Announcement of World Bank Supports Mexico’s Program to Develop Rainfed Agricultural Areas on January 26, 1981

.. . ... t • ... ~ FOR IMMEDIATE RELEASE ,VorldBank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 81/49 January 26, 1981 WORLD BANK SUPPORTS MEXICO'S PROGRAM TO DEVELOP RAINFED AGRICULTURAL AREAS Mexico's agricultural production in rainfed areas will be increased through a project supported by a $280 million World Bank loan, The project will increase farm productivity in nine rainfed districts representative of different ecological zones in the country. The Rainfed Agriculturai D.evelopment Project wi 11 support Mexico 1 s National Pro- gram for Assistance to Rainfed Areas (PLANAT). In addition to increasrng farm produc- tivity, the project also aims at improving institutions for agricultural research, extension, and training at national and district level. With an estimated total cost of $797 million, the project includes a farm ex- tension program, production system research and on-farm testin~ of technology, a soil and water conservation program, and a forestry program. Provision will be made for short- and medium-term farm credit, and a rural works program encompassing construction • or improvement of market roads, small irrigation schemes, and drainage works. The key element of the project is the establishment of an effective field-level extension system based on the training and visit system model backstopped by co- ordinated field research. First Phase of Rainfed Agricultural Plan The project will be the first phase of the government's plan to accelerate agri- cultural development in the largely neglected rainfed areas. It is expected that this project will provide the basis for a sound agricultural development program for other rainfed areas of Mexico. Five of the districts included in the project (Cholula, Puebla; Chilpancingo, Guerrero; Morella, Michoacfn; Zapopan, Jalisco; and ~lpa, Zacatecas) are in the heavily populated central plateau. The other four districts (Martinez de la Torre and Coatzacoalcos, Veracruz; and Cardenas and Villahermosa, Tabasco) are in the humid tropics where land is greatly underutilized and demand for agricultural products is growing rapidly due to petroleum and industrial development. Mexico's rainfed agriculture accounts for about two thirds of the cropped area with about 10 million hectares and provides livelihood to 87% of all farmers. How- ever, it contributes less than 50% of the value of agricultural output. Low produc- tivity in the non-irrigated croplands has contributed to rural poverty, massive rural ~underemployment, and heavy mi~ration to urban areas. NOTE: Money figures are expressed in U.S. dollar equivalents. I ...  ..• • -2- Substantial Benefits for farm Families About 92,000 farm families are expected to receive significant benefits from the project. The project will provide extension packages supported by credit to about 37,000 farm families, 80% of them with annual incomes of less than $1,500 or less than $280 per capita. Their incomes, currently under the relative poverty level, are expected to increase substantially, on average tripling over 12 years. Some 55,000 farmers will also benefit from improved extension services provided under the project. About 90% of these farmers have average family incomes below $2,500. An additional 70,000 farm families will benefit to a lesser extent by adopting some features of the new farming technologies promoted by the extension service. About 60% of the 275,000 farm families in the nine districts wil 1 benefit from one or more of the directly productive components of the project. At full develop- ment in 12 years, the project is expected to result in an increased annual production of 180,000 tons of basic crops and feedgrain; 14,000 tons of cacao, coffee, and coco- nut; 240,000 tons of fruits and vegetables; 124,000 tons of alfalfa; 17,000 tons of beef and pork; and 62 million liters of milk. The project is also expected to have beneficial effects on the environment. Soil and water conservation and forestry programs will reduce erosion losses in the project districts and will serve as a prototype for more extensive and effective conservation programs. The Secretariat of Agriculture and Water Resources wi 11 be responsible for the majority of project programming and execution; the Secretariat of Human Settlements and Public Works for some feeder roads; the Agricultural Trust Funds in the Bank of Mexico and the Trust Fund for Credit in Irrigated and Rainfed Areas for farm credit. • The $280 million World Bank loan was granted to Nacional Financiera, S.A. with the guarantee of the United Mexican States. It is for a term of 15 years, including three years of grace, with interest at 9.25% per annum. -0- • FORM NO. 1121 (5-76) • T E C H N I CA L DA T A PROJECT: Rainfed Agricultural Development COUNTRY: Mexico TOTAL COST: $797 mill ion BANK FINANCING: $280 million for a term of 15 years, including 3 years of grace, with interest at 9.25% per annum OTHER FINANCING: Government of Mexico, $317 million; Trust Fund for Credit in Irrigated and Rainfed Areas and Agricultural Trust Funds in the Bank of Mexico, $180 million; and beneficiaries, $20 mi 11 ion. IMPLEMENTING ORGANIZATION: Secretar(a de Agricultura y Recurses Hidraulicos Direccion General de Distritos de Temporal lnsurgentes Sur 471 Mexico, D.F., Mexico Telex: 001775888 PROJECT DESCRIPTION: The district development program will include: (a) a farm extension program; (b) production systems research and on- • farm testing of new technology; (c) a soil and water conservation program, including various types of terraces, contour furrows, and small storage reservoirs, covering approx- imately 6i,ooo hectares (ha) and benefiting about 7,000 f~rmers; (d) a forestry program covering approximately 10,500 ha of pine plantations, 900 ha of on-farm woodlots, and 2,000 ha of windbreak trees. This program will involve about 1,000 farm families; (e) provi- sion of short- and medium-term farm credit to 37,000 farmers; and (f) a rural works pro- gram, including the construction or improvement of some 2,880 kilometers (km) of roads servicing some 80,000 farm families, 7,000 ha of small irrigation schemes, and drainage works covering some 30,000 ha and servicing about 2,000 farm families. At the national level, the project will include: (a) a research program; (b) training of research, ex- tension, and soil and water conservation service technical staff; (·' field training; and (d) consuitant services. PROCUREMENT: Contracts for civil work scattered over the project area, will be procured following local procedures satisfactory to the Bank. At least 60% of civil works will be constructed under contracts having an esti- mated value of $350,000 or more and let under local competitive bidding (LCB). Because of the number of small works included in the project, a substantial portion (up to 40%) of civil works contracts are expected to be let in contracts of less than $350,000 each, using the government's ordinary procedures. Contracts for goods and equipment will be grouped, when feasible, into packages of at least $350,000 equivalent and procured through interna- tional competitive bidding. Smaller contracts could be procured through LCB or local shop- ping in accordance with the government's ordinary procedures. CONSULTANTS: About 486 man-months of specialized consultant services in ex- • tension, research, soi 1 conservation, moni~oring and evalua- tion, will be required under the project . ECONOMIC RATE OF RETURN: 21% ESTIMATED COMPLETION DATE: 1985 - 0 -