Announcement of Small Farmers from Ecuador will Get Agricultural Credit on June 16, 1977

• \Norld Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. • Telephone: (202) 393-6360 BANK NEWS RELEASE NO. 77/133 JUNE 16, 1977 SMALL FARMERS FROM ECUADOR WILL GET AGRICULTU~AL CREDIT Some 1,500 small farmers from poor rural areas of Ecuador wi 11 receive medium- and long-term investment credits for developing their livestock and agricultural production under an agricultural credit project suppqrted by the \.Jorld Ban~. A $15.5 mil 1 ion \./orld Bank loan wi 11 help finance this project which wi 11 contribute to a more favorable distribution of income ln Ecuador, one of the poorest countries in Latin America. • The project is expected to produce an estimated increase of $12 mil- lion a year in the output of agricultural products and derivatives, mainly of maize, oilseeds, vegetables, rice, milk, beef, mutton, and wool. With a total cost estimated at $36 million, the project will also create additional non-agricultural employment in poor rural areas. The project will provtde medium- and long-term tnvestment credlt for 1 ivestock development, the development of crop farms, small local agrotndus~ tries and the development of consulting services for commercial agrfculture. The $15.5 mill ion loan to the Republic of Ecuador will have a term of 14 years, including five years of grace, with interest at 8.2% per annum. The proce~ds of the loan will be channelled through the Centra1 Bank of Ecuador and 30% of al1 agricultural credit will be earmarked for loans to small farmers. The California First Bank, San Francisco is also participati~g in the • loan. NOTE: Money figures are expressed in U.S. dollar equivalents, FORM NO. 1121 "(5-76) T E C HN I CA L DA T A PROJECT: CO~NTRY :. TOTAL COST: Agricultural Credit Ecuador $36 mi 11 ion • BANK FINANCING: $15.5 mill ton re!)ayable tn 14 years, r·ncludlng 5 years of grace, at 8.2% per annum. OTHER FI NJ\NC I NG: Go~ernment and Banking System of Ecuador: $14.4 million Sub-borrowers: $6.1 million IMPLEMENTING ORGANIZATION: Banco Central pel Ecuador, Quito, Ecu_ador y Ministerio de Agricultura, Quit~ Ecuador. PROJECT DESCRIPTION: The project 'will provide credit for:(a) Livestock ,;evelop- ment, including pasture improvement and renewal, fencing and other infrastructure, ~3chinery and equipment and breeding stock, for beef cattle ranches primarily in the Costa and Oriente and dairy and sheep farms primarily in the Sierra; (b) The development of crop farms in selected areas covering a variety of on- • farm investments, depending on the area; such as: irrigation canals and pumps; land . clearing and development, building (includes home) improvements; storage facilities; rehabilitation of permanent crops, incremental inputs for annual crops; (c) Small local industries, principally in the areas covered by (b) above; and (d) The development of agricultural consulting services. PROCUREMENT: Capital items wil 1 be purchased locally from commercial . suppliers since bulk purchase will be impeded by the wide geographic distributio~ and five-year implementatfon plan. All veRicles and equfprnent for project administration will be procured on the basis of local competitive bidding in accordance with procedures acceptable to the Bank. Consu 1tan ts wi 11 be engaged (i) to assist in the improving CONSULTANTS: of the administration and accounts of the Coooerative Bank and of selected cooperatives; (ii) assist the Project Executive Unit in f~nancial man- agement and supervision of credit to small farmers; (iii) conduct applied research for development of a mixed farming system in the Oriente; and (iv) oversee pasture improve- ment research in the Sierra. ECONOMIC RATE OF RETURN: Estimated 20% (economic) for the agricultural and 1 ive-sto~ component, and 20% for the small industries component. ESTIMATED COMP(ETION D~IE; 1983 - 0 -