguayan conditions at the time of bidding. Individual purchases made by farmers of fencing, farm machinery, building materials and other goods will be made locally. An adequate selection of imported goods are ayailable in the local market. • 'ESTiJ;MATED COMPLETION DATE: Note: J Money n End of FY 1975 • figures are expressed in US dollar equivalents. - 0 -