Announcement of 5.5 Million Dollars Credit for Irrigation and Agricultural Development in Ecuador on July 9, 1973

\°'ly., I\ 1.0/',lt P.i,>, • INTERNATIONAL DEVELOPMENT ASSOCIATION (~) 1818 H STREET. N.W .. WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 73/67 Subject: $5.5 million credit for irri- July 9, 1973 gation and agricultural de- velopment in Ecuador The International Development Association (IDA), an affiliate of the World Bank Group, has approved a credit of $5.5 million to assist an irrigation and agricultural development project in Ecuador. Total cost of the project has been estimated at $10.2 million and it is ex- pected to be completed by the end of 1978. The project consists of integrated irrigation and agricultural development of 17,300 acres in the Milagro area, 25 miles east of the port of Guayaquil and adjacent to the Chimbo River, whose waters • will be utilized • Under its Five-Year (1973-1977) Transformation and Development Plan, the Ecuadorean Government is expected to undertake a series of measures to increase agricultu1ral production for the domestic and the export markets, and to improve the economic conditions of the country's rural population. The IDA-financed project is part of these over-all measures and will benefit some 825 fanns with a population of about 6,000 persons. One third of the farmers living in the project area have farms of less than 12 acres, and another third have farms of 12 to 25 acres. Only 10 farms in the area are of more than 125 acres in size. Engaged in subsistence-type agriculture, these farmers have had little or no access to credit or extension services. The provision of these services and irrigation of the entire area during the dry season is expected to increase production greatly • • Note: Money figures are expressed in UoS. dollar equivalents. /more IDA P.R. Noo 73/67 - Ecuador - Irrigation & Agricultural development - 2 - The project includes rehabilitation of the area's existing canal and intake structure, and the construction of an irrigation and drainage system, and of roads to serve the farms. It also includes on-farm development works such as land clearing • and leveling, farm ditches and drains. As part of the services to be extended by an agricultural production unit to be established under the project, farmers will be pro- vided with production inputs, marketing assistance, storage, transport, drying facili- ties, and machinery services. Credit to the farmers will be provided by Banco Nacional de Fomento (National Development Bank)o The IDA credit will also finance a feasibility study for tne extension of irrigation to some 25,000 to 37,000 additional acres adja- cent to the project area. It is estimated that of the 17,300-acre irrigated project area, about half will be for sugar cane, bananas and cocoa, and the other half for rice and corn in the wet season, and groundnuts and soybeans in the dry season. The Instituto Ecuatoriano de Recursos Hidrl'ulicos (Institute of Hydraulic Re- ~ sources - INERHI), an agency under the Ministry of Agriculture and Livestock, will be responsible for the implementation of the project. A Project Director will be responsible for over-all project executiono INERHI will have the support and co- operation of several agencies, including the lnstituto Ecuatoriano de Reforma Agraria y Colonizaci6n (Institute of Agrarian Reform and Colonization)., the Instituto de Investigaciones Agropecuarias (Institute for Agricultural and Livestock Research), and the Federacicrn de Cooperativas Agr{colas y de Mercadeo (Federation of Agricul- tural and Marketing Cooperatives). -- \, The $5.5 million IDA credit will cover all foreign exchange expenditures required by the projecto Construction equipment for civil works, agricultural machinery and vehicles, and other goods and services to be financed by the credit will be acquired • on the basis of international competitive biddingo The credit is being made to the Republic of Ecuador for a term of 50 years, in- cluding 10 years of grace, at no interest~ The credit will bear a service charge of 3/4 of 1% to cover IDA's administrative expenses.