Nepal - Hill Food Production Project

Document of The World Bank FILE COPY FOR OFFICIAL USE ONLY Report No. P-2944-NEP REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE KINGDOM OF NEPAL FOR A HILL FOOD PRODUCTION PROJECT January 14, 1981 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 Currency Unit - Nepalese Rupee (NR) Since March 20, 1978 US$1.00 = NRs 12.00 NR 1.00 = US$0.08 NRs 100 US$8.33 FINANCIAL YEAR July 16 - July 15 ABBREVIATIONS AND ACRONYMS ADBN - Agricultural Development Bank of Nepal AIC - Agricultural Inputs Corporation ASC - Agricultural Service Center DA - Department of Agriculture, MFA DADO - District Agriculture Development Officer DCA - Development Credit Agreement DDP - District Development Plan ha - hectare ICB - International Competitive Bidding kg - kilogram km - Kilometer M - Million MFA - Ministry of Food and Agriculture NFC - Nepal Food Corporation PC - Project Coordinator RDA - Regional Director of Agriculture SDR - Special Drawing Rights UNDP - United Nations Development Program  FOR OFFICIAL USE ONLY NEPAL HILL FOOD PRCODUCTION PROJECT Credit and E'roject Summary Borrower: Kingdom of Nepal Amount: Special Drawing Rights 6.3 Million (US$8.0 Million equivalent) Terms: Standard Project Description: The project aims to increase food production in four western Hill districts of Gorkha, Lamjung, Syanja, and Tanahu, by providing appropriate extension advice and sup- port services for undertaking low-cost farming practices selected to have an immediate impact on food production, better animal health and increased availability of live- stock feed. The project also includes provision of fertilizer for the project area. It is expected that the project would reach nearly 50% of the 147,000 farm families in the project area. Irrigation works benefitting at least 10,000 farm families and trails and bridges benefitting all the populatiorL in these districts would also be upgraded. In view of the remoteness of the project area, there is a risk that all components may not be undertaken effectively and the interrelated services may not provided; there is also the risk that area farmers may not have access to the development services. The project is therefore designed to minimize the administrative and logistical difficulties of providing services in remote areas through the use of local agricultural service centers. These centers have been found to be effective in other projects in marshalling and directing services and in reaching a broad spectrum of participants. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Estimated Cost US$ Million Equivalent of Project 1/: Component Local Foreign Total I. Agriculture Agricultural Service Centers 1.23 0.05 1.28 Agriculture Extension 0.46 0.26 0.72 Livestock & Animal Health 0.12 0.04 0.16 Subtotal 1.81 0.35 2.16 II. Fertilizer 0.32 0.90 1.22 III. Infrastructure Irrigation 2.39 0.31 2.70 Trails and Bridges 0.37 0.15 0.52 Subtotal 2.76 0.46 3.22 IV. Technical Assistance & Training 0.05 0.64 0.69 Base Cost 4.94 2.35 7.29 V. Contingencies Physical 0.56 0.07 0.63 Price 1.20 0.58 1.78 Subtotal 1.76 0.65 2.41 TOTAL PROJECT COST 6.70 3.00 9.70 Financing Plan: US$ Million Equivalent Local Foreign Total IDA 5.75 2.25 8.00 Government 0.85 - 0.85 UNDP 0.10 0.75 0.85 6.70 3.00 9.70 Estimated IDA US$ Million Equivalent Disbursement: IDA FY 1982 1983 1984 1985 1986 1987 Annual 0.3 1.1 2.0 2.0 1.6 1.0 Cumulative 0.3 1.4 3.4 5.4 7.0 8.0 Rate of Return: 58%. Staff Appraisal Report: No. 3136-NEP, dated January 5, 1981. 1/ Includes US$50,000 equivalent of taxes and duties.  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EKECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE KINGDOM OF NEPAL FOR A HILL FOOD PRODUCTION PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Kingdom of Nepal for Special Drawing Rights (SDR) 6.3 million (US$8.0 million equivalent) on standard IDA terms to help finance a Hill Food Production Project. The United Nations Development Program (UNDP) is expected to provide a grant of US$0.85 million equivalent for technical assistance and training (para 51). PART I - THE ECONOMY 1/ 2. The most recent economic report entitled "Nepal-Development Perform- ance and Prospects" (Report No. 2692-NEP) was distributed to the Executive Directors on December 14, 1979. The principal findings of the Report and recent developments are described below. Country data are shown in Annex I. 3. Nepal is one of the least: developed countries in the world. Per capita income is estimated at $120 (1978), and health and education standards are well below the average of South Asia: life expectancy at birth is about 45 years, infant mortality 150 per thousand, and adult literacy 19%. The population, growing at the rate of 2.6% a year, is estimated to be 13.36 million (1978). About 95% of the population live in rural areas. 4. The economy of Nepal ceni:ers around agriculture. It accounts for more than 60% of GDP and 75% of merchandise exports, and provides a liveli- hood to over 90% of the population. In addition, most of the industrial sector, which comprises about 10% of GDP, processes agricultural raw mate- rials. About 25% of total rural incomes are estimated to arise from non- agricultural activities. Cottage industries are one of the most important of these, engaging over 1 million people and comprising about 6% of GDP. They prov 'e basic consumer goods in the many small isolated markets where such good. 4ou'1 X herwise not be available. 5. As mall o-en economy, Nepal is highly susceptible to develop- ments in Ini... The lerai, which lies along the Indian border, has close and virtually free trading links with India, and accounts for about 60% of the country's GDP, and about 40% of the population. The Kathmandu Valley, .he adlministrative and commercial center, is closely linked with the Terai, but ^- significant transportation costs. The rest of the country, the Hills and 'ountains, is isolated by the nature of the terrain and consists of a large number of fragmented markets. 1/ Part I of this Report is subEtantially the same as Part I of the Report and Recommendation of the President to the Executive Directors on a proposed credit to the Kingdom of Nepal for the Babai Irrigation Engi- neering Project (Report 1, E'-2926-NEP of December 11, 1980).  - 2 - 6. When Nepal adoptecd econor,.ic ancd socia2 development as major govern- ment objectives in the early 1iOs5, there -was virtuaLly no economic or administrative infrastructure. initial development efforts were necessarily concentrated on establishing c funda-iotn for Eture development. During these early stages, it was is v Laie that gcOWfil would remain slow and that there would be little if any 2nrcease in, per ca,ita income. However, the Fifth Development Plan (1975/76-1979/30) was to be a turning point; it was believed that the country was poised for more Tu-,pid growth on the order of 4- 5% annually. The level of investaent was to increase substantially and its focus to shift towards the more directly product:ive sectors and the social services. 7. Public investmen. perfo-Tmance has been excellent; development expenditures have growa at over 15% a-nnually in real terms and the Government has been relatively successful in reorienting iruvestment away from the trans- port sector towards agriculture and th2 social services. However, few of the other Fifth Plan objectives have been achieved. The GDP growth rate is likely to average only 2.4% per year, mainly because of poor agricultural performance. Little progress has been made in increasiAg agricultural productivity and agricultural production increased at an annual rate of only 0.7% during the first four years of the Fifth Plan. Growth in other sectors has been mixed, with the poor agricultural performance limiting the growth of agro-related industries. Production in several large industries including jute goods, sugar, leather goods, and cement has increased but most Fifth Plan targets will go unmet. In the services sector, tourism has been dynamic, but it still only contributes about 1% of GDP. 8. Economic developments during 1979/80 were characterized by declining output, accelerating inflation, and a weakening in the trade and payments position. Foodgrain production declined by 13% due to the poor monsoon in 1979, and.to deal with this shortfall, the Government appealed for 110,000 tons of foodgrains assistance. Donors have made available about 60,000 tons and together with local procurement from less seriously affected parts of Nepal, this may be sufficient to maintain minimum food requirements. The 1980 monsoon is reported to have been satisfactory. Inflation accelerated to about 12% in 1979/80, because of the deterioration in the domestic food situation, higher import prices and the expansionary effects of the budget deficit. Government activity slowed in 1979/80; real growth in total expen- ditures was only 5% compared with 10% in 1978/79, while revenues declined by 3.5% in current terms. However, the economic prospects for 1980/81 are some- what brighter in view of the improved weather as well as the planned accelera- tion in government expenditures given in the 1980/81 Budget; GDP growth should be positive in contrast to its 1% decline in 1979/80. 9. The disappointing overall performance of the domestic economy during the Fifth Plan period has been accompanied by a widening trade deficit. Imports have grown under the impetus of the Government's development program while the trend in export earnings has been sluggish due to declining rice exports. The deterioration on the trade account has been partly covered by increased tourism receipts and remittances from Gurkhas (soldiers from Nepal serving in the British or Indian armies). Foreign assistance in the form of grants and concessionary financing have generally ensured that the overall balance remained in surplus. However, the shortfall in foodgrain production  -3- coming at a time when Nepal's oil bill was rising has resulted in payments deficit of US$8 million for the 12 months ending July 1980, and Nepal drew SDR 10.5 million (US$13.8 million equivalent) from the IMF under the Compen- satory Financing Facility in September 1980. As of May 1980, foreign exchange reserves were equivalent to six months of imports. 10. On March 31, 1978, the authorities replaced a complex system of mul- tiple exchange rates and exchange and trade restrictions with a dual exchange system. Transactions with India, which were virtually free from restrictions, were unaffected by these changes. New treaties on trade and transit with India were also concluded in March 1978. Under the dual exchange rate system, Nepal maintains a basic rate of N'Rs 12,00 per dollar, with a second, premium rate applying for all merchandise trade with third countries except for imports of certain development goods. On. February 21, 1980, the premium rate was changed from NRs 16.00 per dollar to NRs 14.00 per dollar, but the exemption was restricted to only imports of petrol and petroleum products, cement and chemical fertilizers. These exchange rate adjustments involved an apprecia- tion of about 14% for exports to third countries and an overall appreciation of about 2% for imports from third countries. But this was partly offset by (i) withdrawing the 12% duty on Exports of raw jute; and (ii) raising import duties on a wide range of imports from third countries. However, with the exception of raw jute exports, earnings in domestic currency from exports to third countries will decline, leading to a possible shift of some exports to India. The overall trade balance is likely to be adversely affected by the recent measures. 11. The poor long-run performance of the economy is chiefly due to the failure of agricultural production to keep pace with population growth. Over the period 1967-77, foodgrain production grew at an average annual rate of only 1.5%. Increases in the area under cultivation account for almost all of this, since average yields rose by only 0.1% annually. The contribution of irrigation development has so fair been limited. Only about 23% of irrigable area is provided with irrigation, and existing facilities are still poorly utilized. In the past, insufficient attention has been paid to bringing water down to the farm level and this has been compounded by inadequate support services such as extension and research, timely supplies of improved seed and fertilizer and other inputs, credit and farm-to-market roads. However, recent major irrigation projects financed by IDA and the Asian Development Bank are addressing these problems by taking more comprehensive and integrated approaches. 12. In the Hills and Mountains, which contain only one-third of the country's agricultural land and yet have nearly two-thirds of the population, population pressures have pushed cultivation up steep hillsides and onto marginal land; average yields have actually declined. Population density on agricultural land in these areas is higher than in Bangladesh. Malnutrition is acute; food production meets only two-thirds of minimum subsistence needs. Because they have little to trade except their labor, one-third of the inhab- itants of these Hill areas migrate seasonally to the Terai plains and northern India for food and work. Since the early sixties, an estimated 400,000 have migrated permanently, and there are signs that this exodus is accelerating. 13. Economic policy making has been delayed by the political develop- ments of the past two years. These activities culminated in the May 1980  - 4 - referendum which reaffirmed the existing political system, while allowing for suitable reforms. A Constitutional Commission recently presented its recom- mendations and a new constitution was formally announced in mid-December, including direct election of members of parliament. These political activities slowed down preparation of the Sixth Plan (1980/81-1984/85) and the Plan is only now undt:going final review. However, the thrust of the Plan, outlined in an earlier document, was endorsed by members of the Nepal Aid Group at its January 31, 1980 meeting. It places highest priority on developing agriculture, including revitalization of Hill food production to meet local requirements. At the same time, since land holdings in the Hills are too small to generate much more than subsistence needs, programs will be started to encourage diver- sification into other activities such as small-scale and cottage industries to supplement Hill incomes. For the Terai, the strategy is to continue efforts to realize the Terai's considerable potential for increasing production of foodgrains and cash crops. The irrigation infrastructure is to be more fully utilized and improvements to extension services and associated inputs concen- trated on those areas with irrigation facilities. Reafforestation programs are given priority in order to provide fuelwood and fodder as well as to reduce soil erosion. 14. While these efforts in the directly productive sectors merit urgent attention, Nepal faces similar challenges in developing its human resources. Although curbing population growth requires major actions, selective programs in education and health can greatly assist population planning as well as alleviate human suffering and lay the basis for future increases in productiv- ity. The Government's strategy recognises that the approach must be selective since programs for meeting basic needs generally have only a long-term impact on manpower development but divert resources away from activities more directly and immediately related to production. Increasing foodgrains production will meet the major need of improved nutrition. Better and more readily available supplies of drinking water and fuelwood will meet other needs, while also freeing labor currently spent in their collection. Basic health facilities are to be expanded through integrated community health posts, while in educa- tion, stress is placed on improving the quality of primary and adult vocational education. Family planning programs are to be stepped up. The other basic need to be met in rural areas is improved transport, and the Sixth Plan will include programs to improve trails, tracks, and suspension bridges. 15. For Nepal to achieve more rapid and sustained growth, the productive capacity of its economy will need to be broadened and strengthened since the present extreme dependence on agriculture limits the economy's overall growth potential to about 4% per year. Tourism offers perhaps the best near-term potential for increased foreign exchange earnings; however, efforts are needed to reduce its capital intensity, strengthen linkages with other local indus- tries and extend its benefits beyond the Kathmandu Valley. Hydropower also offers some possibilities, but neither it nor tourism will ever be substantial generators of employment. In the long run, Nepal must diversify and develop its industrial sector. Obviously, efforts in this sector must be on a highly selective basis in view of the multiplicity and complexity of the constraints to industrial development, including the lack of natural resources and a skilled labor force, as well as Nepal's small domestic market and landlocked  -5- position. Public enterprises need to operate more efficiently, village and cottage industries should be promoted. Beyond this, joint ventures with India, for example, as in cement production, may be attractive. In support of these endeavors, the preconditions for industrialization will need to be established in the near futura. These include providing financial incen- tives, technical and marketing services, and the upgrading of manpower skills in the areas where Nepal may hava a comparative advantage. 16. Nepal has made significant progress in mobilizing domestic resources to support its development efforts, considering the extreme poverty, low degree of monetization, and fragmented nature of the economy. Revenue grew at 16% a year in current terms between 1969/70 and 1978/79, increasing from 5% of GDP to about 9% during this period. Over the same period, the Government was able to maintain savings on current account in excess of 2% of GDP, a good achieve- ment for a country in Nepal's economic position. However, this excellent record is now in jeopardy. Political developments led to difficulties in collecting income and land taxes in 1978/79, but this was more than offset by increased collections from other sources. However, custom duties, which generate about one-third of total revenues, were lowered in the 1979/80 budget contributing to the 3.5% decline in overall revenues in that year. To reverse the deterioration, the 1980/81 budget raised various taxes including import duties, sales tax, income tax Dn private businesses, tourist taxes (hotel and airport taxes, and visa fees), and fees for extraction of forest products. These measures are expected to generate revenues equal to about 13% of total 1979/80 revenues wiich, together with better implementation of existing taxes, should be sufficient for overall revenues to exceed 9% of GDP in 1980/81. 17. Foreign assistance has been a decisive factor in Nepal's development. During the Fifth Plan, foreign iinancing equalled about 45% of development expenditures. In view of the limited prospects for increased domestic resource mobilization, foreign financing requirements may be about 60% of planned Sixth Plan development expenditures, which amount to about NRs 10 billion or over $800 million at 1979/80 prices. Aid commitments need to average about $225 million annually during 1980-82 compared with $160 million during 1977-79. However, even this level of foreign assistance would not provide the Govern- ment with sufficient resources :o meet increasing consumption demands. Addi- tional aid, either through finanlcing a higher proportion of total project costs or in the form of commodity assistance, could provide budgetary support to meet pressing recurrent expeaditure requirements, particularly in the social sectors. The Nepal Aid Group was formed in 1976 to assist in the overall coordination of financial and technical assistance efforts. The Group has met three times at plenary meetings under the Chairmanship of the Bank to discuss overall external assistance needs as well as at the local level in Kathmandu to discuss and coordinate strategy. At the latest plenary meeting, which was held in Paris on January 31, 1980, and was attended by representatives from eight countries and six international organizations, Nepal received aid indications exceeding US$200 million equivalent. 18. Although foreign aid commitments and disbursements grew by over 25% annually during the Fifth Plan period, only 40% of disbursements included in the Government's budget were from foreign borrowing, the remainder being  - 6 - grants. As of December 31, 1979, official foreign debt outstanding was only $125 million, of which $106 million was due to multilateral agencies. These loans were obtained on a highly concessional basis and the grant element of total aid remains in excess of 90%. As a result, debt service payments were only US$3.1 million during 1978/79, equivalent to less than 2% of exports of goods and services. PART II - BANK GROUP OPERATIONS IN NEPAL 19. Bank Group operations in Nepal began in FY70 with an IDA credit of US$1.7 M equivalent for a telecommunications project. Since then, 23 additional credits have been approved, bringing total IDA assistance to Nepal to US$271.1 M equivalent, net of cancellations. In view of Nepal's many development needs, this assistance has been for projects in a wide variety of sectors. Six of these sectors account for 83% of IDA credits by amount: irrigation (US$78.5 M for 6 projects); water supply and sewerage (US$46.8 M for 3 projects), power (US$40.8 M for 1 project); telecommunications (US$21.7 M for 3 projects); highways (US$19.2 M for 2 projects); and rural development (US$19.0 M for 2 projects). The remaining US$45.1 M of IDA assistance is for one project in each of the areas of settlement, technical education, tourism, technical assistance, forestry, industrial development financing, and grain storage. A credit for Agricultural Extension and Research (US$17.5 M) is being presented to the Executive Directors simultaneously with the Hill Food Production Project. The proposed credit would be the fourth in FY81, bringing the total amount of IDA assistance to Nepal to US$279.1 M equivalent, net of cancellations. No Bank loans have been made to Nepal. IFC made its first investment in Nepal (US$3.1 M) in a hotel project in Kathmandu in FY75. Annex II contains a summary statement of Bank Group operations as of October 31, 1980, and notes on the execution of ongoing IDA projects. It shows certain delays in the implementation of these projects, particularly during the initial periods. These delays have been largely due to Nepal's limited technical and managerial capabilities. In order to assist Nepal in coping with this constraint, con- siderable technical assistance is being given by Bank Group staff, including our Resident Mission in Kathmandu. As a result, improvement in the rate of disbursements is being realized. During FY80, US$22.6 M equivalent were dis- bursed compared to US$42.8 M equivalent disbursed during the entire previous nine years. 20. Bank Group lending to Nepal has increased steadily, but still remains at a modest level compared to the country's need for external assistance. The international community has shown considerable interest in Nepal's economic development and, to date, shortage of funds has not been a bottleneck. The main constraint on the utilization of increased aid has been Nepal's limited absorptive capacity, affecting the pace of project preparation and implementa- tion. The Bank is assisting the Government in project preparation through the Technical Assistance Credit (Credit No. 659-NEP) and by acting as Executing Agency for a number of technical assistance projects financed by UNDP. The Bank Group has also addressed the problem of absorptive capacity through its role in organizing the Aid Group for Nepal (para 17).  - 7 - 21. The Bank Group's current strategy places major emphasis upon the directly-productive sectors (particularly agriculture) and the development of complementary infrastructure, including feeder roads (particularly those connecting the Hills to the Terai), communications and hydroelectric power. Preparation of projects in cottage industry, technical education, cash crops and power is under way. PART III - TRE AGRICULTURAL SECTOR 22. Agriculture is the key sector for Nepal's economic development: farm production and related activities contribute more than 60% of GDP, pro- vide almost 90% of employment and about 75% of merchandise exports, mostly foodgrains2 jute and oilseed. Only about one sixth of Nepal's gross area of 141,000 km is cultivable. Foodgrains account for about 90% of cropped area, rice being the most important (50%), followed by maize, wheat, other cereals and pulses. The rest of the cropped area is under oilseeds, jute, potato, tobacco, sugarcane and horticultural crops. Growth of agricultural production (average 1.1% per year 1970-77), which is largely determined by foodgrain performance, has not kept up with population growth. Growth has primarily come from area expansion since yields have largely stagnated (para 11). 23. The Government has had l:o moderate its earlier approach to regional specialization according to comparative advantage (foodgrains in Terai vs. horticulture, tea and livestock in Hills) in view of the need for an adequate foodbase in the Hills. The role 3f the Terai will continue to be the genera- tion of domestic and exportable f3odgrain surpluses as a resource for further development. Since area expansion is limited in the Terai, emphasis will be given to increasing yields, mainly by an expansion and upgrading of existing irrigation infrastructure and inputs. Initial results from the IDA-assisted Birganj Irrigation Project (Narayani Zone) indicate that substantial yield improvements can be expected from improved irrigation water supply combined with increased agricultural inputs and effective extension services. Agricultural Institutions 24. Four major Ministries eeal with agriculture: the Ministry of Food and Agriculture (MFA); the Ministry of Forest; the Ministry of Land Reform; and the Ministry of Water Resources. MFA includes the Department of Agricul- ture (DA) which is in charge of promoting production through extension, training and research. MFA also has overall responsibility for a number of public sector corporations which include the Agricultural Inputs Corporation, the Agricultural Development Bank of Nepal (ADBN) and the Nepal Food Corpora- tion. In general, like many other Government agencies, agricultural institu- tions suffer from lack of trained staff. 25. The Department of Agri:ulture (DA), located in the Ministry of Food and Agriculture (MFA), is respon3ible for agriculture development, research, and provision of extension services. The extension services are organized on a regional basis under a Regional Director of Agriculture (RDA), with activ- ities directed at the district level by a District Agricultural Development  - 8 - Officer (DADO), who is in turn assisted by Assistant Agriculture Development Officers, Junior Technicians, Junior Technical Assistants, and Agriculture Assistants at the farm level. This program, which is essentially a training and visit system, is used both in the Hills and the Terai. A separate Depart- ment of Livestock and Animal Health has recently been formed to assume devel- opmental and extension responsibilities for the livestock subsector. The organization of its services has not yet been completed, but are expected to parallel that of the DA. In the Hills, it is the intention of the Government to concentrate activities for the organizations involved in agriculture, live- stock, credit, cooperatives, input supply and marketing at the Agricultural Service Centers (ASC). Each ASC is expected to serve about four to six village panchayats covering about 200 sq km and an average of 7,000 farm families. 26. Agricultural Credit. The major source of institutional credit is the Agricultural Development Bank of Nepal (ADBN), established in 1973. It is expected to provide the overall credit requirements of agriculture and agro-based industries, and ensure effective mobilization of rural savings. The Sajha (cooperative) program provides short term production credit to its members using funds made available by ADBN. More recently, commercial banks have also become involved in rural credit. 27. ADBN provides loans to individuals, companies, and institutions engaged in agricultural production. ADBN's standard terms are 18 months for short term loans with a 14% interest rate per annum, 7 years for medium term loans at 11% interest rate per annum, and 20 years for long term loans with an 8% interest rate per annum. Rediscount facilities available to ADBN through the Rastra (Central) Bank provide 6% spread, which is considered sufficient to cover operating and administrative costs. Total lending operations of the ADBN have increased substantially, rising from NRs 76 million in FY1973/74 to NRs 262 million in FY1977/78. Most farmers are still reluctant to approach institutional agencies for credit, mainly due to lengthy and complicated pro- cedures for borrowing, and difficulties in establishing collateral for loans. Absence of technical know-how in commercial banks is a factor restricting expansion of their lending. Technical assistance would be provided under the proposed Agricultural Extension and Research Project to review the working of ADBN and make recommendations for meeting its current and long-term financial and managerial technical assistance needs. Additional assistance is also expected to be provided to ADBN by the International Fund for Agricultural Development and the Asian Development Bank under recently approved projects (Small Farmers Development Project and Fourth Agricultural Credit, respectively). 28. Cooperatives. The cooperative (Sajha) development program was intro- duced in early 1976 to revitalize the cooperative movement, mobilize local savings, and to link economic development with decentralization at the local level. Sajhas provide credit, agricultural inputs, marketing facilities, and some basic consumer goods (diesel oil, kerosene, course cloth, salt, rice and sugar). Each Sajha serves on average three to four panchayats. Further, at the village level, they also act as the local agent of the Agricultural Inputs Corporation. 29. Agricultural Inputs. The Agricultural Inputs Corporation (AIC), established in its present form in 1975/76, is responsible for the supply of  - 9 - inputs to farmers. Its functions [nclude: (a) importation and distribution of chemical fertilizers and maintenance of stock; (b) collection, processing, storage and distribution of improved seeds and assistance to DA in conducting seed multiplication programs through contract growers; (c) procurement and distribution of pesticides; and (d) distribution of locally manufactured agricultural tools and implements as well as importation and distribution of agricultural machinery. AIC's sales of inputs in 1978 are estimated at 54,000 tons of fertilizer, 2,520 tons of improved seeds, pesticides costing NRs 1.9 million and agricultural implements costing NRs 2.6 million. 30. Nepal does not manufacture chemical fertilizer and depends entirely on imports, which are financed either by bilateral aid (about two-thirds in 1979/80) or by direct purchase (about one-third). Fertilizer imports are generally delivered through Calcutta Port (India) and transported by road and train to the Indian/Nepalese border. Internal distribution is then either by road or, in the Hills and Mountair,s, by mules and porters. The transportation costs to some of the more remote areas exceed the actual cost of fertilizer. The total national consumption of fertilizers in 1977/78 was about 54,000 tons which is about 6 kgs of nutrients per cropped ha. This is one of the lowest application rates in the world and compares with levels of consumption in India of about 25-30 kg nutrients per ha. 31. In keeping with other countries in the region, HMGN subsidizes the cost of fertilizers to farmers. The amount of this subsidy effectively depends on the prevailing retail price in India, as any price differential would result in flows of fertilizer across the border. As a matter of policy, the Government adopts a uniform price throughout the country, regardless of transportation costs. The present sale price of urea to farmers is NRs 3,000 (US$250) per ton which corresponds to the price prevailing in India. This covers roughly two thirds of the average total cost of fertilizer c.i.f. retail sales points, and results in an average subsidy to farmers of NRs 1,543 (US$129) per ton. This subsidy amounts to some 34% of the current retail price of urea and is lower than subsidies in Bangladesh (40%) and Pakistan (35-40%) where transportation costs are much lower. The Government provides AIC with either the foreign exchange to purchase the fertilizers or the fertilizer received under bilateral assistance. AIC returns the net proceeds of its fertilizer sales to the Government. AIC is not usually involved in retailing except in some remote Hill areas. Fertilizer is sold nostly through cooperatives (Sajha) or private dealers where cooperatives do not: exist. 32. Agricultural Marketing. The main institutions involved in agricul- tural marketing are: (a) The Nepal Food Corporation (NFC), whose main respon- sibility is to distribute foodgrains to food deficit Hill districts; (b) MFA's Food and Agricultural Marketing Services Department, whose role is to collect socio-economic and price data, analyze trade patterns, and establish marketing systems, particularly in the Hills; and (c) the rice export companies which are quasi-governmental agencies, purchasing paddy either directly from farmers or through Sajha cooperatives. The Government has recently liberalized the export of foodgrains, and plans to place control of public sector domestic and export trading in NFC and strengthen it so that it may be better able to promote Government foodgrain policies. An IDA-assisted grain storage project (Credit No. 1062-NEP) is assisting the Government in this effort.  - 10 - Hill Agriculture 33. Because of very rugged topography, arable land in the Hills is limited to valley bottom land and to slopes which have been terraced; these dry upland terraces, accounting for about 75% of the total arable land in the Hills, have minimal irrigation potential. Maize, wheat, mille: and barley, and, at higher elevation, potatoes are the principal crops. While the Hills account for only about one-third of Nepal's total arable land, they must sup- port two-thirds of the population. Population density in the Hills exceeds 13 persons per ha of cultivated land, compared to about less than six persons per ha in the Terai. 34. In 1971, the average holding size in Nepal was 0.94 ha per family but this average masks considerable variations as 81% of families in the Hills own less than 1 ha, compared with 53% in the Terai. In 1962, the average farm holding of a household in the Hills was 0.56 ha; in 1976, this was estimated at less than 0.5 ha, compared to about 1.7 ha average in the Terai. Each holding, particularly in the Hills, is subdivided into plots of smaller sizes covering several microclimatic zones, thus reducing risks con- sequent on vagaries of weather, changes in the courses of rivers and streams, and landslides. Inheritance continues to decrease land holding size at each succeeding generation. The average cropping intensity is about 150%. 35. During the past decade, farm family income levels have been main- tained by increasing the area under cultivation. While areas of forest that can be converted into productive farmland remain in the Terai, virtually no such reserve is left in the Hills and Mountains. The shortage of good land in the Hills increasingly forces the cultivation of steep or unstable slopes with consequent low yields and increasing erosion. The already massive erosion caused by natural forces is further accelerated by overgrazing of pasture lands, defoliation for livestock fodder and destruction of forests in the search for firewood and timber. 36. In general, the overall picture is one of growing dependence of the Hills on foodgrains from the Terai. In 1976, it was estimated that only eight of the fifty five Hill and Mountain districts showed a food surplus. Zonal differences in production of major food crops are considerable, and when translated into terms of caloric requirements for minimum subsistence, I/ the average family in the Mountains now has enough food for about 190 days; in the Hills, for 225 days; and in the Terai, for 540 days. The declining potential of the Hill and Mountain areas to provide subsistence for its residents is reflected in Nepal's high infant mortality rates (estimated at over 150/1,000 live births), a high child mortality rate between the ages 1-4 (estimated 39/1,000) and a general lowered resistance to disease. 37. Farming methods are largely traditional and fertility is maintained by the use of animal manures and compost. The application of chemical fer- tilizer is extremely low as farms are small and owners generally poor and not considered creditworthy; often fertilizer is in short supply. Additional 1/ About 2,000 calories per day for an adult.  - 11 - output produced through use of fertilizer is generally consumed within the family and does not enter the market. Livestock, mainly cattle and buffalo, but also goats, pigs and poultry, are kept as sources of milk and meat, draught power and manure. Mainly, because of indifferent genetic stock and poor feeding, productivity of these animals is low. In general, little cash trade is associated with agricultural production and, among farmers in isolated villages located at higher altituces, barter is common. Some cash income, however, is derived from the sale of animals and animal products, including milk, eggs and ghee. Off-farm payments from porterage, army pensions or from seasonal employment in the Terai or North India play an important role in food deficit areas. Bank Group Support to Hill AgricuLture 38. Consistent with the Government's agricultural development strategy, Bank Group support to the agricull:ural sector has focused on development of large-scale irrigation schemes in the Terai and rural development and forestry programs in the Hills. The Bank Group is at present involved in two ongoing rural development projects in the Hills. The first project (Credit No. 617-NEP, US$8.0 million equivalent) became effective in July 1976 and is assisting with the development of two north central Hill districts of Rasuwa and Nuwakot. Progress on the multi-component project has been satisfactory. The second project (Credit No. 719-NEP, U$11.0 million equivalent) became effective in January 1980 and is assisting with the development of three far western Hill districts of Darchula, Baitadi and Dandeldhura. Due to the extreme remoteness of the project area, the initial stages are proceeding very slowly and in August 1980, the area suffered a severe earthquake. Programs included under the project for construction of tracks, bridges, administrative buildings, health posts, schools, and village water supply may be accelerated as part of the reconstruction efforts. PART IV - THE PROJECT 39. The proposed project was prepared by the DA, with assistance from the FAO/IBRD Cooperative Program. The project would build on and benefit from an earlier startup project I'Gandaki Anchal Agricultural Development Project) which was supported by l:he Federal Republic of Germany, and which covered the entire Gandaki Zone and several additional districts in Dhaulagiri Zone. The project was appraised in May/June 1980. Negotiations were held in Washington, D.C., in December 1980. The Nepalese delegation was led by Dr. T.N. Pant, Joint Secretary, Ministry of Food and Agriculture. A report entitled "Nepal - Staff Appraisal Report - Hill Food Production Project" (Report No. 3136-NEP, dated January 5, 1981) is being circulated to the Executive Directors. A supplementary data sheet is attached as Annex III. Project Objectives 40. The project aims to increase food production in four western Hill districts of Gorkha, Lamjung, Syanja and Tanahu (Map 15049). As project area farmers do not have the means to invest in costly agricultural inputs, the project would provide farmers with appropriate advice and increased support  - 12 - services for undertaking low-cost farming practices selected to have an immediate impact on food production, increased availability of livestock feed, and better animal health. Project Description 41. The main components of the project are: (a) construction of 20 Agricultural Service Centers (ASCs); (b) improving agricultural extension and livestock services through provision of staff; (c) strengthening of ADBN, AIC, and cooperatives by providing training for staff; (d) provision of fertilizer; (e) improvement to marketing, through introduction of regular market days; (f) development and improvement of irrigation service to about 3,000 ha of land; (g) upgrading of about 70 km of trails and construction of about 34 bridges to facilitate movement of agricultural inputs; and (h) establishment of a monitoring and evaluation program. 42. Overall responsibility for project implementation would be vested in the MFA, with the Regional Director of Agriculture (RDA), Western Region, overseeing day-to-day implementation through the already established district agricultural and livestock services. The project would be implemented accord- ing to standard procedures of Government as they apply to planning, approval, budgeting procedures and the responsibilities of the Ministry of Finance. In recognition of the national shortage of trained agriculture staff, the project is designed to be implemented with a minimum of additional staff. The Govern- ment would establish permanent staffing positions for the incremental agricul- ture and livestock extension staff required for the project on a schedule satisfactory to the Association and employ additional staff as and when needed to fill such positions (Section 3.05(b) of the draft Development Credit Agree- ment (DCA). 43. Regional and district coordinating committees would coordinate proj- ect activities undertaken through the various agencies. A Regional Coordinat- ing Committee (RCC) would be established to conduct planning and implementa- tion of project activities, to identify and resolve problems, and to ensure coordination with the respective District Development Plans (DDP); members would include the RDA, representatives of the ADBN, AIC, Department of Coop- eratives and NFC, the regional head of the Ministry of Local Development, and the four Chief District Officers (Section 3.03(a) of the draft DCA). District Coordinating Committees (DCC), which have already been established in each  - 13 - district, would coordinate activities of all Government agencies operating at the district level; each DCC would include the respective Chairman of the District Panchayat and DADO and the district heads of AIC, ADBN, and the District Technical Office (Section 3.03(b) of the draft DCA). Each DCC in the project area would review the project activities in their respective district and incorporate them in the agreed DDP. 44. A full-time Project Coordinator (PC) would be appointed by April 30, 1981, with qualification and experience satisfactory to the Association (Section 3.02 of the draft DCA), Teporting directly to the RDA. The PC would be assisted by two program officers (one each for agriculture and livestock) and a Disbursement Unit and a Monitoring Unit. The PC would supervise the four DADOs and assist in the preparation of the agriculture and livestock sections of the respective DDP. lThe PC, in his capacity as Secretary to RCC, would assemble the DDPs for review and endorsement by the RCC, and would monitor the budgetary process for each implementing agency's project activi- ties. The agriculture and livestock sections of each DDP would be furnished to the Association by May 15 of each year for review and comment (Section 3.06 of the draft DCA). The PC would also have the responsibility of drawing project implementation and policy disputes and conflicts which could not be reconciled at the district level l:o the attention of the RCC. The PC would prepare the withdrawal requests for disbursements from the IDA credit. 45. Agricultural Service Centers (ASC) have been found to be effective as focal points for promoting development activities in remote areas. These centers provide offices and staff housing for the agriculture, livestock, coop- erative and credit organizations, and storage for agricultural inputs and surplus production. Twenty ASCs would be established at points of high pop- ulation density and agricultural activity; sites have already been selected. The Government would provide sufficient land (Section 3.11 of the draft DCA), and would construct the ASCs at sites satisfactory to the Association (Annex to Schedule 2 of the draft DCA). 46. Agricultural Extension and Livestock and Animal Health Services would be strengthened and intensified. The agricultural extension services would be improved through staff training and regular supervision. The DADO, assisted by an Assistant Agriculture Development Officer, would provide tech- nical guidance to the Junior Technicians in charge of each ASC and assist in organizing the training sessions for the Junior Technical Assistants and Agricultural Assistants. In the initial stage, the extension message would be simple, concentrating on the most important aspects of crop cultivation which involve low cost measures such as seed selection, better use of compost, weed control and crop care. At a later stage, use of inputs and more sophis- ticated cropping systems would be recommended. Livestock services would be strengthened by establishing and staffing of a small veterinary dispensary at each ASC and by upgrading of the livestock extension programs. Emphasis would be placed on immunizing bu:ffalo and cattle against rinderpest and hemorhagic septicema and providing anthelmics for the treatment of parasites. By virtue of the simplicity of the techniques, both extension programs do not require highly trained staff. A,laptive research to validate techniques devel- oped at research stations would be conducted by small teams under the control of the RDA, with assistance provided by technical experts (para 51 below). Trials, including systematic testing in farmers' fields, would also be super- vised by the extension staff.  - 14 - Infrastructure 47. Minor gravity irrigation systems on about 3,000 ha would be improved, converting seasonal systems to perennial irrigation service and upgrading some rainfed land. The works would involve linking of irrigable areas to a perm- anent water source by means of main canal and construction of l headwork with simple but permanent intakes. These works would be carried out by the Farm Irrigation and Water Utilization Division of the DA, costing an average NRs 10,000/ha of improved or irrigated land. To enable year-round access to the project area, about 70 km of trails (or 25% of the total length) would be upgraded and 30 medium to small and 4 major bridges would be constructed. The District Technical Offices would supervise the construction of trails and bridges, with the Ministry of Local Development overseeing the works for the major bridges. Inputs and Marketing 48. While for the most part, the extension programs would involve low- cost measures, use of fertilizer and other inputs would be increased. To ensure a reliable flow of fertilizer to the country and therefore to the proj- ect area, funds have been included in the Agricultural Extension and Research Project (being presented simultaneously with the Hill Food Production Project) to assist in the preparation of a suitable national fertilizer strategy and program. it is expected such a program would involve the AIC, ADBN, and the Sajha, and make recommendations for institutional, procurement, distribution, storage, financing, and credit improvements and for technical assistance and training needs. Pending the implementation of such a program, the proposed project would finance two years of total fertilizer needs of the project area, estimated at about 3,200 metric tons in total. The Government would ensure that the fertilizer financed under the project would be utilized exclusively in the project districts (Section 3.07(a) of the draft DCA). 49. AIC would procure this fertilizer and sell it in the project area through its normal procedures. Project area farmers would purchase the fertil- izer for cash or on credit obtained through the credit facilities of the ADBN or the Sajha. An ADBN loan assistant would be posted at each ASC (Section 3.04 of the draft DCA) to assist in reaching the potential clients. The Government would review annually with the Association the credit needs of farmers in the project area (Section 3.07(b) of the draft DCA), and would provide adequate funds to ADBN to meet these needs (Section 3.07(c) of the draft DCA). The project would also support training of staff for the AIC and ADBN, and the managers of the Sajha serving the project area. 50. To reduce post harvest price depression, a marketing program would be introduced in the second year of the project. A regular weekly market would be held at each ASC at which Sajha and the NFC would purchase grains. It is expected that these agencies would purchase a minimum of 5% of project- generated grain production in the second year of the project, increasing to 10% in the third year and thereafter. The grains would be stored within project area for resale at the markets when needed. A plan for these market- ing programs, satisfactory to the Association, would be furnished to the Association by June 30, 1982 (Section 3.08 of the draft DCA). Credit to the Sajha and NFC for these activities would be arranged through ADBN under existing facilities.  - 15 - Technical Assistance and Training 51. To strengthen the implementation capacity of various project agen- cies, the Government is arranging for technical assistance support through a UNDP grant program, with the World Bank expected to be executing agency. Assistance would be provided in the field of agronomy and field experimenta- tion (44 man-months), extension training and communication (20 man-months) and identification and design of minor irrigation schemes (20 man-months). Assistance would also be made available to the PC in monitoring and project evaluation (6 man-months). Foreign training would be provided for Sajha and MFA staff serving in the project area. The Government would, by April 30, 1981, make arrangements satisiactory to the Association for the provision of funds for these technical assistance and training programs (Section 3.01(b) of the draft DCA). Monitoring and Evaluation 52. Monitoring of project implementation in each district would be con- ducted on a day-to-day basis by the respective DADO. Semi-annual progress reports would be prepared by each DADO, consolidated by PC, and forwarded by RDA to the Association. The PC wDuld be aided by the Monitoring Unit attached to his office. Evaluation of the impact of the project on overall food pro- duction would involve the carrying out of a baseline survey and annual col- lection of data in selected project areas. This is expected to be carried out by the Agriculture Projects Service Center under the direction of the Director General of Agriculture (MFA). Technical assistance would be provided to help develop procedures for monitoring and for analysis and interpretation of data. Cost and Financing 53. The total project cost is estimated at US$9.7 M equivalent, includ- ing contingencies and a negligible amount of taxes and duties. The cost estimates are updated to August 1980 prices and include physical contingencies of 15% for civil works. Price contingencies have been calculated using price increases of 9% and 8% per annum for 1981 and 1982, respectively, and 7% per annum thereafter. The foreign exchange cost is estimated at US$3.0 M equiva- lent or about 30% of total project cost. The proposed IDA credit of US$8.0 M equivalent would cover all foreign exchange costs (excluding the financing for technical assistance to be provided by UNDP) and about US$5.75 M equivalent of local costs, amounting to 82% of total project cost. Given Nepal's significant progress in mobilizing domestic resources for development and its extreme poverty, local cost financing is considered appropriate (para 17). UNDP has agreed in principle to provide US$0.85 M equivalent and the Government would contribute the balance of US$0.85 M equivalent or about 9% of total project cost. The cost of individual foreign consultants' services is based on UNDP scales, with the overall average cost of consultants' services of about US$7,700 per man-month, including benefits, overheads, and travel. 54. Procurement. Procurement of fertilizer, equipment, furniture and vehicles involving contracts abDve US$100,000 (for an estimated total of about  - 16 - US$1.2 M 1/) would be on the basis of international competitive bidding (ICB) in accordance with IDA guidelines. Orders for goods which cannot be bulked into packages of US$100,000 equivalent or more (estimated total of about US$0.3 M 1/) would be purchased under Government local tender procedures, satisfactory to the Association. Because of the remoteness of the project area and small size of most works, it would not be practical to group civil works for ICB or local competitive bidding. Consequently, civil works for trails and bridges, minor irrigation and ASCs (for an estimated total of about US$4.1 M 1/) would be undertaken by the ministry concerned, using local labor, or by local con- tractors in accordance with Government local procurement procedures, satis- factory to the Association. 55. Disbursement. Disbursement of funds would be on the following basis: (i) 95% of expenditures for civil works carried out either by contract or by force account; (ii) 100% of foreign expenditures for directly imported fertil- izer; (iii) 100% of foreign expenditures for directly imported, equipment, furniture and vehicles and 100% of local expenditures (ex-factory cost) for locally manufactured goods and 80% of local expenditure for goods procured locally; (iv) 55% of local expenditures for salaries and allowances of staff engaged in the project in agriculture, animal health and minor irrigation, and ADBN staff posted to the ASCS, equivalent to 95% of incremental costs; (v) 95% of project operating costs for agriculture, animal health and minor irrigation components; and (vi) 95% of expenditures for local training. Disbursement against civil works carried out by force account and against categories (iv), (v), and (vi) above would be made against statements of expenditure. The documentation for such expenditures would be retained by the Government and made available for inspection by IDA representatives during the course of project supervision. Requests for disbursement against other items would be fully documented. 56. The Government would cause participating ministries and agencies to establish and maintain separate accounts for the project in accordance with sound accounting practices; the Government would ensure that these accounts would be audited annually by an independent auditor, satisfactory to the Association, and furnished to the Association not later than nine months after the end of each fiscal year (Section 4.01(a) and (c) of the draft DCA). The documents evidencing the expenditures on account of which withdrawals are requested on the basis of statements of expenditure would be retained until one year after the closing date (Section 4.01(b) of the DCA). Production and Farm Incomes 57. At full development in 1990, project generated production of the main crops in the project area is expected to increase by 34,300 tons to 197,700 tons and net farm incomes would improve by about 20-26%. Benefits are expected to be achieved mainly through yield improvements, ranging from 20-45% obtained by about 50% of the farmers in the project area. As all project districts are classified as food deficit areas, most of the increased crop 1/ Base cost, excluding price and physical contingencies.  - 17 - production would either be consumed on the farm or marketed within the dis- trict. There are good road connections in Syanja district, where most of the incremental animal production is expected to occur. No marketing constraints are foreseen for any incremental production resulting from the project. Benefits and Risks 58. The primary benefit of the project would be the increased produc- tion of food crops. It is expected that nearly one-half of the 147,000 farm families in the project area would participate in the project. Of these some 76,000 families, about 8,000 small farm families (with holdings of up to 0.4 ha) are expected to increase their production to be able to meet minimum subsistence levels and 18,000 medium size farm families (with holdings above 0.4 ha) to generate additional foodgrain surpluses. The remaining 50,000 small farm families are expected to increase food production by about 30%, but due to the small size of farm, this would not be sufficient to attain full sub- sistence levels. Apart from also improving soil fertility, the promotion of fodder legumes would increase the supply of animal feed and thus reduce over- grazing and consequent erosion. The improvement of the irrigation schemes would reduce their susceptibility to damage from weather and landslides and thereby reduce requirements for repair and maintenance. Major time savings should also accrue from the improvement of trails and construction of bridges. Construction activities would gernerate 4 M man-days of employment. 59. Discounting the econom:.c costs and the quantifiable benefits over a 20 year period, the economic rate of return for the project as a whole is estimated at 58%. The economic ^ate of return for the irrigation component is 16%. Sensitivity tests indicate that, under a series of adverse assump- tions, the project would remain viable; farm input or investment costs would have to increase by over 277% anl 477% respectively or yields drop from expected levels by 50% before the rate of return drops below 12%. 60. In view of the remoteness of the project area, there is a risk that the Government would not be able to undertake all components effectively and that the interrelated services would not be provided. The project is, therefore, designed around the use of the ASCs, which have been found to be an effective organizational system to marshal and direct services in remote areas. Staff accommodation and allowances would be included as incentives for service in the field. To minimize the risk that lack of communications and means of transportation would adversely affect farmers' participation in the project, activities would be decentralized to the ASCs located throughout the project area. In addition, tracks and trails would be improved to facilitate delivery of inputs. PART V - LEGAL INSTRUMENTS AND AUTHORITY 61. The draft Development Credit Agreement between the Kingdom of Nepal and the Association, and the Recommendation of the Committee provided for in Article V, Section l(d) of the Articles of Agreement, are being distributed to the Executive Directors separately.  - 18 - 62. Special conditions of the project are listed in Section III of Annex III. There are no special conditions of effectiveness. PART VI - RECOMMENDATION 63. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President January 14, 1981 Attachments  - 19 - ANNEX I TABLE 3A Page lot 5 ages NEPAL - SOCIAI INDICATORS DATA SHEET g o g NEPAL REFERENCE GROUPS (WEIGHTED AVPGES LAND AREA (THOUSAND SQ. KM. - MOST RECENT ESTIMATE) TOITAL 140. 8 MOSr RECENT LOW INCOME MIDDLE IwCOHE AGRICiITlRAL 40. 1 1960 /b 1970 /b ERTDATE lb ASIA & PACIFIC ASIA A PACIFIC GNP PER CAPITA (US$) 50.0 70.0 130.0 212.4 1114.7 ICNERGY CONSUMPTION PER CAPITA (KILOC-GJMS OF COAL EQUIVALENT) 5.0 15.0 I.0 166.0 842.4 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (MILLIONS) 9.3 11.4 13.6 URBAN PQPULATION (PERCENT OF TOTAL) 3. 1 3.9 4.8 20.8 39. 1 POPIRATION PROJECTIONS POPULATION ON YEAB 2000 (MILLIONS) 21.0 STATIONARY POPULATION (MILLIONS) 46.0 YEAR STATIONARY POPULATION IS REACHED 2160 POPULATION DENSITY PER SQ. I;N. 66.0 81.0 97.0 193.2 376. 1 PER SQ. FM. AGRICULTURAL LAND 243.0 286.0 339.0 409.6 2350.4 POPUIAI 70h AGE STRUCTURE (PERCENT) 0-14 YRS. 40.3 42.0 42.4 42.0 40.4 15-64 YRS. 57.0 55.0 54.6 55.0 56.2 65 YRS. AND ABOVE 2.7 3.0 3.0 3.0 3.4 POPULATION GROWTH RATE (PERCENT) TOTAL 1. 1 2.0 2.2 2.2 2.4 URBAN 6.5 4.3 5.0 3.9 4.1 CRUDE NIRTH RATE (PER THOUSAND) 46.0 45.0 45.0 37.4 28.7 CRUDE DEATH RATE (PER THOUSAND) 29.0 23.0 21.0 14.6 7.9 GROSS REPRODUCTION RATE 3.0 3.0 3.2 2.6 1.9 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. 37.4 138.8 USERS (PERCENT OF MARRIED WOMEN) .. 0.7 4. 3lc 15.6 39.0 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 106.0 101.0 91.0 101.4 116.9 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 93.0 96.0 91.0 92.4 108.9 PROTEINS (GRAtIS PER DAY) 50.0 51.0 48.0 49.8 60.3 OF WHICH ANiMAL AND PULSE 9.0 9.0 9.0 12.0 18.8 CHItD (AIES 1-4) MORTALITY RATE 35.0 27.0 23.0 17.9 5.3 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 36.0 41.0 43.0 50.8 63.0 INFANT MORTALITY RATE (PER THOISAND) .. 152.0/d .. .. 52.8 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 2.0 9. 0 30.2 42.4 URBAN .. 53.0 81.0 66.0 62.1 RURAL .. .. 5.0 20.0 29.7 ACCEUS TO EXCRETA DISPOSAL (PERCENT OF POPLLATIONJ TOTAL .. 1. 0 1. 0 17. 7 52.8 URBAN 14.0 14.0 71.3 71.1 RURAL .. .. .. .. 42.4 P0FULATI,N PER PHYSICIAN 72000.0 49770. O/e :5207.O/e 6322.7 4120.1 PIPULAI10N PER NURSING PERSON .. 68320.0/e 71222.0 9459.0 2213.6 PO'!ll,ATrON PEP HOSPITAL BED IOCAL 8060.0 6750.0 6289.0 1758.4 819.4 I,RBAN .. .. . ... RURAL .. .. AMlISIStON PER HOSPITAL BED .. .. .. .. 28.8 HOUSING AIETRACE SIZC OF HOUSEHvLD TUTAL .. 5.5 US(SAN 5.4 .. RSRAL .. .. AVhPACE "CR000P CF PERSONS PER ROOM IOTAL .. .. UTSB AN 2.0 .. RURAL .. .. ACCEUS TC ELECTRICITY (PERCENT OF TO Eli lICS ) 59543, . . .. . .. URBAN 30.2 .. ROOM. . . .. -..  - 20 - ANNEX I TABL,E 3A P g ? o ae NEPAL - SOCIAL INDICATORS TDATA SHEET Page 2 of 5 pages NEPAL REFERENCE GROUPS (WEIGHTED AVFRAGES - MOST RECENT ESTIMATF)- MoST RECENT LOW INCOME MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b ASIA & PACIFIC ASIA & PACIFIC EDUCAT ION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 10.0 26.0 71.0 80.9 98.6 MALE 19.0 44.0 108.0 94.3 99.2 FEMALE 1.0 8.0 32.0 66. 7 97.7 SECONDARY: TOTAL 6.0 9.0 14.0 26.6 55.5 MALE 11.0 15.0 23.0 34.8 60.7 FPMALE 2.0 3.0 1. 0 18.2 49.9 VOCATIONAL EiNROL. (% OF SECONDARY) 0. 2 6.0 22. 0/f 9.9 13. 7 PUPIL-TEACH